Employees have valid reasons to dread performance reviews. After all, the process can be nerve-wracking and highly judgemental. What’s more, your managers might also find it tricky to reduce complex performance outcomes into numerical values. However, all hope is not lost. There are ways to ensure the process is smooth, effective and fair.

This article covers everything you need to conduct a review process that adds value to your performance management strategy.

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Article Roadmap

• What Is a Performance Review?
• Types
• How To Conduct Performance Reviews
• Best Practices
• Common Missteps
• Cheat Sheet
• Next Steps

What Is a Performance Review?

A performance review is a formal evaluation of work output that sets the basis for discussing performance levels with employees in one-on-one meetings. Companies use employee performance reviews to provide constructive feedback, set future goals, acknowledge good work and collaborate with employees to devise suitable growth plans.

Typically, companies organize annual check-ins, but it’s up to top management to decide how frequently to schedule these meetings. Businesses can schedule quarterly, monthly or weekly meetings depending on their performance management goals.

Types

Below, we’ll cover all the different performance evaluation methods. Keeping the nature of the responsibilities of your employees and your company’s unique human capital management goals in mind, consider the following common options:

1. 360-degree Ratings

As the name suggests, 360-degree ratings include everyone involved with an employee’s work. This type of evaluation collects input from as many sources as possible to get well-rounded and unbiased feedback on an employee’s performance, work ethic and attitude.

Typically, 360-degree ratings include feedback from five essential sources:

1. Self Evaluations: Develop and deploy a survey with questions that allow employees to reflect on their strengths and weaknesses. Responses from self-assessment surveys spotlight employees’ perceptions of their work.
2. Supervisory or Managerial Reviews: Collect employee ratings from line managers, supervisors or team leaders based on predefined metrics and scoring systems.
3. Peer Reviews: Identify people who work closely with an employee and involve them in the process. Inputs from peers are more granular about employee reliability and work behavior.
4. Subordinate Appraisals: Use a unique upward appraisal element by collecting inputs from subordinate employees.
5. Customer or Client Reviews: Gather feedback from people outside the organization that interact with the employee regarding deliverables.

Reasons to opt for 360-degree performance feedback:

• Sets a solid base to create suitable development plans.
• Enables complete employee assessments by leveraging different perspectives in the evaluation process.
• Gathers more valuable information than a simple one-on-one evaluation.
• Enhances employees’ awareness regarding how their work performance affects their team, company and stakeholders.

2. Management by Objectives (MBO)

Management by objectives is when managers and employees join forces to identify and set goals to achieve during a specified review period, making it easier to define individualistic success.

By the end of the timeline, compare results with the set objectives to determine the level of performance. This performance evaluation method emphasizes tangible components like output and productivity.

Here are the top reasons for using the management by objectives method:

• Measures the quality and quantity of output of people in leadership positions like managers, directors and executives.
• Sets specific, measurable, attainable, realistic and time-bound corporate goals and tracks completion in a given capacity.
• Allows employees to contribute to the goal-setting process and aligns targets with larger organizational objectives.

3. Behaviorally Anchored Rating Scale (BARS)

Who gets along well with the team? Who has the makings of a future manager? Who’s always punctual at work? Behaviorally anchored rating scales find the answers in a quantifiable way.

Unlike the management of objectives method, qualities like skill, competency, behavior and personality traits are the focal point. A rating scale lets you measure abstract performance components by assigning a numbered or five-point word scale to evaluation criteria.

Grade employees for each trait based on a five-point scale or labels like good, satisfactory and poor. Be sure to communicate where failure and success fall on the scale to avoid confusion and set clear expectations in advance.

The following is achievable using graphic rating scales to review performance:

• Identifies desired traits for specific roles and determines personality-job fit.
• Acquires qualitative data needed to assist with developing succession and promotion paths.
• Makes reviews easier by quantifying behavior, personality traits and values.

4. Continuous Performance Dialogues

Time and again, HR professionals wonder if it’s time to eliminate review processes. But there’s a reason why the performance reviews aren’t altogether archaic yet. Ultimately, the productivity of your workforce directly impacts your company’s bottom line and measuring performance and setting goals will always be relevant.

However, about 90% of HR professionals agree it’s time for a new evaluation approach – the continuous performance management model. Instead of waiting until the end of the year to review outcomes, continuous performance dialogue focuses on what’s happening and what matters now with the flexibility to adapt accordingly.

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How To Conduct Performance Reviews

Your calculations must hit the mark every time. Evaluating the performance of every employee across various departments may seem daunting at first. Still, with a well-defined process, you’ll have valuable feedback on each individual by the end of the review period.

We’ll cover everything you need to know to prepare, conduct and conclude employee performance reviews.

1. Set Clear Goals

Unreachable performance standards lead to burnout and demotivate employees from putting in any effort. Yet, setting the bar too low contributes to feeling stagnant at work. According to Gallup’s Global Workforce Survey, stress and disengagement are at an all-time high, with only a meager 21% of employees actively engaged at work and about 44% carrying stress from the previous day.

Hence, balance is key while setting goals. Challenging yet achievable goals keeps the productivity wheel turning while simultaneously contributing to an employee’s sense of accomplishment.

Here’s what you can do:

• Define what success means for your company and have clear industry-specific benchmarks. Performance goals can be a certain level of sales targets, increased traffic rates, and more revenue. Ultimately, it’s up to you to decide what success means for your company.
• Identify high-performance indicators for each role according to your industry and company standards.
• Use KPIs and OKR framework to accurately measure performance and give employees a framework to own their progress.

2. Measure Employee Progress

Now’s the time to rejoice if you have a real-time performance management system to track progress and goal completion. Once you set and communicate goals, you’ll need to track progress regularly to check surfacing gaps in performance.

