An employee performance review can be a fantastic opportunity to boost engagement and drive employee success. Despite this fact, many employees still consider them to be time-consuming, biased, and ineffective. In fact, according to a survey conducted by Gallup, only one in five employees agreed that their company’s performance practices motivated them. Even more concerning is that many organizations claim to have stopped performance appraisals entirely. And this is a problem as a lack of constructive feedback and guidance can have a direct impact on performance and productivity.
So, what’s the key to success? How do you conduct an effective and motivating employee performance review?
In this post, we will share valuable tips to help you plan and conduct a successful employee appraisal. We will also discuss how to measure employee performance and the benefits of using performance management software to streamline and enhance the process.
Table of Contents
Table of Contents
What are performance reviews?
An employee performance review, also known as a performance appraisal, is a critical component of an organization’s overall employee performance management strategy. Essentially, the aim is to discuss the impact of an employee’s performance on the business and define specific actions to help them grow and develop.
Unlike competency assessments which focus primarily on the specific skills and abilities of an employee, performance reviews are an opportunity to regularly:
- Evaluate an employee’s output.
- Identify their strengths and weaknesses.
- Create and review expectations, standards, and rules.
- Provide guidance on any behaviors or other issues that they need to improve.
- Find out more about an employee’s professional plans and expectations for the future.
- Remind an employee that you value their work and support their development.
- Set performance goals for the future to help employees grow and develop.
Employee performance reviews have formed an integral part of human resources development practices for a number of decades now. However, not all organizations appreciate the value that they can bring, both to the business and to employees. As a result, many companies fail to invest the time and resources required to build an effective performance review strategy. Many more have stopped doing them altogether. And this can be a risky approach.
Why conduct performance reviews?
Employee performance management is an essential HR tool that helps you get the most from your workforce. The right approach helps you keep your employees motivated, valued, and productive.
Before we discuss how to measure employee performance effectively, let’s look at some of the specific benefits of conducting regular employee performance reviews.
- Performance reviews help you align employee performance with your expectations and the specific strategic objectives of your business.
- Performance reviews also enable you to identify and address potential performance gaps before they have a negative impact on the overall productivity of your business.
- Sharing constructive feedback gives employees a clear sense of direction. Moreover, the right feedback can help them develop professionally and expand their skill set.
- Conducting regular performance appraisals can be a great tool to motivate your workforce and raise employee morale. This is because when employees understand how their performance impacts the business, they have a structured incentive to work harder and continuously improve.
- Offering two-way feedback helps your workforce feel valued and heard. This boosts employee engagement and satisfaction levels. It also helps you nurture an inclusive working environment.
- If you use performance management software to manage your reviews, you get access to all the tools you need to manage performance reviews for remote employees. That way, you can maintain open lines of communication with employees who you don’t see regularly. You can also use these reviews to identify if remote employees need any extra support, resources, or training to help them meet their performance objectives.
- Finally, regular performance reviews help you nurture a culture of open dialogue. This helps you build an organization based on trust and transparency.
5 tips for a flawless performance review
When done well, conducting regular performance reviews can be a highly effective tool for driving continuous improvement. When done poorly, both managers and employees can feel that the process is a frustrating waste of time. That’s why it’s so important to create and follow an employee performance review process that enables you to share and develop constructive feedback in an open and transparent setting.
Here are a few tips to help you create a flawless performance review.
Modernize the employee performance review process
The way that many businesses operate has changed a great deal over the past few years. For one thing, working models have shifted since the start of the pandemic and increasing numbers of employees are now working remotely. For another, technology has evolved, and companies now have access to all manner of digital tools and solutions to streamline their internal processes.
Employee performance reviews need to keep up with this changing landscape.
Traditionally, performance appraisals were formal meetings that were held once a year. These appraisals were mainly focused on salary reviews, raises, and dismissals and they had little impact on an employee’s performance. As a result, many companies started to question whether employee performance reviews were worth the time and resources. Thankfully, this mentality is now shifting towards a modernized continuous performance management approach.
