How Performance Management Can Help Improve Employee Retention


Performance reviews are often criticized and questioned, and not without reason. However, performance management is not only essential to evaluate productivity, but also crucial to increase employee retention rates. Rather than disappearing from our managerial practices, performance reviews should therefore be reevaluated and reshaped to fit with new work models and realities. They must benefit employees’ careers as well as the company’s evolution and strategic goals.

How can performance management help improve employee retention, and how should performance reviews be optimized to retain talent?

Take the time to listen 

Employees that feel heard are more likely going to stay with you in the long run. Performance reviews represent the perfect way to start a productive and open discussion. Indeed, performance management should neither be one-dimensional nor one-sided: the employee also needs to be able to express themselves and review management practices.

By asking the right questions and encouraging employees to speak up on what could be improved in the workplace, you are sure to see your retention rates skyrocket!

Moreover, for newly hired employees, the first performance review also represents an opportunity to position themselves in their role. These interviews should lay out expectations on both sides so that the worker clearly understands what they have to do, while the manager takes the time to answer any questions and listen to potential concerns and struggles the employee may be facing.

By opening up a dialogue from the get-go, you will show your staff that they will be heard on a regular basis, and that their problems will be identified and solved quickly. Considering that new hires have the highest turnover rate, managing their performance while remaining open to exchange from the very first months of their employment is a crucial retention strategy that should not be overlooked.

Take Action For Career Development And Skills

Another key element for talent retention is the focus on your employee’s progress. The Great Resignation stems from unhappiness at work, but also from lack of professional growth and a feeling of stagnation that proves debilitating for many employees. This is particularly true for new generations of employees, who feel like their careers have suffered from the pandemic, with fewer professional opportunities offered to remote workers during this difficult period.

Optimal performance management helps identify such issues and individual struggles. The performance evaluation, if conducted properly, gives managers the opportunity to measure one’s performance and engagement and to discuss professional development and goal-setting accordingly. Performance reviews are also the perfect moment not only to receive praise for one’s hard work, but to share constructive feedback that will encourage the employee’s growth.

People want to grow and to learn new skills. When conducting a performance evaluation, you have to consider the employee’s professional future by offering possibilities of ongoing staff training – an efficient strategy both for your business development and for retaining talent. By showing that you care about your staff’s future, they will in turn be more likely to consider evolving with you. 

Evaluate Not Only Performance, But Also Engagement

As we have seen, the range of subjects discussed during performance reviews should be broadened for efficient performance management. Aside from skills, staff training and individual growth and struggles, another essential topic is the employee’s level of satisfaction with their current position to measure engagement.

Straightforward questions on engagement might not be the best approach, but an open dialogue on how an employee positions themselves within the organization will often reveal if they consider staying with you or not. By identifying the employee’s level of satisfaction, you will also be able to ask them what they would like to see improved in their professional lives. If the issue comes from something that could be optimized – better training, team building, more diverse tasks and projects, for instance – then it is up to you to show the employee that they have been heard and to build a strategy to solve the problem. Similarly, if an employee particularly likes some aspects of their job, you can put emphasis on these elements to further boost their engagement!

Your retention strategy can therefore be based on your observations and dialogues with workers, especially if these discussions occur in the context of efficient performance reviews.

Performance management must encompass growth and development, acquisition of skills and stimulating professional challenges.

Performance reviews are an efficient way to identify individual struggles and to solve issues before they affect employee engagement. By implementing the best performance management practices, the evaluation will become an open dialogue and become the starting point for goal setting, professional growth and the development of skills. Your employees will be more engaged, and your retention rates will skyrocket!



Morgane Lança is the HR Content Manager at Folks.

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