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How to Conduct Better Performance Reviews

Transform the dreaded annual check-in into a gateway for growth

Updated: December 19, 2023
managering conducting performance review with her employee

Employees crave feedback about their work and overall job performance. But too often, they either aren’t getting it or aren’t getting it in a way that is helpful. According to Gallup, “Only 26% of employees strongly agree that the feedback they receive helps them do better work.” Why so low?

Let’s be clear – mentioning performance reviews often causes employees and managers to cringe. Unclear expectations, inconsistent feedback, and not having a straightforward review process are just a few reasons for the dread.

But all that stops today as we explore how to conduct better performance reviews in your business. When done well, this process will engage your employees and set them up for continued success.

What is a performance review?

Performance reviews are two-way conversations between employees and their supervisors to discuss overall work performance. This includes accomplishments, strengths, and development opportunities during a specific time period.

Typically, companies conduct yearly performance reviews, completed for all employees at a common time or on each employee’s anniversary date. Although past performance is discussed, the goal is to use those insights to plan for future goals, training, support, and ongoing professional development experiences.

Why are performance reviews important?

When done effectively, performance reviews can motivate, engage, and support the development of your team members. The valuable feedback and future training planning help individuals see how their contributions support the organization’s success and their individual continued career path and skill set.

It is amazing how a good performance review process can empower employees. When the review is employee-centered, feedback is actionable and ongoing, and the conversation two-way, both employees and managers benefit.

Let’s explore some of the ways your organization can support its managers and staff with a better performance review process.

“When the review is employee-centered, feedback is actionable and ongoing, and the conversation two-way, both employees and managers benefit,”

Pros & cons of performance reviews

  • Builds employee accountability, ownership, and empowerment
  • Aligns individual actions with business goals to drive the organization forward
  • Informs fact-driven personnel decisions based on documented data
  • Ineffective when not conducted or managed properly
  • Demotivating if they do not inform promotion or compensation decisions
  • “Check-the-box” activity, if not used to inform future employment decisions

Tips to improve performance reviews

1. Establish a performance culture

Prioritizing ongoing feedback and support in your business helps each individual utilize their unique skills and experiences to contribute to the success of the company. In this type of environment, expectations are clearly communicated, goals are set and tracked, and resources are provided to support individual attainment.

Organizations that have a strong performance culture are characterized by a focus on continuous learning, recognition and appreciation of contributions, individual empowerment, accountability, and employee engagement.

2. Nurture honest communication

Frequently performance reviews are ineffective because the feedback managers provide their employees tends to be general, non-actionable, and conflict-avoidant. Of course, you want to share positive comments recognizing an employee’s strengths and contributions. But providing constructive and objective feedback about areas that aren’t meeting expectations is also important. Normalize an environment of transparent, open, honest, two-way communication where positive and challenging conversations are regularly engaged.

Additionally, conversations about performance should be ongoing. The focus should be on discussing the positive and negative aspects of an individual’s performance, delivered timely with clear next steps that will strengthen and develop key areas.

3. Align expectations

Employees need to know how their individual efforts contribute to the organization’s success. Lining up the individual performance expectations with the organization’s strategic goals is the key difference between just doing a job versus owning and feeling empowered and accountable for your contributions.

At the beginning of each new performance period, discuss with your employee the organizational goals for the next 12 months and how their areas of responsibility, projects, and individual tasks will support the company in reaching those goals. Based on this, individuals can better translate those into their goals for the year.

4. Set goals

It is important to help employees establish goals at the start of the review period, so there is clarity and agreement around expectations and what success looks like. The goals should have clear timelines and milestones and align with the strategic goals of the organization, individual responsibilities, and the person’s professional development aspirations.

Track progress consistently throughout the year through formal and informal discussions. Both employees and managers should document what has been achieved, along with any expectations that have been missed, in real time so it can be referenced later during the annual and ongoing performance-related meetings.

5. Track progress

The annual performance review is an opportunity to discuss what was accomplished and plan for the next year/review period. But since this only happens once a year, this conversation shouldn’t be the first time a performance issue or recognition of an outstanding job is shared. Instead, regular and ongoing check-ins focusing on progress, accomplishments, setbacks, and collaboratively troubleshooting problems are a way to discuss these items and greatly enhance your overall performance review process.

6. Utilize technology

Performance management software will streamline your performance review process. Having a clear way of gathering and communicating performance-related information is important. A performance management system, either stand-alone or embedded in your HRIS, can make this process much easier and more transparent for your employees.

7. Give feedback

One of the biggest places managers struggle – and why many employees find performance reviews not very helpful – is the area of feedback. So how do you provide effective and constructive feedback?

  • Use specific examples and evidence to support your evaluation of skills and goals.
  • Provide actionable and measurable feedback.
  • Consider what support is needed from the manager or organization to increase the likelihood of success.
  • Create a follow-up timeline to track progress.
  • Focus on behaviors and results, not personal traits.
  • Use a balanced approach of praise and constructive criticism.

And you don’t have to wait for the formal performance review meeting or 1:1 check-ins to do so. According to a survey by PWC, nearly 60% of employees surveyed stated that they would like feedback on a daily or weekly basis, which highlights sharing often and more regularly is key.

Peer feedback is another option. Sometimes hearing from peers gives a more comprehensive understanding of one’s performance. This can be done by

  • Including 360 feedback in the annual performance review.
  • Providing informal opportunities for team members to give “shout outs”.
  • Utilizing team collaboration tools for employees to provide feedback.

Note: finding a good balance between inviting objective and helpful feedback from colleagues while strengthening healthy and collaborative work relationships can sometimes be delicate. Consistently evaluate when and at what level peer feedback is helpful.

8. Explore growth opportunities

Don’t let the performance review process end without having a future-focused discussion about how individuals can continue to grow in their roles and the company overall. It is helpful to explore the employee’s professional development goals, what career progression looks like in your organization, and what specific experiences an individual can pursue to continue growing. This could include training, certifications, and leadership development which can be tracked through a learning management system such as Absorb LMS.

9. Make employment-related decisions

Performance reviews often lack impact on employment-related decisions by upper management. But when coupled with the previously mentioned ideas, the performance review process suddenly becomes a fact and evidence-rich process for making decisions. Upper management can use performance reviews when deciding promotions, recognitions, development opportunities, pay, and reassignments or terminations.

The Bottom Line

Providing consistent, objective, and open feedback on performance is crucial for enhancing employee engagement and productivity. By conducting better performance reviews, employees will benefit from growth and development opportunities while understanding how they contribute to the business’s success. Moreover, an effective performance review process enables employees to achieve their individual goals successfully and offers the necessary support for them to improve in areas identified for development.

Performance Review Frequently Asked Questions (FAQs)

A performance review is a two-way conversation that evaluates an employee’s performance over a period of time and supports future career, professional development, goal setting, and work plans.

Performance reviews are generally conducted annually. To ensure employees receive ongoing, objective, and helpful feedback, adopt a schedule of more frequent check-ins to discuss progress on performance review goals and issues.

The performance review should include both the employee and manager. Offering the opportunity for both to assess and provide comments regarding the employee’s performance helps maintain two-way engagement. Additionally, it’s optional to include coworker and other stakeholder feedback.

Using a stand-alone platform or functionality in your HR software for small business can significantly improve the performance review process for your organization. Your employees will have access to their goals, be able to track progress, and document what they have accomplished. The software can make the evaluation process easier and more collaborative for managers by viewing employee inputs and self-evaluations in real-time.