XM Knowledge Base
What is an employee performance review?
A performance review is a formal, regulated assessment mechanism in which managers and other key stakeholders evaluate an employee’s work performance. The purpose is to learn more about their strengths and weaknesses, offer constructive feedback for skill development in the future, and assist with goal setting.
Whichever methodology you choose for performance reviews, a well-planned and executed appraisal boosts employee engagement and sets the tone for creating a culture of feedback and ongoing development at your organization.
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Types of performance review
Weekly or fortnightly performance evaluation
Weekly or fortnightly performance reviews don’t need to collect a vast amount of data each time or be particularly goal-oriented. They are helpful for record-keeping and making sure a project – especially an agile or fast-moving one – stays on track week by week
Monthly performance appraisals
These are especially useful for businesses who employ people on short-term contracts or freelancers, and for new hires during their onboarding process, as they go from job description to actual performance. New projects also benefit from monthly employee reviews so that they stay on track and organizational goals are met. Some employees typically prefer monthly check-ins over annual reviews.
Quarterly performance evaluations
Companies divide their business year into quarters (Q1, Q2, Q3, Q4), with set goals, targets, and budgets. It makes sense that assessing performance is run alongside these. Three months is sufficient time for an employee to achieve their goals and targets, as well as hone their organizational skills. You can also aggregate weekly/fortnightly or monthly reviews together each quarter to create a report of an employee’s progress, ready for a review meeting.
Annual performance review
Some businesses still conduct an annual review, but it is increasingly being replaced, or at least supplemented, by pulse surveys and 360 reviews throughout the year. These traditional and formal performance appraisals tended to become overblown, with too much information on them to be manageable, or to be a fair evaluation of an employee’s efforts. They looked back on past performance rather than forwards to future performance, and a year is far too long for employees to go without feedback.
That said, reviews and feedback throughout the year collated into one 12-month overall performance report are a useful bank of information, provided all the feedback has had actions attached to it.
Who runs an employee performance review?
It’s usually the person’s line manager, as they know most about the employee’s role and their current work. In some cases, a leadership group, team leader, or a more senior leader may lead the review or someone from human resources.
Why are performance reviews important?
As well as long-term positive outcomes, performance reviews offer an immediate lift – not only for businesses but for employees who want an overview of their strengths and weaknesses and progress in their careers. Here are some of the benefits performance reviews can offer:
1. Aligning personal roles to business goals
A job performance review is a chance to make sure everyone understands the organization’s vision and goals and how their work fits into the bigger picture. Individual performance drives organizational performance.
2. A clear understanding of job roles
Performance management empowers individuals to think about their role within the organization and clarify any areas where they have questions. When employees and supervisors can clearly understand and own their specific job duties, any ambiguities in the workplace are eliminated. Each person is accountable for their work and responsibilities.
3. Regular feedback about performance
Regular feedback contributes to better all-around communication in the workplace. Performance reviews help to identify an individual’s strengths and weaknesses, and most importantly, give employees a better understanding of the expectations that they are being held to.
Performance management can be a motivational tool, encouraging employees not only to feel more satisfied in their work but to take action beyond what’s expected.
4. Career development
The performance review presents the opportunity to plan for and set objectives to further develop an employee’s career. Performance management will also help them gain any additional training or mentoring which can act as a basis for HR’s development of future succession plans.
5. Rewards for good performance
Performance management offers a variety of rewards beyond just compensation that show gratitude for a job well done, such as time off and bonuses. The prospect of a better than ‘exceeds expectations’ performance appraisal – one where it is recognized that you’ve gone above and beyond – is an incentive to perform well and may open the door to career advancements in the future.
What’s the best approach for performance appraisals?
With so many practices, HR policies, tools, and techniques involved, no two performance management programs will look the same. Some have grading systems. Others have question and response formats, while others are expected to be free-form.
Just like your company culture, your performance management system will be unique and specific to your values, your goals and your purpose.
