Whether you are a manager conducting a performance review or an employee undertaking it, it is one of the most dreaded management practices. It is because managers have to evaluate each team member's performance and review it on a one-on-one basis. Moreover, people may not be excited about their performance being analyzed and discussed.
Regardless of how difficult it is for people, a performance review is necessary not only to decide on compensation and promotions and to know how people are carrying out their work.
Before delving into the types of performance reviews, first, let’s look at what a performance review is.
What is a performance review and its types
A performance review is a process where an employee's job performance and contributions are evaluated by their supervisor or manager. It typically involves assessing the employee's strengths, areas for improvement, and goal setting for future performance.
Types of employee performance review
Also known as performance appraisals or assessments, these can be formal or informal, depending on your organization’s size, industry, and policies. Here are some of the standard formats of these assessments:
Self Appraisal: As the name suggests, this is the process where employees assess their performance.
Peer to Peer Review: In a peer review, the manager does not rely on their judgment alone but also considers what the employee’s teammates have to say about them.
360 Degree Appraisal: This appraisal focuses on providing performance feedback to the employee from different sources such as colleagues, managers, and supervisors.
Continuous Feedback: This strategy complements performance appraisals. It encourages regular feedback between a manager, an employee, and peers.
Management by Objectives (MBO): It is a review method in which an employee’s performance is evaluated against quantifiable objectives.
Why is performance evaluation important?
A performance review is a great way to assess an employee's work and provide constructive feedback. According to a survey, 68% of employees feel satisfied with their jobs if they are provided consistent feedback.
Performance evaluation is important for several reasons:
As employees know the areas of improvement, they understand what to focus on to improve their performance.
Also, it allows acknowledging employees' achievements, thereby boosting their morale. Providing incentives based on the review encourages the employee to perform well and increases engagement.
When a vacancy arises, performance evaluation helps in deciding who can be tapped for promotion. Sometimes, managers need not hire talent from outside but can promote people who have performed exceptionally.
Performance evaluations help identify skill gaps or training needs. This information enables organizations to provide targeted training and development opportunities to enhance employee performance.
How to conduct a great performance review
Here are a few steps that will help you prepare for the performance review meeting
1. Prepare in advance
Before conducting a performance review, it's important to make some preparations. This includes:
Setting clear objectives for the review
Gathering feedback: Collect feedback from multiple sources, including your team members, peers, and other stakeholders. This will give you a well-rounded view of your team member's performance and will help you identify areas of improvement.
Reviewing performance data: Review performance data such as sales figures, customer satisfaction scores, and productivity metrics. This will give you an objective view of your team member's performance and will help you identify areas where they are excelling and areas where they need improvement.
Also, it is essential to maintain a performance record throughout the year so that you don’t base the evaluation on recent events.
Scheduling a time for the meeting that is most convenient for the employee. Setting aside 45 to 60 minutes for the meeting is a good idea as it gives sufficient time to discuss all the points in detail.
2. Create a comfortable environment
Performance reviews can be stressful for both the employee and the manager. To create a comfortable environment, choose a quiet and private location for the review. Start the meeting by acknowledging the employee's hard work and contributions to the team. By creating a positive atmosphere, you'll encourage open communication and make the review more productive.
3. Define performance evaluation criteria
Let the employee know the results, actions, and behaviors that were expected from them. Also, explain the different parameters that will be used to evaluate their performance such as quality of work, productivity level, goals, and targets accomplished, and the initiatives taken by the individual.
It is crucial to define each standard clearly so that both the manager and the employee know its meaning. Moreover, you should know how to differentiate a ‘4’ from a ‘5’ when it comes to numeric scales.
4. Be prepared to listen
During the performance review, be prepared to listen to your team member's feedback. Encourage them to share their thoughts and concerns about their performance. This will help you understand their perspective and will enable you to provide more effective feedback.
5. Provide constructive feedback (good and bad)
One of the reasons for holding a performance review meeting is to appreciate the employees for what they have done in the past year. Be it achieving targets, developing innovative solutions, or achieving high levels of customer satisfaction, this meeting is an opportunity to recognize the positive outcomes and it also helps start the meeting on a good note.
But you also need to point out areas where the employee can improve and provide actionable suggestions on how they can do so.
6. Use specific examples
When discussing the employee's performance, use specific examples to illustrate your points. This will help the employees understand where they excel and where they need to improve. For example, instead of saying "You need to improve your communication skills," say "During the last project, I noticed that you didn't communicate effectively with your team members, which caused delays in the project timeline."
7. Review the past but focus on the future
The conventional reviews had no place for future discussions and involved evaluating past performance. However, the modern process focuses on future goals and the necessary tools and guidance to achieve them. It helps in fostering a culture of growth.
So, as a leader, you should take the time to identify the gaps in skills and discuss skill development with an employee. It will help increase engagement and retention rates as more opportunities will ensure that employees do not feel stagnant in their jobs.
