{"id":87840,"date":"2022-12-01T21:31:55","date_gmt":"2022-12-01T19:31:55","guid":{"rendered":"https:\/\/factorialhr.com\/blog\/?p=87840"},"modified":"2026-02-12T12:56:40","modified_gmt":"2026-02-12T10:56:40","slug":"performance-reviews","status":"publish","type":"post","link":"https:\/\/factorialhr.com\/blog\/performance-reviews\/","title":{"rendered":"Employee Performance Reviews: Complete Guide"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Constructive feedback is vital to employee development. It helps your employees understand <\/span><b>what your performance expectations are<\/b><span style=\"font-weight: 400;\">, and it also helps you <\/span><b>align your workforce with your overall business objectives<\/b><span style=\"font-weight: 400;\">. That\u2019s why it\u2019s so important to have an established system in place for measuring performance, including a regular employee performance review and effective competency assessment procedures.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, this isn\u2019t always easy.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In today\u2019s post, we are going to share everything you need to know about employee performance reviews and competency assessments. We will look at what they are, how they differ, and the pros and cons of both evaluation methods. We will also discuss<\/span><b> how using the right employee performance software can help you create an effective performance management process for the good of your business<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<div class=\"factorial-banner inline-banner banner-freebie category-hr-development\"\n    data-banner-id=\"179964\"\n    data-banner-type=\"freebie\"\n    data-category=\"HR Development\">\n    <div class=\"banner-content\">\n        <div class=\"banner-text\">\n                            <h4>Get your free 360 Degree Feedback Template<\/h4>\n            \n                            <ul class=\"banner-checklist\">\n                                                                        <li class=\"not-prose\">Collect feedback from peers, managers, and direct reports<\/li>\n                                                                                                <li class=\"not-prose\">Get a complete view of employee performance<\/li>\n                                                                                                <li class=\"not-prose\">Free ready-to-use template<\/li>\n                                                            <\/ul>\n            \n                            <a href=\"https:\/\/factorialhr.com\/templates\/performance-appraisal-template\"\n                    class=\"factorial-cta-button not-prose freebie\" data-cta=\"freebie\" data-cta-position=\"inline-banner\">\n                    Download for free                <\/a>\n                    <\/div>\n\n        <div class=\"banner-image has-image\">\n            <img decoding=\"async\" src=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2025\/12\/17164313\/template.png\" class=\"not-prose\" \/>\n        <\/div>\n    <\/div>\n<\/div>\n<h2><b>Why conduct employee performance reviews?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Employee performance management is an <\/span><b>essential HR tool that helps you get the most from your workforce<\/b><span style=\"font-weight: 400;\">. The right approach helps you <\/span><b>keep your employees motivated, valued, and productive<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to a recent study by Deloitte,<\/span> <a href=\"https:\/\/www2.deloitte.com\/bd\/en\/pages\/human-capital\/articles\/performance-mgmt-is-broken.html\"><span style=\"font-weight: 400;\">only 8% of companies believe <\/span><\/a><span style=\"font-weight: 400;\">that their current performance management process drives high levels of value, and 58% claim that it is not an effective use of their time<\/span><span style=\"font-weight: 400;\">. Unless you design and implement <\/span><b>an effective system for measuring performance<\/b><span style=\"font-weight: 400;\">, you risk alienating high performers, damaging employee engagement, and wasting valuable time and resources.<\/span><\/p>\n<h3>Benefits of conducting regular employee performance reviews<\/h3>\n<p><span style=\"font-weight: 400;\">Before we discuss how to measure employee performance effectively, let\u2019s look at some of the <\/span><b>specific benefits of conducting regular employee performance reviews<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Performance reviews help you <\/span><b>align employee performance <\/b><span style=\"font-weight: 400;\">with your <\/span><b>expectations <\/b><span style=\"font-weight: 400;\">and the specific <\/span><b>strategic objectives<\/b><span style=\"font-weight: 400;\"> of your business.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Employee performance reviews also enable you to <\/span><b>identify and address potential performance gaps<\/b><span style=\"font-weight: 400;\"> before they have a negative impact on the overall productivity of your business.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Sharing constructive feedback gives employees a <\/span><b>clear sense of direction<\/b><span style=\"font-weight: 400;\">. Moreover, the right feedback can help them <\/span><b>develop professionally and expand their skill set<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Conducting regular performance appraisals can be a great tool to <\/span><b>motivate your workforce and raise <\/b><a href=\"https:\/\/factorialhr.com\/blog\/employee-morale-pms\/\"><b>employee morale<\/b><\/a><span style=\"font-weight: 400;\">. This is because when employees understand how their performance impacts the business, they have a structured incentive to work harder and continuously improve.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Offering two-way feedback <\/span><b>helps your workforce feel valued and heard<\/b><span style=\"font-weight: 400;\">. This boosts <\/span><b>employee engagement and satisfaction levels<\/b><span style=\"font-weight: 400;\">. It also helps you nurture an inclusive working environment.