Whether you are already in a managerial position or plan to pursue one after earning an MBA, chances are you already have or will have to conduct staff reviews. Although this may not be the most fun part of managing a team, regularly performing reviews of your employees’ work can have a dramatic impact not only on your staff, but the overarching goals of the company.
Here are five reasons why you should hold regular performance reviews for members of your staff:
1. Improve overall performance
One of the clearest benefits of regular reviews is the opportunity to improve the overall performance in the workplace. Taking the time to analyze the work produced by your staff over the last year, or any period you wish to review, is the perfect opportunity to find areas that need attention. Analyzing problems and finding solutions, when possible, can avoid the necessity of hiring a new employee.

According to a study by Heather Boushey and Sarah Jane Glynn of the Center for American Progress, the cost of hiring a new employee for a mid-level position is 20 percent of the annual salary [i]. Replacing a manager who makes $50,000 a year would carry a price tag of about $10,000 [i]. The cost of a lower-level position with higher turnover is less, at about 16 percent, but the cost of replacing an executive position that requires a high level of education is significant: 213 percent of the annual salary [i].
As a manager, you can help your employees create benchmarks to judge progress and set deadlines for each stage of performance. If the problem is significant, you may need to put a staff member on probation until improvement is seen. Conversely, providing a financial incentive may give extra encouragement and speed up the process.
2. Increase employee engagement
Performance reviews are not just about what they can do for you. They can also help your employees. One of the primary benefits is that regular feedback can increase engagement, which can pay dividends for your company. According to Forbes contributor Kevin Kruse, 28 research studies have found correlations between employee engagement and quality, sales, service, retention, safety, profit, sales and total shareholder returns [ii].
“Companies constantly evolve, and they need new ideas all the time. Engaged employees are a lot closer to the best ideas,” Jim Harter, PhD, chief scientist of employee engagement and wellbeing at Gallup, said in a press release. “They’re thinking about the whole company and how they fit into it, and their ideas lead to better decisions” [iii].
By reviewing the performance of your staff members at periodic intervals, they will gain greater understanding of how their position contributes to the goals of the company and likely become more invested in the outcome.