Conducting Effective Employee Performance Reviews
July 27, 2022 | BY Simcha Felder, CPA, MBA
Discussing an employee’s performance with them can be very stressful. It’s tough for managers to give feedback, and even harder for employees to receive it. While employee performance reviews are an incredibly powerful tool for driving employee success, their effectiveness depends on how they are conducted. Performance reviews have the ability to empower your employees to reach new heights – or – they can waste time, frustrate and even drive employees away from your company.
An employee performance review, also known as a performance evaluation, is a formal assessment of an employee’s work in a given time period. In an employee performance review, managers evaluate the individual’s overall performance, identify their strengths and weaknesses, offer feedback and help them set goals.
Although employee performance reviews can be extremely useful, they can also be one of the most uncomfortable parts of being a manager – and being an employee. Dissatisfaction with performance reviews is pervasive and has received a lot of criticism in recent years. A recent Gallup poll found that just 1 in 5 employees felt that their company’s performance practices motivated them.
Organizations such as Netflix, Microsoft and General Electric have recently begun to re-think their performance management systems. Many organizations and employees see performance reviews as time-consuming, demotivating, inaccurate, biased and unfair.
The problem is that these attitudes become self-fulfilling. Busy managers do cursory reviews without providing insightful feedback. Employees feel the review is unfair and approach the next review with that attitude. Managers then try to avoid the unpleasantness and will do an even more cursory, drive-by review, and the downward spiral continues.
Despite these concerns, there is immense value in developing an open, honest avenue for managers to discuss an employee’s performance and opportunities for growth. Employee reviews are also an important key to effective leadership. The higher you rise in any organization, the more dependent you are on your subordinates’ performance. How organizations handle these conversations plays a huge role in your employees’ engagement and growth. Here are some useful and effective tips for conducting performance reviews:
- Set Expectations and Goals – At the beginning of the year, have a meeting with your employees to share your goals and expectations for the team. Then, take the time to meet with employees individually to set their own performance goals. This ensures that everyone is clear about expectations, and gives employees a defined outline to follow each time you discuss performance going forward.
- Start Positive – Start with a compliment or a positive piece of feedback. Don’t put the employee on the defensive by highlighting problems at the start of the review. Consider first asking the employee how they think they’re doing, rather than starting the review off with your assessment.
- Two-Way Conversation – Even if you know that performance reviews should be a two-way conversation, it can be easy to end up talking for most of the review. Effective performance management can only be reached if you’re open to listening and obtaining feedback from the employee. The goal of a good performance review should be to help people gain insight into how they can get even better. Consider asking your employees how they might be able to improve. By being ready to listen and having an open conversation, the review process will give great insights into both sides of the table.
- Specific Examples/Data – When you’re giving feedback, don’t be vague. Vague or generic criticism given during a performance review is only going to frustrate and disenchant an employee. Don’t say things like “you need to be more proactive.” Give specific examples of behaviors you want your employee to stop, start or continue. The more concrete examples you can give to back up your constructive criticism, the better.
- Multiple Source – Use data and feedback from multiple sources. Solicit feedback from colleagues who have worked closely with the employee to give a more well-rounded and balanced review. Be sure to gather both quantitative measures of employee performance, like sales reports and project deadlines, as well as qualitative measures, such as feedback from clients, customers or other employees.
- Evaluate Results, Not Traits – One of the most common mistakes is trying to evaluate personality traits such as leadership, motivation, attitude and so on. The problem is that traits are subjective and are therefore impossible to evaluate fairly. Instead, focus on results that are observable, such as meeting sales quotas or completing projects on time.
- Consider Conducting Reviews More Often – Want to make each performance review less of an ordeal? Conduct them more often. Of course, that’s easier said than done. Obviously, employees, supervisors and managers are all busy. It’s not easy to find the time to spend writing up fair, engaged and humanizing evaluations for every employee. But an entire year can be a long time for things to build up, and notable areas of performance can be forgotten or overlooked if they have to wait until the annual performance review.
A performance conversation is the perfect opportunity to make or break trust. Open, honest, regular dialogue builds trust among employees, managers and the organization as a whole. From an employee’s standpoint, performance reviews provide an opportunity for self-evaluation to discuss what’s been going right, and analyze areas for improvement. From a management standpoint, a well-crafted performance review allows business leaders to provide constructive feedback and coaching, while also building rapport and trust.
We want what’s best for you and your employees, and we are committed to helping your company grow together.