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If you use <\/span><b>performance management software<\/b><span style=\"font-weight: 400;\"> to manage your reviews, you get access to all the tools you need to manage <\/span><a href=\"https:\/\/factorialhr.com\/blog\/performance-review-for-remote-employees\/\"><span style=\"font-weight: 400;\">performance reviews for remote employees<\/span><\/a><span style=\"font-weight: 400;\">. That way, you can <\/span><b>maintain open lines of communication with employees who you don\u2019t see regularly<\/b><span style=\"font-weight: 400;\">. You can also use these reviews to identify if remote employees need any extra <\/span><b>support, resources, or training to help them meet their performance objectives<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Finally, regular employee performance reviews help you <\/span><b>nurture a culture of open dialogue<\/b><span style=\"font-weight: 400;\">. This helps you build an organization based on <\/span><b>trust and transparency<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<h2><b>5 ways of measuring employee performance &amp; examples<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Let\u2019s begin by pointing out that <\/span><b>there is no one \u201cright way\u201d of evaluating and <\/b><a href=\"https:\/\/factorialhr.com\/blog\/employee-performance-management\/\"><b>managing employee performance<\/b><\/a><b>.<\/b><span style=\"font-weight: 400;\"> The truth is, many businesses adopt several models. After all, the more information and data available, the better off you are.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here are some different tactics that many businesses implement to have a well-rounded understanding of their team\u2019s efforts.<\/span><\/p>\n<h3><b>Use a 9-box grid for employee performance reviews<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">A <\/span><a href=\"https:\/\/factorialhr.com\/blog\/9-box\/\"><span style=\"font-weight: 400;\">9-box grid<\/span><\/a><span style=\"font-weight: 400;\"> is <\/span><b>a performance management tool that allows employers to consider and evaluate employee performance and potential.<\/b><span style=\"font-weight: 400;\"> Essentially, it is a 3\u00d73 square chart (9 boxes total) with the x-axis representing potential and the y-axis representing performance. During evaluations, employees receive a numerical score for their potential and performance. Then, managers plot these scores onto the 9-box grid.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Afterward, employers look into the specific archetypes that define employees based on their 9-box results. Those who receive both high performance and potential scores are star employees who often advance up the career ladder fairly quickly. Whereas those who have high performance but low potential are so-called workhorses that might be well-placed in their current position.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">9-box charts are an excellent way for employers to make sure that employees are a good fit for their given roles. And, <\/span><b>they can be especially effective when used in tandem with career pathing tools<\/b><span style=\"font-weight: 400;\">, like <\/span><span style=\"font-weight: 400;\">Factorial\u2019s <a href=\"https:\/\/factorialhr.com\/measure-objectives-okr\">OKR software<\/a><\/span><span style=\"font-weight: 400;\">, to ensure that employees are fulfilling their long-term professional development objectives.<\/span><\/p>\n<h3><b>360-degree feedback during performance reviews<\/b><\/h3>\n<p><span style=\"font-weight: 400;\"><a href=\"https:\/\/factorialhr.com\/blog\/360-feedback-reviews\/\">360-degree feedback<\/a> is <\/span><b>a way of measuring employee performance in which an employee\u2019s manager, peers, direct reports, and customers provide feedback.<\/b><span style=\"font-weight: 400;\"> This is not to be confused with 180-degree feedback, in which only an employee\u2019s manager and colleagues are part of the process.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Having more participation provides employers with a <\/span><b>wider range of information<\/b><span style=\"font-weight: 400;\"> and a <\/span><b>more comprehensive understanding<\/b><span style=\"font-weight: 400;\"> of the employee\u2019s performance, skill sets, and areas of improvement. Some employers choose to use a <\/span><a href=\"https:\/\/factorialhr.com\/templates\/360-review-template\"><span style=\"font-weight: 400;\">360-degree excel template<\/span><\/a><span style=\"font-weight: 400;\"> to organize, score, and keep track of questions. An even better and more reliable option is to manage 360 feedback with <\/span><a href=\"https:\/\/factorialhr.com\/performance-management\"><span style=\"font-weight: 400;\">performance management software<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<h3><b>NPS<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">An <\/span><a href=\"https:\/\/factorialhr.com\/blog\/nps\/\"><span style=\"font-weight: 400;\">NPS or \u201cNet Promoter Score\u201d<\/span><\/a><span style=\"font-weight: 400;\"> is <\/span><b>an <\/b><a href=\"https:\/\/factorialhr.com\/blog\/hr-metrics\/\"><b>HR metric<\/b><\/a><b> that reflects a customer\u2019s satisfaction, and loyalty.<\/b><span style=\"font-weight: 400;\"> And, depending on the employee\u2019s role, it can also be an indicator of performance. To determine an NPS, customers provide a number between 1-10 on how likely they are to recommend the company\u2019s product or services to other potential clients.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Frequently, <\/span><b>this score is taken into consideration when evaluating employees working in customer service or sales<\/b><span style=\"font-weight: 400;\">. It\u2019s not necessarily a stand-alone implication of strong or weak performance. Rather, it\u2019s more of a metric that allows employers to understand how employees interact beyond the office walls.