Employee performance reviews are essential for all businesses. However, how you conduct reviews determines their effectiveness. A performance review can empower your employees to reach new heights – or drive your team away.
An effective performance review helps employees identify growth opportunities and potential areas of improvement while still maintaining healthy business relationships. But writing an effective review isn’t easy, and managers often don’t receive enough guidance. We’ll explore best practices for writing and conducting comprehensive reviews and share how performance management software can help.
Consider incorporating the following six best practices to ensure you’re conducting excellent performance reviews.
While performance reviews typically happen once or twice a year, don’t limit feedback to review periods. Consider the following when incorporating informal feedback:
“Highly valuable employees who do their job and do it well are often not the priority of concern in performance review cycles, resulting in missed opportunities to communicate how much the organization values the drive and the results of the top performers,” said Rasure. “An unexpected ‘keep up the great work’ email [or] a quick phone call or text sends a consistent signal to your employee that you are paying attention and value what they do.”
No worker is perfect, and there will always be room for improvement. When delivering constructive feedback, be honest and consider the following:
A written review should be a brief but direct overview of discussion points, making for a more nuanced face-to-face conversation. You might want to schedule a meeting in a coffee shop or out-of-office location to provide a comfortable atmosphere. If you’re reviewing remote workers, schedule a video chat so you’re still having a live conversation. This approach leaves room for discussion and feedback and prevents miscommunication.
“The only way to deliver performance reviews is face to face, with ample time to present and process, listen, and respond,” said Bailey. “It’s just too important to relegate to email or telephone. Doing so would send a signal that you didn’t care enough about the subject even to take the time to meet.”
After outlining any shortcomings or mistakes, discuss resolutions and invite employees to comment on the issues you raised.
When discussing areas for improvement or what an employee has done well, ensure you reference clear examples to show you’re paying attention. (This is why taking notes over a long period is essential.)
“If you’ve got nothing to refer to, then you’re speaking anecdotally,” said Rbibo. “This prevents clarity and understanding. If an employee is falling behind in certain key performance areas, point to one or two specific examples, and address how you’d like those handled differently in the future.”
Your review should end with mutual understanding and respect. You don’t want your employee to feel like they’re in the dark going forward. Instead, equip them with achievable business goals, a sense of optimism, and an employee performance plan moving forward.
“Use the review process as an opportunity to set attainable goals specific to addressing the expectations the employee isn’t meeting, but which also makes the employee feel like they have a clear, reasonable plan of action that can get them back on track,” said Rasure.
Encouraging your employees and expressing your appreciation boosts a good review and lifts an employee’s spirits after a less positive evaluation. Positive reinforcement and constructive professional feedback can help give workers the confidence and drive they need to perform better.
Pay close attention to how you phrase your evaluations. Excellent leadership language includes meaningful and action-oriented words with a far greater impact than standard phrases like “good” or “satisfactory.”
Here are five words and expressions that will help you effectively highlight an employee’s contributions, based on James E. Neal’s book Effective Phrases for Performance Appraisals.
An employee performance review, also known as a performance evaluation or performance appraisal, is a formal assessment of an employee’s work in a given period. In an employee performance review, managers evaluate an individual’s overall performance, identify their strengths and weaknesses, offer feedback, and help them set goals.
Employees typically can ask questions and share feedback with their manager. They may also complete a performance evaluation self-assessment as part of the performance review process.
While performance evaluations have traditionally been annual reviews, more companies are moving toward quarterly, monthly, or even weekly feedback. Some organizations have entirely eliminated the formal performance review process, replacing it with regular, casual one-on-one check-ins with management.
Regardless of how frequently or in what manner your company conducts performance reviews, these meetings should benefit employees and managers. Workers will gain a better understanding of what they’re doing well and where they can improve, and they can ask questions or provide feedback to their managers.
In turn, managers can communicate expectations to their team, identify the highest performers, and correct issues before they escalate.
Regardless of industry, most employee reviews include an assessment of the following skills:
A review should also include:
After addressing key assessment areas, evaluate and weigh each element to get a picture of the employee’s overall performance.
How you format and organize this information is up to you and your company’s needs. Some organizations use a grading system of A through F, while others rely on numerical scoring, percentages, or written descriptions (e.g., “most of the time,” “some of the time”). Whichever system you use, ensure it’s objective and easy to understand.
Once you finish the grading process, set up a time to discuss your findings with each employee and build an employee performance plan together.
The true cost of performance reviews is the time managers and HR staff spend gathering and writing the review’s foundational material. To reduce the financial burden on your small business, consider integrating performance management software into your annual review process.
High-quality performance management software can deliver real-time reports and enhance collaboration between employees and managers. Your platform can help you complete the process and store the results for later review.
Depending on your HR requirements, you can incorporate a performance management solution in-house or outsource the process to a third party.
Some performance management solutions include an open API system that allows you to customize the software to fit the size and scope of your HR requirements. For example, Namely and BambooHR include an open API that allows for third-party integrations. (Read our BambooHR review to learn more.)
Performance management solutions may offer the following features:
Professional employer organization (PEO) companies offer another way for small and midsize businesses to provide effective employee feedback. The best PEO services let you outsource performance reviews and other HR tasks through a co-employment arrangement – a contractual agreement where the provider assumes responsibility for assigned tasks.
Using the PEO company’s apps, managers and employees have real-time access to payroll, time, and benefits. PEOs also provide a full range of professional HR benefits, including compliance with the latest employment regulations.
Some excellent PEO companies include the following:
The entire performance review process can be challenging for managers and employees, especially when they don’t have an established framework to guide the conversation. A review template helps ensure successful interactions throughout your organization.
If you’re struggling to write a template for company-wide use, consider these four performance review templates to get you started:
With these templates and all the above advice, effective performance reviews are within reach.
Max Freedman, Sammi Caramela, and Kiely Kuligowski contributed to this article. Some source interviews were conducted for a previous version of this article.