When they’re conducted properly, employee performance reviews are a powerful tool for driving business growth, improving employee retention, and creating happy (and high-performing) working environments.
But they often get a bad wrap. Research shows that many of us find performance reviews less enjoyable than the customer experience we received from internet service providers or health insurance plans - long hold queues, being passed from customer service agent to customer service agent, and all.
So, why is this? Well, recent surveys have shown that less than half of employees believe they’re assessed fairly and transparently. Add in the unconscious biases that can affect a manager’s ability to conduct an impartial assessment, and it’s no wonder they’re viewed with trepidation by employees.
That being said, the solution isn’t to stop conducting performance reviews. According to research from Deloitte, ratings, and reviews aren’t dead. Companies and their managers simply need to conduct their performance reviews differently.
Why are performance reviews important?
In a survey by the Harvard Business Review, it was found that only 42% of employees trust their boss. That’s a shockingly low number, especially considering 58% of people trust strangers.
When it comes to building a strong culture at work, a foundation of trust is imperative. Without a strong culture, there is employee disengagement, loss of productivity, and a higher turnover.
By regularly engaging in transparent communication and encouraging feedback from your employees, you can create an environment that is constantly improving.
But that’s not all effective performance reviews can do for your company. They’re a great way to boost employee engagement because when someone feels heard and valued, they’re far more likely to be productive at work.
Performance reviews are also an opportunity to set goals with your employees and give them a sense of purpose and direction in their job. Career progression is important for employee retention. Without it, you run the risk of losing talent because they feel unchallenged and underappreciated.
When should I conduct performance reviews?
Performance reviews are essentially a scheduled circuit breaker for both management and employees. But how often you decide to incorporate them into your organisation or business's schedule, depends entirely on your culture and company size.
For instance, if direct feedback is incorporated into your day-to-day already, you might decide to skip quarterly reviews. Similarly, if management is stretched thin across a large number of employees, conducting multiple reviews across the year might not be achievable.
It may also depend on what you’re wishing to measure. Quarterly reviews are a good way of checking in on employees regularly and touching base on their short-term goals. Biannual reviews are a good way of marking a halfway point in the year and can be an opportunity to focus on development.
Annual reviews are a more traditional approach, with 70% of companies choosing to administer them this way. However, a survey conducted by Lawpath found that 67% of respondents preferred more regular feedback to only sitting for a review once a year.
Whichever review schedule works best for you, make sure your employees know when they should be expecting it. Make your review process part of your company’s routine, so your employees don’t feel ambushed and underprepared.
How to conduct a performance review
Make sure the employee knows how you’re measuring performance
No one likes to feel blindsided. Let your employees know what rating scale you’re using to measure their performance and what they’re being measured on.
For example, some common performance measures are:
Quality of work
Whether they are meeting objectives
Leadership, communication & ability to work in team
Progress towards personal career goals
Always let your employees know what to expect when you can, so they feel like you’re on a team, not like it’s you against them.
Draft a meeting agenda
Make sure you structure your meetings strategically and don’t dwell on the negatives for too long. Better yet, frame your criticism constructively and as something you and your employee can work together to improve upon.
Your agenda might look something like this:
Employee reflection - How do they rate their own performance?
Has the employee met their goals?
Where have they excelled?
Where do they need to improve?
Creating an agenda will help your meeting stay on track and make sure you tick off every key element you want to discuss. If you’re feeling anxious about providing constructive feedback, practice using the SBI approach (skip to number 6 to learn more about this).
Ask your employees to rate their own performance
Asking your employees to rate their own performance means you’re engaging them in the process of their development. A review isn’t just something that they’re being subjected to - they’re an active participant.
It shows you value their input and will let you know whether your thought processes are in alignment or not. And who knows - maybe their insights will bring interesting observations you hadn’t considered before to light.
Emphasise the positives
Start with the positives and emphasise them over the negatives. Starting by acknowledging an employee’s efforts makes them feel valued, and it also means they’ll be more open to receiving constructive criticism.
Regardless of what you’re saying, your points should always be backed up with examples - whether it’s data related or situational. This means you’re making your feedback clear and fair.
Be mindful of your phrasing
Delivering information tactfully is an art - but an important one to master when you’re dealing with the happiness of employees at work. When delivering feedback, make it actionable, specific, and respectful.
A helpful framework to use during these reviews is the SBI approach.
Situation: What was the specific situation and what occurred at that time?
Behaviour: What was the behaviour the employee displayed?
Impact: What were your thoughts and feelings in response?
Using this method means your feedback isn’t vague or too general to grasp. It’s honest, to the point, and shows you’ve really thought about their performance.
Recognise their performance
It’s important to ensure your top-performing employees are getting the recognition and reward they deserve. There are three types of recognition: day-to-day, informal and formal recognition.
While day-to-day and informal recognition will be given out regularly, formal recognition is usually reserved for those 5-10% of employees who are high-performers. This will usually include a special reward but it can also be an opportunity to increase their salary or offer a promotion.
Clarify next steps
So, where to next? End the meeting by collaborating and agreeing on the employee’s next objectives. If they require additional training to learn new skills, improve upon weaknesses, or grow within the company, now is the time to commit to a plan.
Using their performance as a guideline, set out new goals they should hopefully reach by the time their next review comes around. It’s helpful for an employee to know what’s expected of them and to feel supported in their development.
Keep a record of it
Put your meeting in writing and share it with your employee, so there’s a written record of how the meeting progressed. Note what you discussed, any observations you had, and detail what goals (and actions) you both agreed to take.
Make sure you get a signature from your employee, as this is an acknowledgment of the meeting taking place, as well as a confirmation that they have read and understood the contents in the document.
Having a written account of the review means you can keep track of employee goals and development, refer back to past reviews when reflecting on employee performance in the future and make sure everyone is on the literal same page moving forward.
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