<\/span><\/p>\n<h3><b>Absenteeism rate and performance reviews<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Another metric that employers will want to take into account when evaluating employee performance is their absenteeism rate. While it\u2019s not the sole indicator of performance quality, <\/span><b>high <\/b><a href=\"https:\/\/factorialhr.com\/blog\/employee-absenteeism\/\"><b>employee absenteeism<\/b><\/a><b> is a definite cause for concern.<\/b><span style=\"font-weight: 400;\"> Often, it means that employees are struggling with their responsibilities. As a result, they might be experiencing burnout, excessive stress, and illness due to a high workload.<\/span><\/p>\n<p><b>It\u2019s best to look at employee absenteeism in conjunction with other performance indicators.<\/b><span style=\"font-weight: 400;\"> For example, if an employee is frequently absent and is regularly experiencing communication problems with clients and colleagues, it might be a red flag worth investigating. They might feel overwhelmed or struggle with prioritization and time management.<\/span><\/p>\n<h3><b>Management by objectives<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Last but not least, we have management by objectives (MOB). Essentially, <\/span><b>MBO is a way of measuring employee performance based on their ability to achieve goals.<\/b><span style=\"font-weight: 400;\"> Under this model, employees play an active role in setting individual objectives and timeframes, based on the company\u2019s overarching strategic vision. Many employers implement management by objectives in order to boost engagement levels and productivity.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This model can be potentially effective for teams, and<\/span><b> increase feelings of collaboration and involvement.<\/b><span style=\"font-weight: 400;\"> However, note that it\u2019s a management structure that requires a high level of trust, communication, and psychological safety. Otherwise, employees might develop unhealthy work habits and the environment can become toxic. While being goal-focused is a definite asset,<\/span><b> it\u2019s important to simultaneously prioritize company cultural values and work-life balance.\u00a0<\/b><\/p>\n<div class=\"factorial-banner inline-banner banner-freebie category-hr-development\"\n    data-banner-id=\"179964\"\n    data-banner-type=\"freebie\"\n    data-category=\"HR Development\">\n    <div class=\"banner-content\">\n        <div class=\"banner-text\">\n                            <h4>Get your free 360 Degree Feedback Template<\/h4>\n            \n                            <ul class=\"banner-checklist\">\n                                                                        <li class=\"not-prose\">Collect feedback from peers, managers, and direct reports<\/li>\n                                                                                                <li class=\"not-prose\">Get a complete view of employee performance<\/li>\n                                                                                                <li class=\"not-prose\">Free ready-to-use template<\/li>\n                                                            <\/ul>\n            \n                            <a href=\"https:\/\/factorialhr.com\/templates\/performance-appraisal-template\"\n                    class=\"factorial-cta-button not-prose freebie\" data-cta=\"freebie\" data-cta-position=\"inline-banner\">\n                    Download for free                <\/a>\n                    <\/div>\n\n        <div class=\"banner-image has-image\">\n            <img decoding=\"async\" src=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2025\/12\/17164313\/template.png\" class=\"not-prose\" \/>\n        <\/div>\n    <\/div>\n<\/div>\n<h2><b>Examples of doing performance reviews<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Now that we\u2019ve gone through some of the best ways of measuring employee performance, let\u2019s take a look at how Netflix, General Electrics (GE), and Adobe manage performance.\u00a0<\/span><\/p>\n<h3><b>Netflix<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Every spring, <\/span><a href=\"https:\/\/www.businessinsider.com\/netflix-insiders-describe-how-its-360-feedback-reviews-work-2020-3\"><span style=\"font-weight: 400;\">Netflix uses 360 review techniques<\/span><\/a><span style=\"font-weight: 400;\"> to have an ample understanding of employee performance. During yearly reviews, <\/span><b>Netflix encourages their employees to reflect and provide honest feedback to their colleagues, supervisors, and direct reports.<\/b><span style=\"font-weight: 400;\"> Employees can discuss anything that they want about anyone in the company, whether they be working in an entry-level or executive role.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Although there is no set structure for these reviews, the company suggests that employees provide feedback using a \u201cstart, stop, continue\u201d template. This helps reviewers to organize their thoughts and provides reviewees with clear information about what they should start doing, stop doing, and continue doing.<\/span><\/p>\n<h3><b>General Electrics (GE)<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">In the past, General Electrics used a forced ranking system in which employees were evaluated annually and given a score based on their performance. Those who had a performance score in the bottom tenth percentile of the company were either denied promotion or terminated from their position.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In 2016, <\/span><a href=\"https:\/\/www.cnbc.com\/2015\/08\/19\/general-electric-rethinks-from-annual-job-reviews.html\"><span style=\"font-weight: 400;\">General Electrics decided to do away with this model<\/span><\/a><span style=\"font-weight: 400;\"> and <\/span><b>replaced rigid performance scores with continuous employee feedback and coaching.<\/b><span style=\"font-weight: 400;\"> Overall, this transition has paid off and has helped GE to build a more communicative and people-focused company culture.