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How to Perform an Effective Performance Review

Alan Price

Last Updated:  

8 April 2020

4 min read

If there’s anybody that should be given extra care, then its your employees. A successful organization is the product of efficient work and efficient work is the product of happy, passionate and engaged employees. So, how do you know if your employees are happy and engaged? Employee Performance Review is the answer.

Holding employee performance reviews is important for a number of reasons. It helps you to find out:

  • Overall performance.
  • Staff engagement.
  • Retention rates.
  • Potential ways to improve your business.

And performance reviews help with the self-development of your employees. By talking to your staff, you can understand their plans for career development. And then go ahead and assist them with that—if it suits you. That can lead to training opportunities, promotions, and other ways to improve the productivity and profitability of your organisation.

So, how do you go about using performance reviews to gain advantages? How do you make them as effective as possible? We explain the options below.

How to approach performance reviews

It’s important to schedule in your reviews at certain points throughout a business calendar. Most organisations—large or small—hold them:

  • Quarterly.
  • Twice yearly—every six months.
  • Annually.

Of course, some businesses don’t hold reviews at all. Or are too busy to commit to them on a regular basis. But, it’s important to have at least once a year, at the very least, you can get an understanding of how your employees are doing.

But what exactly should the process involve? There’s a structure most businesses follow—the steps will include:

  • Examining productivity results over the last period, whether the employee has had a good or bad time of it.
  • Addressing issues such as persistent lateness, absenteeism, presenteeism, or excessive sick days.
  • Setting new goals, adjusting old ones, and aiming for new targets in time for the next review.
  • Outlining work plans.
  • Explaining the performance expectations.
  • Discussing possibilities for training and career advancement.

Many performance reviews also feature a scorecard to rate the employee’s performance over the course of a working period. This can offer an easy way to visually spot the employees performing to the best of their abilities in your business. For example, if you have 20 employees you can see their respective scores to understand who is performing—and who isn’t.

Performance Reviews help with the self-development of your employees.

Conducting a performance review effectively

With your process set, you can define how you go about holding the review.

It plays out like an interview, in many ways—but it can be formal or informal, depending on what you’d like to get from the performance review.

A suitable line manager will take on the duty. Although small businesses usually have the main boss to take control and talk to their employees—it’s entirely up to you.

But the goals are the same, so you can follow this procedure:

  • Set up your performance management system, which is a schedule to follow for how and when to hold your reviews. Even if it’s only once annually, it’s important to know when and how you’ll go about it.
  • In the review, having a transparent outlook allows for free-flowing communication. This will also help prior to a review, as your employees will know what to expect during their assessment.
  • Ensure the review is constructive—if a member of staff has struggled over the previous few months, for example, piling on heaps of criticism won’t help the matter. Talk to the employee in question and find out what you can do to assist them.
  • Keep records of your conversation and make notes—this can come in useful at a later date, such as if a disciplinary action is taking place.
  • Catch up with the individual regularly. Don’t leave it at that and wait six months to follow-up. Weekly contact is a great way to ensure the employee is happy with the progress they’re making.

And whilst following business protocol, don’t forget to keep it friendly. It’s important for your line managers to get on well with colleagues. So, they can use it as an opportunity to assist the individual and help out with any issues they may have. For example, if they make a request for a better work-life balance.

Little changes such as that can then improve staff retention rates—in the long-term. As you’re looking after your workforce and ensuring they’re happy in the role.

Ensure your performance review is constructive. Ask relevant questions only.

The future of performance reviews

“When Brian Jensen told his audience of HR executives that Colorcon wasn’t bothering with annual reviews anymore, they were appalled. This was in 2002, during his tenure as the drugmaker’s head of global human resources. In his presentation at the Wharton School, Jensen explained that Colorcon had found a more effective way of reinforcing desired behaviors and managing performance: Supervisors were giving people instant feedback, tying it to individuals’ own goals, and handing out small weekly bonuses to employees they saw doing good things.”

That’s a quote from the Harvard Business Review on the performance management revolution.

Although it was almost 20 years ago, the piece notes a third of US businesses are now abandoning traditional performance reviews.

We don’t feel this is the end for the process, however, as it can still work wonders for your business—but the trick is to evolve with the likes of technology and adapt it to suit your organisation.

And one of the best approaches is to take advantage of employee surveys to engage with your workforce. You can send the performance review surveys at regular time periods. The market offers a lot of performance management tools to automate and thereby ease the entire process.

Such steps can help you to:

  • Analyse employee feedback.
  • Act on any criticisms to improve company culture.
  • Let employees provide confidential feedback for more authenticity.
  • Receive feedback in digital form for ease of access—no excessive paperwork.

It’s also very easy to create a survey for your employees—it’s just one way to go about it.

The other is to embrace “catchups”—as The Guardian championed in 2018. It flags up that many software companies, such as Adobe Systems, have ditched appraisals entirely:

“Adobe has since seen a 30% decrease in the number of employees quitting – and recovered the thousands of hours managers and employees had been spending on their reviews.”

There’s no set answer, of course. Whatever approach you want to take—no matter how innovative or traditional—remember what the goal of the performance review is.

It’s to address any issues and help your employees. The net result can lead to greater productivity, lower turnover rates, and ever-increasing profits.

Alan Price

A leading authority on employment law and HR, Alan Price is CEO of BrightHR.

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