How to Conduct a Performance Review: Tips & Best Practices

Employee performance reviews can feel like a tightrope walk, not just for the folks on the receiving end but also for you, the managers steering the ship. Fortunately, shedding light on performance reviews and how to conduct them effectively can ease the anxiety surrounding them, giving managers like you the confidence to navigate them smoothly. In this blog, we're diving deep into the world of performance reviews. We'll explore everything from the basics of what they are and why they're crucial, to the different styles you can adopt. Plus, we'll discuss the benefits they bring to both the company and employees, the common challenges you might face, and how to overcome them. 

Armed with best practices for before, during, and after the review, you'll walk away ready to handle these reviews with confidence and finesse. Let's get you prepped to conduct employee performance reviews that are as effective as they are empowering.

What are performance reviews?

Performance reviews, also known as performance appraisals or evaluations, are a method used by employers to assess an employee's job performance and overall contribution to the organization. 

Typically conducted annually or semi-annually, these reviews provide a structured way for managers to provide feedback, recognize quality performance, and identify areas for improvement. They often influence decisions related to promotions, pay raises, and professional development.

Each company conducts employee performance reviews their own way. Here are some of the most popular styles. 

360-Degree Feedback Review

This approach gathers feedback from all directions – managers, peers, subordinates, and sometimes even clients. It provides a comprehensive view of an employee's performance from multiple perspectives, offering a well-rounded evaluation.

Self-Assessment Review

In this style, employees are asked to evaluate their own performance. This encourages self-reflection and personal accountability. It allows employees to highlight their achievements and reflect on areas where they might improve.

Management by Objectives (MBO)

MBO involves setting specific, measurable objectives for employees and then reviewing the performance against these goals. This method focuses on setting achievable, clear objectives and is often used for performance management.

Behaviorally Anchored Rating Scales (BARS)

This method uses specific behaviors as a basis for evaluating an employee's performance. BARS are designed to reduce the subjectivity involved in rating and provide concrete examples of what various levels of performance look like in certain areas of competency.

Why do companies conduct performance reviews?

We’ve learned “what” employee reviews are; now let’s dive into the “why” behind them. Companies conduct performance reviews for a variety of reasons, with the below being some of the most significant:

  • Feedback and Improvement: Reviews provide employees with feedback on their work, helping them understand their strengths and areas for improvement.
  • Career Development: They assist in identifying career paths and development opportunities for employees.
  • Goal Alignment: Reviews ensure that employees' goals are aligned with the company's objectives.
  • Reward and Recognition: They help in making decisions about promotions, raises, and bonuses, rewarding strong performance.
  • Performance Documentation: Reviews create a record of employee performance, which can be useful for future reference or in case of disputes.

How do performance reviews benefit the company and the individual? 

There’s a reason why performance reviews were initiated in the first place. If done correctly (we’ll get to that later), they positively impact both company and employee performance. We’ll discuss each of these in turn. 

Performance review benefits to the company

Employees are the heartbeat of a company, and their performance levels up to company-wide success (or failure). Here’s how effective employee performance reviews can benefit the company as a whole. 

  • Enhanced Productivity: Performance reviews help in identifying and rewarding high performers, motivating them to maintain or improve their productivity.
  • Alignment with Goals: They ensure that employee efforts are aligned with the company's strategic objectives, facilitating organizational growth and success.
  • Employee Development: Reviews help in identifying training needs, contributing to the development of a more skilled and versatile workforce.
  • Better Communication: These reviews open lines of communication between managers and employees, improving understanding and collaboration.
  • Decision-Making Data: They provide valuable data for informed decisions regarding promotions, compensation, and succession planning.

Performance review benefits to the employee

It’s not just about the company. Performance reviews are intended to support employees in reaching their maximum potential. Here’s how:  

  • Clear Expectations: Reviews clarify what is expected from the employee in terms of performance and objectives.
  • Recognition and Motivation: They offer an opportunity for recognition, boosting morale and motivation.
  • Personal Growth: Performance reviews can highlight areas for personal development, aiding in career progression.
  • Feedback for Improvement: They provide constructive feedback, helping individuals understand their strengths and areas needing improvement.
  • Career Development Opportunities: Reviews can pave the way for discussions about career aspirations and potential growth opportunities within the company.

The benefits are clear . . . so what are the challenges of performance reviews? 