Rather than dwelling too much on past mistakes, this meeting should also be taken as an opportunity to identify how employees can be more valuable to the organization.
9. Set clear goals
At the end of the performance review, set clear goals for the employee to work towards. These goals should be specific, measurable, achievable, relevant, and time-bound (SMART). By setting clear goals, you'll give the employee a clear direction on what they need to work on and how they can improve their performance.
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A performance review agenda template
A performance review template is instrumental in assessing the employees' performance objectively. It helps managers identify the areas where an individual needs improvement and their strengths and talents that can be harnessed for the growth of the employee and the organization.
Here are the items that a performance review template must include:
Employee name:
Department:
Review timeframe:
Date of review:
Overall Assessment
Review an employee’s overall performance for the quarter from perspectives like achievements, team collaboration, work ethics, etc.
Performance against Goals
Review if the employees are meeting the goals that were set forth; highlight wins and give positive feedback.
Areas for Growth
Help employees identify what could have been done better and any growth opportunities.
Future Goals & Expectations
List some goals for the quarter to come.
Additional Comments
Allow employees to share any concerns or questions they may have and have a friendly discussion.
Performance review writing examples
Here are examples of writing an employee performance review, including excellent, satisfactory, and poor performance.
Excellent performance review example
John’s performance has been above par this year in his role as a systems engineer. He significantly exceeds expectations by providing high-quality work. He also produces timely results, and that too with minimum error.
John takes the initiative and develops new strategies to improve the projects and the company's performance.
Satisfactory performance review example
Shiela regularly meets expectations in her role as a customer support specialist. She achieves the annual goals consistently. She seeks help from her co-workers when facing a challenging question rather than providing a wrong answer.
Shiela receives positive feedback from customers. She should make more attempts to follow up with the customers and ensure they have a positive experience.
Poor performance review example
Sasha’s work is below expectations in her role as a receptionist. She finds it challenging to organize and handle activities. She doesn’t get along with colleagues and fails to make timely decisions. Her communication skills are good, and she conveys timely information to her manager.
Performance review: Dos and don'ts
Suppose you are looking forward to implementing employee performance reviews in your organization. In that case, you should seek help from the human resources team. Based on their feedback, you can decide which type of performance review system would work for your organization.
Dos
Here are a few valuable tips for successful implementation:
Performance reviews are generally dreaded because of the questions that come your way. The traditional reviews included so many questions that the good ones seemed to get lost. So, limiting the number of questions and asking questions that elicit insightful responses is the key. It is good to keep in mind the purpose of asking the question and remain as direct and objective as possible to make the question understood.
Unlike past performance reviews, today's appraisals are a two-way conversation. As the employees are encouraged to discuss topics related to their performance, the manager should practice active listening. Try to respond to the person in a manner that will enable them to speak their mind.
It is not easy to give feedback to someone, especially if it is negative. However, the choice of words and the tone of voice play an essential role. Pay attention to what you are trying to convey before speaking.
Avoid criticizing a person’s personality; provide feedback about their actions. So, discuss the specifics of someone’s work rather than personalizing it. For instance, rather than telling an employee, “You’re so slow,” you can mention a specific example during projects where the employee took longer to complete the work and suggest ways to improve their speed.
Do not use vague terms or cliches as they do not convey anything important. For instance, simply telling a person to “think outside the box” without providing guidance creates confusion and frustration.
Another good practice is to avoid absolutes such as ‘never’ or ‘always’ because they can be hurtful. Rather than saying, “You are never on time,” it is better to be objective with your feedback and say, “You were late to work thrice last month.”
Ensure that the employees are involved in creating performance reviews and take their input on the performance management process
Conduct training for managers, supervisors, and employees on how to use the performance appraisal system. Everyone should be aware of what is being measured and how.
Ensure that the performance review process lays down the expectations and the improvement areas.
Don’ts
Do not make performance review a one-way street where the manager judges an individual and provides feedback. Instead, encourage the employee to speak up about performance issues and seek clarity on expectations.
Don’t limit the review process to an event to decide an employee’s compensation. Although money is the most important motivating factor, a performance review also identifies training opportunities for the overall growth of the employee and helps in employee satisfaction and retention.
Don’t make it a once-in-a-year meeting but provide timely feedback to the employees, so they know what is working for them and what isn’t.
Questions to ask employees in performance review
Here are some helpful questions to ask employees during performance meetings:
What kind of work comes easiest to you?
What can I do to help you meet your goals?
Where do you feel there's room for you to improve?
What are two to three things I could do differently to better manage you?
Do you feel that the team is working well collaboratively?
What's one professional skill you're currently working on?
If you could change one thing about your job, what would it be?
Final thoughts
In conclusion, performance reviews are essential for evaluating employee performance, providing constructive feedback, and setting goals for future improvement.
Implementing a performance review system requires careful consideration and effective communication with the HR team. By following these tips and best practices, organizations can ensure that performance reviews are valuable and contribute to the growth and success of both employees and the organization as a whole.
