On this page
- Understand how reviews can benefit your business and employees
- Find out how to set up review processes
- Learn how to develop and measure KPIs using our HR manual template
- Use our performance and development agreement plan template
Performance reviews and appraisals
Key Performance Indicators (KPIs), performance reviews and appraisals should be available to all your staff, so they know how they've been doing, and what further development or training they need to undertake to improve.
Objectives give employees focus, and appraisals make them feel their good work is being recognised. You can also discuss any weaknesses or problems, and identify solutions together.
A big part of successful performance reviews and appraisals is being able to communicate well with your staff. You'll find some useful tips and advice on our communication skills for managers page.
Use the performance and development agreement plan below to outline your employee's expected performance standards and goals, as well as skills improvement.
Set up the processes
The most effective way to conduct KPI and performance reviews is to have a combination of structured face-to-face discussions – with diary notes – quarterly, then half yearly, and a full review at the end of each year.
Save the prospect of a discussion about pay for another time – you want your employee to leave the review thinking about their performance.
In conducting a performance review, you should:
- ask the employee to rate themselves
- provide a written performance review to the employee
- make sure you can back up any positives and negatives – with specific examples
- conduct a review meeting within 48 hours of the written performance review
- note and file any employee comments, and then make sure the final version goes on file.
Our template below can be customised to suit your company's requirements. Hand it out to your employees and ask for them to complete it before their performance review.
Use the 'performance management' section of our HR template to embed the process in your business.
If an employee is consistently failing – and the situation cannot be salvaged – you may need to dismiss the employee.
KPIs for your staff
You can incorporate KPIs into your business by setting and measuring personal targets for individual staff members or departments.
Performance management KPIs should:
- tie into the overall business objectives
- measure areas that will influence the success of the business
- indicate areas requiring further action.
The areas you choose to measure should relate directly to the core activities of your business.
The performance indicators you choose will differ depending on your specific business type, operations and industry. For example, KPIs may be used to measure areas such as:
- unit sales
- profit per item
- product quality
- customer service
- time required to complete tasks
- customer referrals
- staff turnover.
Measure KPIs over time
KPIs should allow you to set measurable and achievable goals for improving core business activities. After introducing a method for examining and recording KPIs, make sure you maintain records of your results – so you can track performance over time.
Revision and review of agreed KPIs
If you regularly reconsider your performance indicators alongside the ongoing development of a business plan, you'll find your KPIs are more likely to stay aligned with your changing business requirement.