Page 666 - Business Principles and Management

Chapter 24 • Rewarding and Developing Employees

24.3 Improving Employee Performance

Goals Terms
• Describe the procedures for • formal training
reviewing employee performance. • informal training
• Discuss several important training
needs of businesses.

ompanies depend on effective and satisfied employees. Just as a company can-
not operate if equipment is outdated or regularly needs repair, it must have
Cemployees with up-to-date skills who perform their jobs accurately and effi-
ciently. Two requirements for maintaining a high-quality workforce are an effec-
tive system for performance review and well-designed training and development
programs.

Employee Performance Review

Companies must make sure employees are performing as well as they possibly can.
As you learned in Chapter 11, a performance review is the process of assessing
how well employees are doing their jobs. Companies use the information ob-
tained from performance reviews for career planning, determining increases in
wages and salaries, and planning training programs. Continuing poor perfor-
mance reviews may lead to employee transfer, demotion, or even discharge.

CONDUCTING A PERFORMANCE REVIEW
The first step in developing a performance review process is to determine what
to evaluate. Each job should have a complete description of duties and perfor-
mance expectations, and the review should focus on these duties and expecta-
tions. Next, the human resources department prepares forms and procedures for
performance reviews. Those materials should be designed to make the review
process as easy and objective as possible.
Managers conduct formal performance reviews of all employees usually once or
twice a year. The formal review is based on regular observations of the employee’s
performance throughout the year, checking the quality and quantity of the work the
employee has produced, and seeking feedback from others who have worked with
the employee. Some managers fail to conduct regular reviews of each employee’s
work and so base their formal evaluation on the most recent work, general obser-
vations, or even biases. That procedure is certainly unfair to the employee and does
not result in an accurate evaluation or provide the chance to recognize positive per-
formance and improve employee performance in weaker areas.
To be most objective, managers should use observation forms and record
information on the employee’s performance. Those forms and records should be
specific to each employee’s job and based on the employee’s job description and
job responsibilities. They should also take into account the employee’s experience

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