If the benefits of employee performance reviews are so clear, why wouldn’t everyone — managers and employees alike — be thrilled when review time rolls around? To put it simply: performance reviews aren’t without their challenges, on both manager and employee side. The stakes are high, and the tension can follow suit. Below are some of the primary challenges managers confront when faced with conducting employee reviews. (Stay tuned for how to tackle them by following best practices!)

  • Bias: It's tough to stay completely objective. Personal biases can skew evaluations, making them less about performance and more about personal opinions.
  • Time Constraints: Managers are busy, and finding the time to prepare and conduct thorough reviews can be hard.
  • Employee Anxiety: Reviews can be stressful for employees. Handling this anxiety while giving honest feedback is a delicate balance.
  • Maintaining Morale: Negative feedback can demotivate employees if not handled correctly.
  • Setting Achievable Goals: It's challenging to set goals that are ambitious yet achievable, and align with both company objectives and employee growth.
  • Consistency: Ensuring uniform standards across different employees and teams can be difficult, leading to perceptions of unfairness.
  • Effective Communication: Clearly conveying feedback, especially when it's negative, without causing demotivation is a complex task.
  • Lack of Training: Many managers aren't trained in how to conduct effective performance reviews, impacting the quality of the process.

Performance review process and best practices

So how can managers overcome performance review challenges in order to reap their myriad benefits? With a little guidance, you’ll get there in no time. Performance review best practices can be thought of in three groups: before, during, and after the review. We’ll explore all three. 

What to do before conducting a performance review

Like with anything, preparation is key. Preparing to conduct a performance review should include collecting and reviewing relevant data, setting clear objectives for the meeting, and ensuring a comprehensive understanding of each employee's role and performance. Here’s what that looks like: 

  • Review Past Performance: Look at the employee's past reviews, goals set, and any relevant metrics or KPIs.
  • Gather Feedback: Collect feedback from colleagues, subordinates, and other managers if applicable.
  • Understand the Employee's Role: Be clear about the employee’s responsibilities, job description, and how their role fits into the team and company.
  • Set Clear Objectives for the Review: Decide on what you want to achieve in the review, such as specific areas of focus.
  • Create a Comfortable Environment: Plan for a setting that is private and free from interruptions.

It’s showtime: What to do during a performance review

With preparation behind you, it’s time to outline the structure of the performance review you’re about to conduct. Follow a format that covers evaluation of past performance, discussion of strengths and weaknesses, and setting future objectives. This ensures a comprehensive, balanced, and forward-looking review.

  • Introduction: Begin with a positive note, setting a constructive tone for the meeting. 
  • Review of Past Performance: Discuss the employee's performance since the last review, focusing on specific achievements and challenges. Use examples to illustrate points, avoiding generalizations.
  • Strengths and Weaknesses: Highlight the employee's strengths, and tactfully discuss areas where improvement is needed, using specific examples. Provide balanced feedback: both positive reinforcement and constructive criticism.
  • Future Objectives and Development: Develop a mutual plan for the employee’s growth and improvement, including setting specific, measurable goals.
  • Feedback and Discussion: Encourage the employee to share their thoughts and feedback. Listen actively and show genuine interest in the employee’s perspective.
  • Conclusion: Summarize the main points of the review and next steps.

We’re not done yet: what to do after conducting a performance review

It’s all about the follow-up. Schedule regular check-ins on progress and continuous feedback, rather than waiting for the next formal review.

  • Schedule Regular Check-Ins: Set up frequent meetings (monthly or quarterly) to discuss progress on goals and any new developments.
  • Provide Ongoing Feedback: Offer continuous feedback, both positive and constructive, to guide the employee’s development.
  • Monitor Progress: Keep track of the employee's progress towards the goals set during the review.
  • Be Accessible: Remain approachable for any questions or discussions the employee might want to initiate.
  • Adjust Goals as Needed: Be flexible to adjust goals in response to changing circumstances or new insights.

Need a little help? We’ve got you covered.

As we wrap up this comprehensive guide on employee performance reviews, remember that mastering these evaluations is a journey, not a one-time event. If you find yourself needing extra guidance or have questions about any human resources-related tasks, we’re here to help. Our experienced HR consultants offer small businesses personalized assistance to ensure you're equipped with the knowledge and skills needed to excel in managing your team effectively. Don't hesitate to reach out for support in navigating the nuances of employee evaluations and reaping the rewards. 

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