New performance management trends and strategies are created and tested every year to create a high-performance workforce. For managers, evaluating an employee’s performance is a daunting yet core responsibility of their jobs. Performance reviews are crucial to an employee’s ongoing development and can drive business success to new levels. To reach their full potential, employees need genuine, timely, and specific guidance.
What is a Performance Review?
Performance reviews are the pillar of performance management and an essential business process. A performance review is defined as an in-depth, formal assessment that managers conduct to evaluate an employee’s positive and negative contributions within an organization.
The goal of conducting performance reviews is to drive performance; align goals; identify strengths and weaknesses; offer constructive feedback; and set goals. Performance reviews are not about measuring the individual members of your workforce against each other, but rather developing it.
Performance management is an industry that is constantly evolving and changing, with new strategies appearing every year. Alongside the traditional annual review of the entire workforce, companies are incorporating a more effective approach of giving continuous feedback.
As mentioned in Shortlister’s performance management statistics article, regular feedback makes employees nearly three times more likely to be engaged in their work.
Effective performance reviews should help employees:
One way to establish effective review cycles is to set metrics in place.
Effective goals should be discussed and set by the employee and manager together, and aligned to high-level goals for the team or department. These goals should be SMART (Specific, Measurable, Attainable, Relevant, Time-Based) and tracked regularly.
When done well, these assessment sessions lead to more productive, engaging, and morale-boosting exchanges between managers, teams, and the company. But when executed poorly, they can intimidate employees, discourage teamwork, and stifle productivity.
How Should Employees Prepare for Performance Reviews?
Performance reviews are nerve-wracking for many professionals. However, these sessions should not surprise employees. Instead, they should be an assurance to the employees about where they stand in the business.
Some areas that employees can expect to be evaluated on are:
There are some steps employees can take to help them be better prepared for their reviews. Keeping notes throughout the year is one way to ensure that you will not forget to mention important accomplishments during the review.
1) Reflect on Major Achievements
When you look back on the last year, it should be easy to point out some big wins. It can be a major project you took on and finished on time, a process you optimized to save the company time, or a big sale you closed.
Whatever it is, a record of these big wins serves as an excellent reminder to your manager of everything that you have achieved for the company. Performance management systems can offer data to back up your successes.
2) Record Additional Responsibilities
The employee’s role is constantly evolving, and often this means taking on additional responsibilities. These added duties may be picking up more work from another coworker, taking on more clients, leading a new initiative, or other interim tasks.
The chances of getting a promotion or raise are higher when you showcase an increase in workload outside of your job description.
3) Note any Weaknesses
While it’s important to display your strengths and achievements, addressing any shortcomings is just as important. This could include frequently being late to work, missing a deadline, or miscommunications with coworkers.
By writing down any negative comments from colleagues or customers, you can show what you did to improve. Nobody is perfect, and by addressing any aspects of your role that are difficult to execute, you will be better prepared to come up with solutions on how to fix them.
4) Seek Improvement
Seek out documentation from previous performance reviews and recognize areas where you have excelled or reached KPIs, areas you need further training, and any aspects in relation to career progression.
This is the time to show initiative and actionable changes you implemented to correct your weaknesses. Your organization is there to support you and provide you with resources to help you meet your targets and goals. Upgrading your skill set will make you more marketable within the company and outside.
Types of Performance Reviews
All types of performance evaluations aim to create an ongoing dialogue with employees to understand their contributions to the organization’s success. Recognizing top performers and underperformers, rewarding them, and providing them with the right tools for success are some of the goals good reviews can achieve.
Many performance management software tools are available on the market that gather employee data and feedback to help managers make better-informed decisions. Based on the type of feedback, we can divide performance reviews into multi-rater and single-input reviews.
Multi-Rater Performance Reviews
Gathering input from multiple sources gives a complete, 360-degree picture of an employee’s performance. The sources of multi-rater reviews can come from the employee, manager, colleagues, staff members, and, sometimes, customers.