However, every good employee performance review process seeks to improve how the overall organization performs while supporting the performance, development, productivity, and well-being of its employees.
Despite this common goal, data suggests that traditional approaches to performance management can be demotivating, uninspiring, and make people want to give up rather than work harder and progress.
In fact, traditional performance management (PM) is universally disliked by both managers and employees. It is seen as having little value and has failed to meet its intended goal of improving performance. According to research reported in the Journal of Industrial and Organizational Psychology:
- Among managers, 95% are dissatisfied with their PM systems.
- Among employees, 59% feel PM reviews are not worth the time invested, while 56% said they do not receive feedback on what to improve.
- Almost 90% of human resources (HR) heads report that their PM systems do not yield accurate information.
It’s time to make the case for change and redesign performance management. Instead of an annual performance review, a better performance management system frequently engages its employees to better gauge their work satisfaction levels.
So rather than focusing on past performance in a yearly review, a better employee performance evaluation system incorporates continuous feedback. Research from Josh Bersin estimates that about 75% of multinational companies are moving toward this model.
What should a performance review look like?
Performance reviews based on a continuous feedback philosophy are more likely to be future-focused and geared towards promoting growth and development. Rather than rating employees against a one-size-fits-all standard based on their past performance, continuous performance management treats each employee as an individual whose full potential can be maximized.
| Traditional Model | Continuous Feedback |
|---|---|
| Focus is on past performance | Focus is on developing employee’s performance for the future |
| Top-down goals/metrics | Shared/aligned goals |
| Manager ratings only | Multi-rater feedback (Peers/Customers/Direct Reports/Manager) |
| Process mainly led by HR | Process is mainly led by managers/leaders |
However, adopting continuous feedback doesn’t mean removing measurement and metrics from your performance review process and reports altogether – it just means you should be using them in a different way. Metrics and measurements can provide valuable clarity and focus for employees and managers, acting as a framework for planning and prioritizing future efforts.
To be useful and realistic, measurements for progress need to be balanced across all the relevant elements of performance. Appropriate measures might cover a range of aspects like quality, quantity, timeliness, and/or cost-effectiveness of the work.
Expectations placed on employees also need to be credible – the employee can visualize the results and the means of achieving them, and feel confident about getting it right.
To that end, performance expectations must be:
- based on job function
- clear and understandable
- specific
- reasonable and attainable
- measurable – observable or verifiable
- results oriented
- communicated in a timely fashion
- geared towards fostering continual improvement in productivity and skill development
How to set the right goals in a performance review
When it comes to employee goals, striking the right balance is everything. Goals can’t be too easy, or they won’t leave employees feeling satisfied — most people enjoy a challenge. They want to be stretched, expand their knowledge, and develop new skills. Equally, however, goals that are too challenging can be demotivating. Employees will burn out trying to accomplish them, or they won’t try at all, believing them to be impossible.
Effective goals should be set collaboratively between manager and employee. They should be SMART (Specific, Measurable, Attainable, Relevant, Time Based) and tracked regularly. In addition, regular meetings should be held to discuss goal progress and what can be done to support the employee in meeting the target.
Performance review templates
Nobody can, or should, conduct an off-the-cuff performance review. It’s essential to use customizable templates that cover all the necessary feedback areas and metrics, and also deliver a positive review that energizes, motivates, and engages individual employees.
Read more about performance review templates
Performance review examples: phrases and questions
Whichever performance review model you’re working within, providing feedback with clear, positive language is the key to keeping the review goal-focused and productive. Writing performance reviews requires managers and other raters to be specific with their feedback, stay constructive, and provide solutions needed to help the employee grow.