<\/span><\/p>\n<h3><b>Adobe<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Like General Electrics, Adobe previously managed performance through a forced ranking system and cast employees into four categories based on their performance scores: high performer, strong performer, solid performer, and low performer. Under this system, there were quotas that limited how many employees could qualify as high performers.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Needless to say, this \u201crank and yank\u201d system caused many cultural problems, undue stress for management, and excessive voluntary turnover.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Once they realized that quotas and forced ranking evaluations were causing damage, <\/span><a href=\"https:\/\/www.forbes.com\/sites\/davidburkus\/2016\/06\/01\/how-adobe-scrapped-its-performance-review-system-and-why-it-worked\/#1dbe876155e8\"><span style=\"font-weight: 400;\">Adobe decided to do away with them entirely<\/span><\/a><span style=\"font-weight: 400;\">. Instead, they opted to replace their scoring system with more informal and frequent check-ins. In these sessions, <\/span><b>managers review employee contributions, reward accomplishments, and provide and receive feedback.<\/b><span style=\"font-weight: 400;\"> Through their efforts, Adobe has managed to reduce voluntary attrition by 30%.<\/span><\/p>\n<h2><b>What questions should you ask during performance reviews?<\/b><\/h2>\n<p><img decoding=\"async\" class=\"alignnone wp-image-114440 size-full\" src=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2022\/12\/17220149\/performance-management.jpeg\" alt=\"performance reviews\" width=\"640\" height=\"427\" srcset=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2022\/12\/17220149\/performance-management.jpeg 640w, https:\/\/factorialhr.com\/wp-content\/uploads\/2022\/12\/17220149\/performance-management-300x200.jpeg 300w\" sizes=\"(max-width: 640px) 100vw, 640px\" \/><\/p>\n<p><span style=\"font-weight: 400;\">Determining which questions to ask is not always a straightforward process.\u00a0 However, we\u2019ve created some general guidelines to help you decide.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It is not enough to just go by numbers, but don\u2019t ignore them either. There should be a mixture of questions that take into consideration both quantity of work and quality of work.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Ask about an employee\u2019s career growth and goals.\u00a0 It is impossible to separate performance, motivation levels, and overall career goals.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Take a holistic approach while assessing employee performance.\u00a0 Think big picture and small picture.\u00a0 It\u2019s important to get an idea of what kind of work the employee is doing now and where they will go in 5 years.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Think about the employee\u2019s position in the context of the company.\u00a0 What kind of value do they add? Are they team players?\u00a0 At least some of your employee performance review questions should reflect how the employee helps to reach the company\u2019s objectives.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Ask them about how their job could be better.\u00a0 This will give you insight into any problems that might exist and also motivate your team.\u00a0 Feedback is central to cultivating a healthy workspace and a <\/span><a href=\"https:\/\/factorialhr.com\/blog\/high-performance-culture\/\"><span style=\"font-weight: 400;\">high-performance culture.<\/span><\/a><\/li>\n<\/ul>\n<h2><b>Sample of employee performance review questions<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Here are our favorite employee performance review questions to get at specific, measurable, achievable, relevant, and time-based goals.\u00a0 Below, you\u2019ll find examples of performance review questions for managers and employees alike.\u00a0 We\u2019ve also included some examples of questions for self-appraisals and one-on-one performance reviews.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Before performing a performance review, managers should ask themselves the following:<\/span><\/p>\n<p><b>Questions to measure adaptability<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Does the employee help develop strategies in line with our changing business priorities?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Has the employee been able to face this year\u2019s challenges with grit and grace?<\/span><\/li>\n<\/ul>\n<p><b>Questions to evaluate problem-solving skills:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Does the employee collaborate with peers and team members?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Do they help facilitate open conversation and an inclusive atmosphere?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Has the employee helped streamline routine processes or find unique solutions for adding value?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Is the employee able to practically implement creative recommendations?<\/span><\/li>\n<\/ul>\n<p><b>Questions to measure change management capabilities:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Does the employee communicate with management about changing priorities or resources?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Are they responsive to changing information and able to pivot away from a pre-planned course of action?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Does the employee look for novel applications of new technologies in order to increase efficiency?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Is the employee able to effectively translate strategies into action plans?<\/span><\/li>\n<\/ul>\n<h2><b>Employee performance review questions for managers<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">The following performance review questions are intended to help managers assess different employee skill sets and competencies. In order to get a complete picture of employee contributions, managers should remember to ask themselves about an employee\u2019s interpersonal skills and teamwork.