For example, instead of relying on formal annual assessments, hold shorter and more informal reviews every quarter or even every month. Instead of following an exclusive top-down approach, encourage 360 feedback. Nurture an environment of continuous development and implement initiatives to keep your workforce motivated and engaged. And, perhaps most importantly, make sure you are using performance management software to support the entire process.
This modern approach to performance management will help you get constructive and actionable feedback from your appraisals. It will also make it much easier to effectively manage the performance of your remote employees.
Make it a two-way conversation
When you conduct your employee performance reviews, make sure they are two-way conversations where both managers and employees actively participate. The employee being reviewed should be engaged in the conversation, not passively listening to one-directional feedback. Encourage employees to share their opinions and ask them follow-up questions. Remind them that they are in a safe environment where they can voice any concerns or suggestions. This approach will make it much easier to identify strategies and objectives for continuously improving their performance and development.
It’s also important to ask employees to review their own performance. Are they meeting their own expectations? Are there any tools, resources, or training opportunities that would help them perform better? Can they offer any suggestions to improve your management style?
Don’t limit an employee performance review to performance, either. These appraisals can be a great opportunity to discuss other aspects of an employee’s role within the company. This includes career growth and development, alignment with organizational goals, and engagement challenges, for example.
Keep feedback constructive
A performance review isn’t always going to be filled with praise and compliments. More often than not, you will need to have difficult conversations when employees are not meeting expectations. When this happens, make sure you provide constructive feedback. Don’t just point out an employee’s faults. Offer guidance and suggestions for how they can address any performance issues.
Aim to keep feedback balanced, too. Discuss both their strengths and weaknesses in equal measures and try to be positive with what you say. A good strategy for this is framing the conversation around what an employee needs to stop doing, what they need to start doing, and what they should continue doing. This will give them a constructive roadmap to improve their performance.
Constructive feedback should work both ways, too. It’s just as important that an employee feels that their manager is meeting their performance expectations. The more open, honest, and transparent both parties can be with the feedback they share, the easier it will be to identify opportunities for improvement.
Be specific during your employee performance review
It’s important to be as specific as possible when you share feedback during an employee performance review. Provide the employee with as much detailed information as possible and use data and specific examples to back up your feedback. The more precise you can be, the easier it will be for the employee to understand your feedback without feeling judged or defensive.
For example, if an employee is underperforming because they are frequently late for work, tell them the exact number of days that they failed to arrive on time over the past month. And make sure that they understand the impact that this is having on the rest of the team.
Be specific with performance goals and objectives, too. These goals should address the areas for improvement that you have identified and include a clear roadmap to success. Objectives should also be aligned with the specific requirements of a role and an employee’s personal development goals.
Encourage employees to respond
Finally, as we mentioned earlier, two-way conversations are essential for productive employee performance reviews. With each point you make, pause, give the employee a moment to reflect on it, and then encourage them to respond. Involve them in each stage of the process.
Do they agree with what you are saying? If so, how do they think they can address the issue? If not, can they provide any specific examples that contradict what you are saying?
Active participation is a must. The feedback that an employee provides is just as important as the feedback you are giving them. Make sure they understand that you value their honest opinions. You might discover, for example, that performance issues are down to a clash with a manager’s leadership style or due to a lack of resources. You can then address these issues and open up new opportunities for performance development.
How to prepare for a performance review
We are going to finish today’s guide by sharing a few best practices to help you fully prepare for an employee performance review.
However, there’s one important aspect that you need to consider before you prepare an appraisal: make sure you have a clear structure for your employee performance reviews. Firstly, you need to understand the types of reviews that you are going to conduct. Will you focus on 360 performance reviews only? Or will you also encourage peer reviews and self-assessments? Secondly, you need to determine how often you will be conducting these reviews, and how you will analyze the feedback that you collect.
Once you’ve defined a clear review management process, you can start preparing for your review.
Here’s what you need to do.