1. 360 Performance Review
In 360-degree feedback, employees receive feedback not only from their direct managers but also from both senior and junior staff members. This gives the employee a chance to receive an appraisal from all directions in the company, from coworkers with various roles, providing them with a comprehensive overview of their performance. Employees typically receive a performance rating on a scale from one to five, ideally from six to 12 coworkers.
Self-evaluations can be daunting, but they are an integral part of the performance management process as they give valuable insight into how an employee perceives their performance.
The intent is to encourage self-reflection and promote change and growth. When employees spend time reviewing their own performance, they become self-aware, increasing accountability.
3. Peer Review
Even the most effective managers can sometimes miss valuable insights into an employee’s performance. A peer–to–peer review helps point out the finer details of working closely side by side with someone. An objective and authentic peer review assessment can bridge these gaps in knowledge.
5. Team Performance Review
Chances are that, at some point, employees will have to work together in a team setting. Uncovering and solving teamwork issues can have a significant impact on the company. Assessing team effectiveness and collaboration helps develop them in the right direction.
4. Upward Feedback
Establishing a bi-directional and transparent line of feedback is essential for creating an ongoing dialogue about performance. Asking employees to review a manager’s performance may be a delicate matter, but it can help build a trusting relationship when done correctly.
It should provide managers with an understanding of how to improve their leadership and managerial styles to better guide their employees. Fostering a feedback-rich environment leads to improvements on all levels.
Continuous Performance Conversations
Continuous performance conversations are a critical component to organizational growth and success. Companies can match the frequency of the review cycles with the needs of their business.
Several factors contribute to the frequency, like the size of the company and the pace of growth. Companies can choose to conduct annual, mid-year, or quarterly reviews.
1. Annual Performance Review
Annual performance reviews are the foundation of traditional performance management. Often criticized for being inefficient, when executed well, these reviews have many benefits.
The most common critique is that the goals of an organization may change in a year, and roles and responsibilities shift, so the feedback becomes irrelevant.
However, these reviews provide a look at the big picture: the company’s direction, what goals an employee aims to achieve, and how to get there are all parts of the discussion.
These reviews also offer a formal and documented assessment of an employee’s performance. The problem with informal feedback is there is often a lack of consequences if set goals are not reached.
Annual reviews remain the most popular performance review cadence and are preferred by those who manage many employees: It can be time-consuming to conduct multiple analyses per year.
2. Mid-Year Performance Review
Organizations can choose to conduct semiannual performance reviews for a more frequent check-in with their employees. In fact, 16% of organizations prefer this type of single-input review.
3. Quarterly Performance Review
Quarterly reviews are conducted four times a year. A quarterly cadence is ideal for high-growth and fast–changing organizations as they are more focused on short-term goals. Rather than a comprehensive evaluation, meaningful and frequent check-ins with managers are crucial in staying aligned in a high-growth organization.
What Managers Should Not to Say in a Performance Review
There is no such thing as aperfect employee, as there will always be room for improvement. However, poorly executed performance reviews are demoralizing and can decrease employee engagement.
These are a few actions managers should avoid during a performance review:
Focus on observable and measurable performance. Avoid unfocused and generalized phrases such as, “Needs to improve communication skills.” Instead, be specific, objective, and give examples.
It is not helpful to anyone if you beat around the bush and try to soften the criticism. Don’t be afraid to tell the truth: Confronting an issue is part of the performance management process. Using clear, concise language lessens the chances of miscommunication.
Ranking employees against each other is not only discouraging, but it creates toxic politics in the workplace.
While an evaluation should include positives, managers should avoid being falsely positive and giving positive areas too much weight over negative ones. This will only give the employee a false sense of security, and it does not give them an opportunity to improve and fix their shortcomings.
While it is common to discuss rewards, speculation and raising hopes for a raise or promotion only leads to disappointment if they can’t be backed up.
Nothing can leave an employee feeling more demoralized than an inaccurate appraisal. If a manager is unprepared, it can give an employee the feeling that the manager couldn’t make time for them.
Organizations that are committed to continuous improvement and encourage an open feedback process will motivate superior performance from their workforce. Giving employees the proper recognition and rewards through collaborative performance reviews will ultimately drive business success.