These performance insights form the basis for evaluating and discussing employee performance levels. When you know where an employee fell short or could perform better, you can begin determining how to better support them to complete their targets.

3. Train Your Managers

The most effective organizations always position their managers and supervisors as coaches and mentors. Turning your managers, team leaders and key people into effective evaluators depends on how well you equip them with the right resources.

Need more information? We’ll highlight the do’s and don’ts of effective reviews later in the article. Scroll to the Best Practices section for a head start.

4. Decide the Time and Place

Setting a timeline depends on the frequency of reviews and the number of employees in the pipeline. Finding the right time to conduct check-ins is challenging, but prioritizing these meetings is a necessary juggling act to create a culture of continuous improvement.

Ask the following questions internally to make space for reviews:

• When is the best time and date to schedule review meetings?
• Where will they be on-site or on a virtual conferencing platform?
• How much time will each item on the agenda require?
• Is the decided time suitable for everyone involved?

If you’re an enterprise business with a sizable workforce, consider implementing interview scheduling software with access to a shareable calendar to avoid scheduling conflicts and decide on suitable timeslots.

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5. Develop Role-specific Reviews

Performance reviews aren’t a one-size-fits-all method. Once you have access to role-based evaluation criteria, performance benchmarks and insights into employee progress, it’s time to sync your findings and create an agenda for the review.

Customize the process based on job function and the employee’s competencies to generate a personalized plan for the meetings.

Here’s a tip: performance reports highlighting key talent data are a good reference point during review meetings.

6. Convey Employee Impact

Discuss the grades and overall performance levels with the employee. The goal is to spotlight the impact of the employee’s behavior and contributions on their team and organization. Conveying the big picture lets employees know how their work adds value to the overall output.

Take the opportunity to recognize wins and encourage better performance in the future.

7. Listen to Employee Feedback

Lastly, it’s time to turn the mic over to your employees. Regardless of how the employees performed, leveraging the platform to listen to all types of performers helps uncover gaps in leadership or oversights in the review process. Two-way communication is key to creating an open and transparent work culture.

8. Create a Plan

Once you give and collect feedback, it’s time to resolve conversations by reviewing your findings to develop a revised performance plan. Define what the next steps should look like for each employee and set the plan in motion until the next performance conversation.

9. Follow Up

Pew Research found that besides low pay, lack of growth opportunities and toxic work environments were the top reasons workers quit during the Great Resignation.

Performance dialogue is a crucial method to let your workforce know you support their growth and development and can encourage them to remain a part of the team longer. Mark your calendar for future follow-up conversations and adopt an open communication policy to check in on employee progress frequently.

10. Look for Patterns

Last but not least, keep an eye on performance levels before and after the reviews. Analyze the impact of improvement plans. Consistently low output and productivity either mean an employee is poorly fit for the job or point to a much larger leadership issue.

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Best Practices

Now, it’s time to look at what separates good experiences from bad ones. Here’s what to consider to change the negative sentiment surrounding performance reviews:

1. Keep It Conversational

A meeting dedicated to discussing the highs and lows of work output can seem daunting for your employees, especially when promotions and salary increments are on the line.

Changing the management approach from judging to coaching makes it easier for employees to feel at ease, garnering genuine responses. In case of poor performance, allow the employee to clarify the reasons for falling behind and ask follow-up questions before deciding on the next steps.

2. Evaluate the Process

Whether this is your first time organizing performance reviews or if you already have a framework, there’s always room for improvement. Regular maintenance checks help uncover and address weaknesses in the process. Every incremental improvement is a step towards efficiency.

3. Implement the Right Tools

Keeping up with tumultuous talent needs requires internal processes that match new trends. The good news is that suitable HR tools assist your managers with making better decisions regarding employee performance management.

According to the Betterworks survey referenced earlier, managers who participated in the study stated the following tools would enable better employee performance management:

• Upskilling programs (39%)
• Recognition and feedback software (34%)
• Flexible goal-setting tools (34%)

Ultimately, the tools you implement should suit your industry, company and talent-specific needs. Refer to our performance management requirements template to evaluate different criteria and make the optimal choice.

Common Missteps

It’s vital to ensure that not even an iota of prejudice or discrimination makes its way into the review meetings. Here are the top things to avoid at all costs:

1. Don’t Criticize Without Examples

Reviews can start difficult but necessary conversations about performance levels and weaknesses. Coupling criticisms with quick references to specific incidents is vital to clarify where employees can improve rather than leaving them in the dark concerning where they underperformed.

2. Don’t Make Comparisons With Peers

Use reviews to discuss present and future performance goals. Focus solely on the person you’re reviewing and avoid pitting employees against each other. Use an employee’s past performance data to compare productivity and output.

3. Don’t Give False Praise

While it’s vital to also focus on the positives, avoid offering false praises as it gives employees a false sense of their progress and misleads them into thinking they’re doing better than they are. Being honest and open is key to setting realistic expectations and targets for the future.

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Cheat Sheet

If that seemed like a lot of information, here’s the summarized list of everything you need to know to prepare, conduct and wrap up the review process:

Steps before the review:

1. Set clear goals.
2. Measure employee progress.
3. Train your managers.
4. Decide the time and place.

Steps during the review:

5. Develop role-specific reviews.
6. Convey employee impact.
7. Listen to employee feedback.

Steps after the review:

8. Create a plan.
9. Follow up.
10. Look for patterns.

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Next Steps

Ready to conduct an effective performance review? Your choice of method and process should ultimately support your company’s people and culture. Try our custom vendor comparison report to evaluate your options with your company-specific requirements at the heart of the selection process. The right tools will help you gather accurate performance data and connect data points to support decisions.

What is the performance review strategy of your company? What steps did you take to conduct a smooth and effective process? Let us know in the comments.