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">How has (employee name) helped to contribute to the team\u2019s success over the past quarter?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">What are (employee name)\u2019s strong points? In which areas do they excel?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">How does (employee name) plan and organize their time?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">How does (employee name) carry out projects?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Where are opportunities for (employee name) to grow in their position?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">How does (employee name) interact with other members of the team? In what ways do they offer their support?<\/span><\/li>\n<\/ul>\n<div class=\"factorial-banner inline-banner banner-freebie category-hr-development\"\n    data-banner-id=\"179964\"\n    data-banner-type=\"freebie\"\n    data-category=\"HR Development\">\n    <div class=\"banner-content\">\n        <div class=\"banner-text\">\n                            <h4>Get your free 360 Degree Feedback Template<\/h4>\n            \n                            <ul class=\"banner-checklist\">\n                                                                        <li class=\"not-prose\">Collect feedback from peers, managers, and direct reports<\/li>\n                                                                                                <li class=\"not-prose\">Get a complete view of employee performance<\/li>\n                                                                                                <li class=\"not-prose\">Free ready-to-use template<\/li>\n                                                            <\/ul>\n            \n                            <a href=\"https:\/\/factorialhr.com\/templates\/performance-appraisal-template\"\n                    class=\"factorial-cta-button not-prose freebie\" data-cta=\"freebie\" data-cta-position=\"inline-banner\">\n                    Download for free                <\/a>\n                    <\/div>\n\n        <div class=\"banner-image has-image\">\n            <img decoding=\"async\" src=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2025\/12\/17164313\/template.png\" class=\"not-prose\" \/>\n        <\/div>\n    <\/div>\n<\/div>\n<h2><b>Employee performance reviews and competency assessments: similarities &amp; differences<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">As an HR manager or small business owner,<\/span><a href=\"https:\/\/factorialhr.com\/blog\/employee-performance-management\/\"> <span style=\"font-weight: 400;\">employee performance management<\/span><\/a><span style=\"font-weight: 400;\"> is an essential tool that helps you get the most from your workforce. It helps you <\/span><b>align the performance of your staff <\/b><span style=\"font-weight: 400;\">with your strategic objectives. It\u2019s also an effective tool for identifying potential<\/span><b> performance gaps <\/b><span style=\"font-weight: 400;\">before they have an impact on your company\u2019s overall productivity. Plus, the right approach helps you keep your employees <\/span><b>motivated, fulfilled, and valued<\/b><span style=\"font-weight: 400;\">. It gives them a <\/span><b>clear sense of direction<\/b><span style=\"font-weight: 400;\"> and the right feedback helps them <\/span><b>grow professionally and expand their skill set<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, in order to create a <\/span><b>high-performance culture<\/b><span style=\"font-weight: 400;\"> where people can perform to the best of their abilities, it\u2019s important to use the right approach. This means implementing a strategy that addresses <\/span><b>each stage of the<\/b><a href=\"https:\/\/factorialhr.com\/blog\/performance-management-cycle\/\"> <b>performance management cycle<\/b><\/a><span style=\"font-weight: 400;\">. Most companies use one of two approaches for this: <\/span><b>performance reviews<\/b><span style=\"font-weight: 400;\"> and <\/span><b>competency assessments<\/b><span style=\"font-weight: 400;\">.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">An<\/span> <span style=\"font-weight: 400;\">employee performance review<\/span><span style=\"font-weight: 400;\">, also known as a performance appraisal, is a <\/span><b>periodical assessment where you evaluate the performance of an employee<\/b><span style=\"font-weight: 400;\">. It\u2019s an opportunity to identify their <\/span><b>strengths and weaknesses<\/b><span style=\"font-weight: 400;\"> and establish <\/span><b>performance goals<\/b><span style=\"font-weight: 400;\"> for the future. Essentially, the aim of a performance review is to discuss the impact of an employee\u2019s performance and define specific actions to help them develop and grow.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A competency assessment, in turn, is a more <\/span><b>holistic approach to performance management<\/b><span style=\"font-weight: 400;\">. It involves <\/span><b>measuring and analyzing an employee\u2019s specific skills and abilities in line with the requirements of their role<\/b><span style=\"font-weight: 400;\">. Instead of focusing solely on how well they are performing, this approach also takes into account the training and resources they need in order to effectively perform their duties.