You’ll find criteria will vary depending on the size, scope, and culture of your organization. However, there are a few elements that come up for almost all companies. Here are a few sample areas of focus to get you started with planning your employee evaluation criteria:
Accomplishing goals
- Sets challenging goals for him/herself
- Helps others achieve their objectives
- Prioritizes his/her work based on the needs of the organization and its customers
- Achieves his/her objectives even when faced with obstacles and challenges
Leadership qualities
- Takes team members’ ideas and opinions into account when making decisions
- Helps team members resolve work-related problems
- Holds team members accountable for achieving their objectives
Communication
- Actively listens to others
- Tailors his/her communication to the needs of the audience
- Communicates clearly and concisely
Teamwork
- Collaborates effectively with other team members
- Gives constructive and helpful feedback to others
- Treats others with respect
- Values and respects differences among team members
- Actively listens and participates in a work-related discussion
Culture/Values
- Lives company values every day
- Acts as a role model
- Creates a positive work environment
The content of a performance review will vary depending on job role and organization, but it may be valuable to develop some universal questions for managers to ask, such as:
- What is [Subject’s Name] greatest strength and what can he/she continue to do to grow?
- What is [Subject’s Name] greatest opportunity and what can he/she do to improve in the area?
Performance review phrases to avoid
Although performance review templates and performance reviews themselves are customizable, it’s important to be mindful of the messages you are giving out. Great review conversations nurture an employee’s performance, development, and manager-employee relationship, whereas thoughtless ones can damage employee engagement and even business success as your top people leave.
Here are some real howlers – while some of these may seem a little over the top, they do demonstrate neatly what NOT to say, and why not:
“You do so brilliantly, I have nothing to give you feedback on”
Even your very top talent will have some areas they can improve or develop skills in. Comments like this give the impression you haven’t bothered to look at their work in any detail.
“If you double your targets this year, then we might look at promotion to the C-suite next year”
Avoid ‘if/then’ statements, as they sound like empty promises, based on unattainable goals.
“You’re never at your desk on time. And you’re always late to meetings”
Avoid absolute words such as ‘always’ and ‘never’ – no one is late 100% of the time.
“You’re a great employee. Keep it up”
This says nothing about what the employee does that is great, how they can be even greater, or what they can do to ‘keep it up’. You need to explain in detail what the employee did that was great and their development goals to continue their good work
“I heard you handled that financial services account badly, which was disappointing, to say the least”
The reviewer is relying on hearsay here rather than first-hand observation and gives the employee no chance to put over their version before being criticized. True, it may be peer observation, but using 360 feedback rather than the office gossip mill is much more constructive.
“You knocked the other two designers into a cocked hat. Their prototypes were trash compared with yours.”
Comparing colleagues and co-workers in a performance review is a big NO. You’re reviewing only one person’s achievements, so leave the disasters (and triumphs) of others to their own, separate performance discussions.
“I can’t believe you! I thought you would do a good job of this, but it’s very poor”
The reviewer is bringing emotion into this feedback, which will only upset or rile the employee having the review. There is no constructive feedback and this level of hostility is likely to drive the employee to look for another job.
“You’re lucky to get this promotion. Don’t waste the opportunity”
Condescending and begrudging much? You never want to undermine your employees but rather praise them and encourage their successes. Forcing employees into a promotion does not mean its the best option for them, they deserve to choose.
How to prepare to conduct a performance review
If you’re a manager or team leader tasked with running appraisals for your team, you’re likely to have an established performance review process to guide your approach. However, you can still make the review experience go as smoothly as possible by preparing in advance.
Clear your calendar
If you’re going to be meeting with team members one on one, make sure you won’t be distracted or interrupted by other priorities during the meeting. Try to minimize commitments earlier in the day to reduce the risk of getting waylaid and having to postpone the review or turn up late. This way, employees know that the review is as important to you as it is to them.
Brush up on your employee experience data
Before the meeting, look through your notes from the most recent review with the employee to see what happened last time. What were the main themes of the meeting? Was there anything either of you said you’d follow up on?
Be ready to take feedback as well as give it
Make sure you allow enough time for the employee to share their feedback with you regarding the way you manage and bring a laptop or notebook to record it so that you can follow up later.