Use performance management software
The best way to create an effective employee performance review process is by using the right tools and software to automate and streamline the process. The best solution for this is performance management software.
An effective performance management software solution takes into account a number of key characteristics. These include performance expectations, appraisals, disciplinary policies, and recommendations. It promotes continuous development and guides managers so that they can identify, track and improve employee performance. It provides you with features for preparing your employee performance reviews, and tools for analyzing the feedback that you collect. Performance management tools usually also include features for tracking and monitoring progress, generating reports, setting goals, and collecting real-time feedback.
For example, you can use Factorial’s performance management software to:
- Gain insight into your workforce with 360-degree reviews.
- Schedule regular performance review cycles in order to make strategic decisions based on qualitative and quantitative data.
- Tailor employee evaluations to the performance needs of your company.
- Generate data to help you identify performance gaps and areas for improvement.
- Track the progress of each employee performance review.
- Automate your performance review processes.
- Access feedback directly through the platform.
You also get access to a 360 performance review template that you can use to evaluate where there is room for improvement in your business. That way, you get access to the right feedback so that you can support your employees at each stage of their development.
Gather employee performance review data
The next important stage when you prepare for an employee performance review is gathering data. This enables you to get a clearer picture of an employee’s current and past performance. You also get access to clear and objective evidence to support the feedback that you provide employees. Plus, collecting and analyzing the right employee performance metrics will also make it easier to define clear performance objectives for each employee that you review.
Here are a few examples of where you can find this data:
- Notes from previous employee performance reviews and check-ins
- Feedback from self-assessments
- Engagement and pulse surveys
- Ranked performance scales
- Goal progression reports
- Hiring documents and job descriptions for each role
- Disciplinary reports
- Input and 360-degree feedback from other managers or colleagues
- Quantitative measurements (sales reports, call records, deadline reports, etc.)
- Qualitative measurements (client feedback, personal observations, etc.)
- Learning and development reports
- Quality of work reports
- Employee performance metrics (you can access all these directly from the dashboard included in Factorial’s performance management software)
- General HR KPIs such as absence rates, timekeeping, etc.
Prepare the right employee performance review questions
Once you’ve prepared your data, it’s time to work on the questions that you will ask during your employee performance review. This stage is critical as unless you ask the right questions, you won’t get the feedback you need to design a clear roadmap for continuous improvement.
It’s a good idea to design a template for this (such as the one we mentioned above). That way, you won’t forget to cover any important areas during an appraisal. Make sure you include a mix of questions that take into account the quality of an employee’s work, their goals for the future, self-reflection, and suggestions for improvement.
Here are a few performance review examples that you can include in your template:
- What are some of your biggest achievements this past quarter?
- Do you feel you are on track to achieve your professional goals?
- Which goals were difficult for you to reach? Why?
- What part of your job do you like the most?
- Which area of your performance would you like to improve? How do you think you can achieve this?
- Is there anything specific that’s preventing you from performing to the best of your abilities? How can we overcome this obstacle?
- How can I better support you?
Select the right setting for your employee performance review
When you conduct an employee performance review, make sure you pick the right setting. The environment you choose can have a big impact on the outcome of the appraisal.
Make sure the location you pick is quiet, private, and comfortable so that the employee feels at ease. If you’re conducting a remote review, make sure you use a reliable platform with a stable connection and that your colleagues know not to interrupt you during the performance appraisal. Also, consider the time of day that you will be holding your review. You are far more likely to have a productive session on a Tuesday morning than a Friday afternoon when an employee might be more focused on the weekend ahead.
Employee performance reviews: wrapping up
Finally, don’t forget that the work doesn’t end once an appraisal has finished. Once you’ve completed your employee performance review, analyze your feedback and define actionable objectives for the future. Send the employee a performance review evaluation and communicate clear goals. Then provide ongoing feedback to ensure that the employee is on track to hit their objectives by their next employee performance review.
And there you have it. By following the right strategies and using the right performance management software you can get the most from your reviews and develop a productive and motivated workforce.