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Although performance reviews and competency assessments are two distinct methods of evaluating employees, many companies use both approaches as part of their overall <\/span><b>performance management strategy<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<h2><b>Types of competency assessments<\/b><span style=\"font-weight: 400;\">\u00a0<strong>during performance reviews<\/strong><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">As we already mentioned, <\/span><b>a competency assessment focuses on the current abilities and <a href=\"https:\/\/factorialhr.com\/blog\/skills-gap\/\">skill gaps<\/a> of employees<\/b><span style=\"font-weight: 400;\">. The aim is to identify <\/span><b>which skills they need to develop in order to improve their overall performance<\/b><span style=\"font-weight: 400;\">. This helps you create the right <\/span><b>learning and development<\/b><span style=\"font-weight: 400;\"> strategy so that employees can improve their competencies and continuously grow as members of your organization.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Generally speaking, there are <\/span><b>3 different types of competency assessments<\/b><span style=\"font-weight: 400;\"> that you can use for this.\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>360-degree feedback<\/b><span style=\"font-weight: 400;\">. This is where you use a multi-input approach to collect feedback on the skills and competencies of an employee. This usually includes feedback from an employee\u2019s direct manager, feedback from the employee themself, and feedback from other members of their team, where appropriate. This helps you obtain a more objective evaluation based on multiple perspectives.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Self-assessment<\/b><span style=\"font-weight: 400;\">. This is where you ask an employee their opinion on their current skill levels and get them to identify in which areas they need more support and training. Essentially, it\u2019s about asking an employee what they think their strengths and weaknesses are and which job skills they need to develop in order to raise their performance levels.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Skill gap analysis<\/b><span style=\"font-weight: 400;\">. This process involves using a systematic approach to evaluate an employee\u2019s skills and competencies. The best way to do this is by using tools like a <\/span><b>9-box or <a href=\"https:\/\/factorialhr.com\/blog\/stack-ranking\/\">stack ranking<\/a><\/b><span style=\"font-weight: 400;\">. More on what the 9-box evaluation model is later in this post.\u00a0<\/span><\/li>\n<\/ul>\n<h2><b>Benefits of competency assessments<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Let\u2019s take a look at some of the <\/span><b>benefits of both performance reviews and competency assessments<\/b><span style=\"font-weight: 400;\"> to measure employee performance.\u00a0<\/span><\/p>\n<h3><b>Competency assessments: benefits<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Here are some of the benefits of conducting competency-based assessments:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Competency assessments help you <\/span><b>gather valuable feedback and data<\/b><span style=\"font-weight: 400;\">. You can monitor skill progression levels to understand how employee competencies are impacting productivity, especially if you use tools like the <\/span><b>9-box<\/b><span style=\"font-weight: 400;\">. You can then use the results to design actions for improvement and <\/span><b>personalized training plans<\/b><span style=\"font-weight: 400;\">. That way, employees get the training they actually need.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">They provide employees with a <\/span><b>platform to request training<\/b><span style=\"font-weight: 400;\"> when needed, which helps you build a <\/span><b>high-performance culture<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Constructive feedback can be used to identify who might be eligible for <\/span><b>bonuses or rewards<\/b><span style=\"font-weight: 400;\"> if you have an <\/span><b>employee recognition program<\/b><span style=\"font-weight: 400;\"> (such as <\/span><b>pay for performance<\/b><span style=\"font-weight: 400;\">).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Competency assessments are also a <\/span><b>useful system for identifying how effective your learning &amp; development programs are<\/b><span style=\"font-weight: 400;\">. If, for example, you offer training to an employee, but it has no impact on their performance, then you can then work to identify what the issue might be.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Competency-based assessments can help organizations develop a <\/span><b>wider business strategy based on sustainable growth<\/b><span style=\"font-weight: 400;\">. Because you evaluate an employee&#8217;s skills regularly, you can ensure that they remain up to date with evolving technology, for example. You can also <\/span><b>identify when re-skilling or up-skilling is needed<\/b><span style=\"font-weight: 400;\"> to help keep you relevant as an organization.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Because assessments are personalized to the specific competencies required for each role, you can get <\/span><b>valuable information that helps you understand each of your employees better<\/b><span style=\"font-weight: 400;\">. You can also use these sessions to assign <\/span><b>individual goals<\/b><span style=\"font-weight: 400;\"> to each employee in line with their current abilities.\u00a0\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Finally, competency assessments help you develop a <\/span><b>system of continuous improvement<\/b><span style=\"font-weight: 400;\"> based on regular 360-feedback. This helps your company run more efficiently and boosts your overall performance and productivity levels.\u00a0\u00a0<\/span><\/li>\n<\/ul>\n<h2><b>Downsides of competency assessments<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">There is no such thing as a perfect approach when it comes to employee performance management. This is because<\/span><b> all businesses are different, and all people are different<\/b><span style=\"font-weight: 400;\">. The key lies in weighing up the pros and cons in order to determine <\/span><b>which method would work best for the particular needs of your organization and your employees<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With that in mind, let\u2019s look at some of the cons of competency assessments to employee performance management.