Prepare for curveballs
Although you shouldn’t be telling the employee anything they don’t already know about their performance, it’s very possible that they’ll bring up matters that are news to you. Because they’re private one-to-one exchanges, reviews may be seen as an opportunity to raise issues or share news. While it might not be pertinent to the review itself, be receptive to whatever the employee brings up and table it for a later conversation if required.
Performance review pitfalls to avoid
As you’re planning or reviewing your performance review process, you can save time and expense by being aware of these potential failure points.
1. Losing the link between process and purpose
Make sure the goal of your performance management systems drives the process, and be ready to make changes if required. Understanding how well your organization’s goals line up with the day-to-day work of individuals and teams is key here.
2. Not prioritizing a culture of feedback
If you don’t already have a culture of feedback, invest time and resources on the front end to communicate the true purpose of performance reviews and build trust in the process to develop a feedback-based culture.
3. Failing to engage your stakeholders
Getting decision-makers and business leaders on board right from the very beginning will improve buy-in, increase participation rates, and set your program up for success.
4. Not building in a support network
Follow-up and feedback need to be built in at the forefront of the project. Set expectations for employees and managers early on so they know who they can go to for advice and support
5. Lack of communication
Communication is the most critical component of implementing a new or improved performance management system. Performance management systems succeed when communication about the process is authentic and transparent.
6. Insufficient training and enablement for managers
No performance management system will be successful if the people involved don’t invest in the process. If employees sense that their managers are apathetic about the performance management system, they will mirror this attitude. Managers need to take control and lead by example, and they need support and adequate training to do so.
Alternative ways to collect feedback
For many businesses, performance reviews are the most helpful way to share and collect employee feedback. But thanks to the uptick in experience-led business and a new understanding of the value of employee experience, new methodologies are emerging.
360 feedback
In a 360 feedback, staff members can receive feedback not only from managers, but from peers and junior staff members. They can also review themselves, resulting in a complete – or 360 degree – view of their strengths and opportunities. However, this kind of program should only ever be used for development, not to gauge performance.
Continual feedback
Some companies prefer to avoid the formal structure of a performance review and instead share feedback on a continual ad hoc basis. This might be a suitable option for very small businesses and new start-ups. However, there is a risk that without a formal checkpoint, staff lack clarity on how they’re progressing and what they need to work on.
Employee pulse reviews
The employee pulse review can be seen as a happy medium between continual feedback and a big once-a-year performance review. It’s a smaller-scale employee review that’s conducted on a more frequent schedule, such as monthly or quarterly. Pulse feedback is more commonly associated with employee engagement surveys, but it works just as well for sharing feedback in the other direction since it offers clear measures and is quick and easy to complete.
Free eBook: Your guide to talent development using 360 Feedback
References:
Bersin Josh. (2018). We wasted ten years talking about performance ratings. The seven things we’ve learned. Josh Bersin Institute: Retrieved March 18th from https://joshbersin.com/2018/11/we-wasted-ten-years-talking-about-performance-ratings-the-seven-things-weve-learned/#_ftn1
Capelli, P & Tavis, Anna (2016) Assessing Performance: The Performance Management Revolution. Harvard Business Review. Retrieved March 18th from https://hbr.org/2016/10/the-performance-management-revolution
Enderes, K., & Derunts, M. (2018). Seven Top Findings for Enabling Performance in the Flow of Work, Bersin, Deloitte Consulting LLP.
Kathi Enders (2018) Performance Management, Disrupted: Enabling Performance in the Flow of Work. Bersin, Deloitte Consulting LLP.
Pulakos, E. D., Hansen, M. R., Cargill, A. S., Moye, N. (2015). Performance Management can be fixed: An on the job experiential learning approach for complex behavior change. Industrial and Organizational Psychology, Vol 8(1), 51–76.
Rodgers, R., & Hunter, J. E. (1991). Impact of management by objectives on organizational productivity. Journal of Applied Psychology, Vol 76(2), 322–336.
Smith, M. and Bititci, U. (2017), “Interplay between performance measurement and management, employee engagement and performance”, International Journal of Operations & Production Management, Vol 37(9), 1207-1228.