\u00a0<\/span><\/p>\n<h3><b>Competency assessments: downsides<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Here are some of the potential drawbacks of conducting competency assessments:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Competency-based assessments can <\/span><b>sometimes be overly focused on the skills an employee &#8220;should&#8221; have<\/b><span style=\"font-weight: 400;\">, rather than those they already possess. It\u2019s important to maintain a balance so that employees don\u2019t become demotivated.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It\u2019s <\/span><b>not always easy to define the specific skills that each role requires<\/b><span style=\"font-weight: 400;\">, especially for more nuanced positions. Before you launch a competency assessment program, it\u2019s important to clearly define the roles and responsibilities of each position in your company.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If your managers don\u2019t understand what a competency assessment is and how it should be conducted, there\u2019s a<\/span><b> risk that it could be managed in the same way as a performance review<\/b><span style=\"font-weight: 400;\">, which defies the purpose of the process.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">There\u2019s always a <\/span><b>risk that these sessions become more focused on employer needs rather than the needs of employees<\/b><span style=\"font-weight: 400;\">. That\u2019s why it\u2019s so important to use <a href=\"https:\/\/factorialhr.com\/blog\/write-the-perfect-self-appraisal-for-a-performance-review-free-template\/\">self-appraisals<\/a>, too. After all, an employee is usually far better equipped to tell you what skills they are lacking.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Finally, as with performance reviews, it\u2019s <\/span><b>not always easy to achieve complete objectivity<\/b><span style=\"font-weight: 400;\">. For example, employees might overestimate their skills. Or managers might underestimate an employee\u2019s competencies if there is an element of conscious or unconscious <a href=\"https:\/\/factorialhr.com\/blog\/bias-in-performance-reviews\/\">rater bias during performance reviews<\/a>.\u00a0\u00a0<\/span><\/li>\n<\/ul>\n<h2><b>Tracking employee performance with Factorial<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The best way to create an effective employee performance management system is by using<\/span><b> the right tools and HR software to automate and streamline the process<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The right employee performance software can help you track and evaluate<\/span><a href=\"https:\/\/factorialhr.com\/blog\/employee-performance-metrics\/\"> <span style=\"font-weight: 400;\">employee performance metrics<\/span><\/a><span style=\"font-weight: 400;\"> to help you <\/span><b>identify potential skills and performance gaps<\/b><span style=\"font-weight: 400;\">. It can also help you align the results of your reviews and evaluations with <\/span><b>concrete actions for learning and development<\/b><span style=\"font-weight: 400;\">. That way, you can create a clearly defined process based on <\/span><b>continuous improvement<\/b><span style=\"font-weight: 400;\">. Performance management tools usually also include features for tracking and monitoring progress reviews, reporting, goal setting, real-time feedback, and rewards for improved performance.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, <\/span><b>Factorial\u2019s performance management software<\/b><span style=\"font-weight: 400;\"> is a great solution for managing every aspect of employee performance at your company.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You can use it to:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Gain insight into your workforce with 360-degree reviews<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Schedule regular performance review cycles in order to make strategic decisions based on qualitative and quantitative data<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Generate data to help you identify performance gaps and areas for improvement<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Track the progress of each employee performance review\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Automate your performance review processes<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Access feedback directly through the platform<\/span><\/li>\n<\/ul>\n<h2><b>Defining and assessing competencies with Factorial\u00a0<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Factorial\u2019s employee performance software can also help you <\/span><b>manage your competency assessments more efficiently<\/b><span style=\"font-weight: 400;\">. This is because you get a variety of <\/span><b>competency assessment tools<\/b><span style=\"font-weight: 400;\"> to help you manage, automate, and streamline the entire process.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, our employee performance management software includes a<\/span>\u00a0<a href=\"https:\/\/factorialhr.com\/blog\/9-box\/\"><b>9-box grid<\/b><\/a><b> feature to help you with your competency assessments<\/b><span style=\"font-weight: 400;\">. With a 9-box grid, you can <\/span><b>visualize employee skills and potential on a scale<\/b><span style=\"font-weight: 400;\">, allowing you to make better, data-driven decisions. The 9-box can also be used to evaluate talent placement, improve succession planning, and identify performance issues and skill gaps. It facilitates employee growth and contributes to retention, engagement, and productivity.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In terms of defining and assessing employee competencies, <\/span><b>our 9-box grid can help you<\/b><span style=\"font-weight: 400;\">:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Recognize high-performing employees<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Support mid-range performers to help them improve their performance and move higher up the grid\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Identify employees who consistently underperform and develop appropriate performance improvement plans\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">All this enables you to <\/span><b>develop a system of performance reviews and competency assessments that promotes continuous growth and improvement in your organization<\/b><span style=\"font-weight: 400;\">. That way, you can be sure that you are getting the most from your workforce and that every member of your business is working toward a shared, common goal.<\/span><\/p>\n<p><a href=\"https:\/\/factorialhr.com\/request-demo\">Book a demo<\/a> to learn how you can make the most of your performance reviews!<\/p>\n<div class=\"factorial-banner inline-banner banner-freebie category-hr-development\"\n    data-banner-id=\"179964\"\n    data-banner-type=\"freebie\"\n    data-category=\"HR Development\">\n    <div class=\"banner-content\">\n        <div class=\"banner-text\">\n                            <h4>Get your free 360 Degree Feedback Template<\/h4>\n            \n                            <ul class=\"banner-checklist\">\n                                                                        <li class=\"not-prose\">Collect feedback from peers, managers, and direct reports<\/li>\n                                                                                                <li class=\"not-prose\">Get a complete view of employee performance<\/li>\n                                                                                                <li class=\"not-prose\">Free ready-to-use template<\/li>\n                                                            <\/ul>\n            \n                            <a href=\"https:\/\/factorialhr.com\/templates\/performance-appraisal-template\"\n                    class=\"factorial-cta-button not-prose freebie\" data-cta=\"freebie\" data-cta-position=\"inline-banner\">\n                    Download for free                <\/a>\n                    <\/div>\n\n        <div class=\"banner-image has-image\">\n            <img decoding=\"async\" src=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2025\/12\/17164313\/template.png\" class=\"not-prose\" \/>\n        <\/div>\n    <\/div>\n<\/div>\n<h2>Employee performance review FAQs<\/h2>\n<h3>Why would a manager have an employee complete a self-evaluation in terms of a performance review?<\/h3>\n<p>Self-evaluation is a great tool to use during employee performance reviews to encourage self-reflection on the employee&#8217;s side. A self-evaluation is a great opportunity for the employee to consider what actions they have taken and what they have contributed to the company and how those actions and contributions fit into the bigger picture. Self-assessments can lead to better conversations during performance reviews.<\/p>\n<h3>How to conduct a performance review for employee who needs improvement?<\/h3>\n<p>To conduct a performance review for an underperforming employee, prepare specific examples and discuss specific areas where they need to improve. Make sure to offer guidance on what steps you can take together to help them improve in those areas. Start by highlighting strengths, then clearly state the expectations that the employee missed using numbers and other data. Create a development plan together and schedule regular check-ins to align on future actions.<\/p>\n<h3>How do I automate employee anniversary and performance review reminders?<\/h3>\n<p>Automate employee anniversary and employee performance review reminders using specialized <a href=\"https:\/\/factorialhr.com\/\">business management software<\/a> like Factorial. Built-in workflows send automatic reminders so you don&#8217;t forget any important dates. Performance reviews are also automated based on your preferences.<\/p>\n<h3>How to conduct an employee performance review?<\/h3>\n<p>Conducting an employee performance review effectively involves preparing by reviewing goals and documented progress on achieving those goals. During the performance review, deliver balanced, unbiased feedback based on specific examples, and set the stage for a two-way conversation to set SMART goals for the future that foster employee growth as well as hitting business targets for your company.<\/p>\n<h3>How to prepare for employee performance review?<\/h3>\n<p>In order to prepare for a performance review, you should gather the data you have and review it carefully. Review any documentation you have at your disposal, check metrics and KPIs set at previous performance reviews, collect 360 degree feedback from managers and peers, and review the employee&#8217;s self-assessment. During the performance review, make sure that you are ready to speak objectively and openly, and that you are prepared with a development plan for future steps.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Constructive feedback is vital to employee development. It helps your employees understand what your performance expectations are, and it also helps you align your workforce with your overall business objectives. That\u2019s why it\u2019s so important to have an established system in place for measuring performance, including a regular employee performance review and effective competency assessment<a href=\"https:\/\/factorialhr.com\/blog\/performance-reviews\/\" class=\"read-more\"> [&#8230;]<\/a><\/p>\n","protected":false},"author":80,"featured_media":87841,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[350],"tags":[],"class_list":["post-87840","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-hr-development"],"acf":{"topics":"talent-performance-review"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v21.5 (Yoast SEO v21.9.1) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Employee Performance Review Guide (5 Methods) | Factorial<\/title>\n<meta name=\"description\" content=\"Stuck with an employee performance review? 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