How to Conduct Performance Reviews: The Essential Guide for HR Teams
Now more than ever, employees want to know where they stand and how they can further their careers. And it’s up to HR teams to rethink their performance review process to inspire their employees to improve.
Failing to conduct performance reviews effectively can have a domino effect on productivity. With no clear expectations, employees have no agreed standard or roadmap to follow.
Read on to learn the common goals of performance reviews and how to get them right with BambooHR.
Key takeaways
- Performance reviews are formal assessments that provide feedback, identify strengths, and set clear, collaborative goals for employee growth and development.
- Effective reviews boost employee engagement, provide meaningful recognition, correct performance issues, and foster a positive workplace culture.
- Review formats range from regular one-on-one check-ins and self-evaluations to comprehensive 360-degree reviews and management by objectives (MBO).
- Managers should prepare by reviewing performance, setting a two-way agenda, beginning with positives, giving actionable feedback, and creating a future roadmap.
What is a performance review?
A performance review is a formal assessment in which a manager evaluates an employee’s work performance—it can also be called a performance appraisal or an employee evaluation. Performance reviews can be structured in different ways to effectively identify strengths and weaknesses. They also allow managers to offer constructive feedback and set goals for the future.
Key aspects of performance reviews include:
- Formal assessment: Performance reviews provide an opportunity for employees to gain feedback on their work during a specific time frame. This can be annually, quarterly, or semi-annually.
- Goal setting: They encourage employees and managers to work together to set clear goals for employees based on any feedback they receive.
- One-to-one conversation: Performance reviews provide a chance for employees and direct reports to have an open, one-on-one conversation on strengths and areas for development.
- Feedback from peers: Sometimes, a performance review may include feedback from people the employee works closely with, other than their direct report.
- Employee assessments: Employees may also be asked to complete assessments for their managers and peers. This can help managers understand where employees feel they may need extra support.
What are the common goals of performance reviews?
Helps employees know where they stand
Performance reviews play a pivotal role in the employee experience. This critical process helps people understand:
- What they’re doing well
- How their work aligns with the larger company goals
- Areas for improvement.
Promotes a progressive workplace culture
Performance reviews promote a culture of continuous learning and development. These appraisals provide an opportunity to communicate where employees can develop by setting actionable goals and areas for improvement.
These reviews also allow managers to communicate company expectations to help employees understand what is expected of them to move forward in their careers.
Recognizes employees and corrects performance issues
Most managers use employee performance reviews to recognize high-performing employees or correct performance issues before they become a problem. They also allow employees to showcase any work or achievements they’re proud of.
Gives employees a say
Performance reviews give employees a chance to have open and honest conversations with their direct reports around compensation and benefits. It’s also a time to share their feedback on working conditions and processes.
Increases employee engagement
With 80% of employees more engaged after receiving meaningful feedback, performance reviews can also directly influence employee productivity, satisfaction, and engagement if done correctly.
Performance review examples
The performance review process can differ across organizations. However, some common performance review examples include:
Regular check-ins and one-on-ones
Some organizations have done away with formal performance reviews in favor of more regular , casual manager check-ins and one-on-one meetings. This helps account for the factors a yearly employee review may miss.
For example, by checking in at least every two weeks, managers and employees can have an ongoing two-way dialogue to discuss meaningful goals. Small steps can help make progress feel more manageable and ensure employee goals continually align with evolving company priorities.
To make the most of your performance reviews, be sure to ask the right performance review questions.
Self-evaluation performance reviews
A self-evaluation performance review invites employees to reflect on their work, skillset, and areas of improvement. These cultivate more balanced assessments and spark opportunities for discussion. If major discrepancies between manager and employee evaluations arise, HR can provide additional support and mediation.
360-degree reviews
360 reviews involve gathering feedback from an employee’s peers, direct reports, and managers. This might also include feedback from clients. The goal is to improve individual and organizational performance by forming a wider understanding of an employee’s strengths and areas for improvement.
The feedback is usually anonymous to employees to encourage open responses from selected peers, though managers may be able to see responses. 360 reviews sometimes also feed directly into a company’s annual review process.
Management by objectives (MBO)
Management by objectives (MBO) is a performance strategy that focuses on improving company effectiveness by aligning the organizational performance goals with employee and management goals. The process usually involves managers and employees agreeing on specific targets and creating a plan to reach them.
Team assessment
Some organizations may carry out team assessments to analyze employee performance. This type of performance assessment is commonly used in situations when employees are part of a team and share the same responsibilities and tasks. The method involves measuring how well team members worked together and how successful they were in reaching shared goals.
How to conduct performance reviews: A step-by-step guide for managers
Sometimes performance reviews can feel overwhelming, but they don’t have to be. The steps below can help you conduct great performance reviews every time.
Step 1: Review employee performance in advance
Before you write up a performance review, set aside some time to review employee performance in advance.
Ask yourself the following questions:
- What went well for them this year?
- Have they achieved any major accomplishments?
- How did their work have a direct impact on the organization?
- Are there any areas where they can develop?
Step 2: Set an agenda
Set an agenda and provide employees with an overview of what will happen during the review in advance. This allows employees to prepare their input, which can help ease any anxiety they may be feeling on the day. Try to create an agenda that promotes two-way dialogue to encourage employee engagement.
Step 3: Begin with positives
Start the review on a positive note. Highlight any areas where the employee has excelled or grown since the previous review cycle, and any achievements they should be proud of. Providing employees with positive feedback promotes recognition and helps to strengthen their emotional connection to their work.
Step 4: Provide actionable feedback
Providing employees with clear, actionable feedback is crucial. Identify areas for improvement based on real examples and share growth opportunities with a focus on performance improvement. It’s also important to ensure that any feedback you provide is fair and authentic and within their ability to control.
Step 5: Create a roadmap for development
To ensure employees and leadership get the most out of performance reviews, focus on future growth rather than past shortcomings. Dedicate the remaining half of the review to setting future goals and creating a roadmap for development. This can provide employees with clear expectations as to what they need to focus on going forward.
Performance reviews FAQs
We’ve answered some common questions around performance reviews to help you navigate this important process.
Should managers host annual performance reviews?
Annual performance reviews are not required by the Fair Labor Standards Act (FLSA). However, companies can choose to embrace frequent feedback and conduct quarterly, monthly, or even weekly employee review sessions.
What are the three Cs of performance reviews?
The 3 Cs of performance reviews are:
- Continuous: Scheduling regular check-ins with employees and providing ongoing feedback
- Crowdsourced: Gathering feedback from all the employees’ coworkers to gauge a more detailed overview of their performance
- Culturally aligned: Setting goals for employees in line with the company’s culture and core values
What are some examples of performance goals?
Some of the most common types of performance goals businesses set for their employees, teams, and company include:
- Time management goals: Help team members stay productive and efficient.
- Collaboration goals: Encourage employees to work with other teams and people across the business to achieve the best results.
- Creativity goals: Encourage team members to think outside the box and innovative processes and deliverables.
- Sales performance goals: Classic target goals to ensure the business is hitting certain numbers and beating targets.
Short-term and measurable performance goals tend to be the most achievable. So, this is something worth keeping in mind during goal-setting-season.
How many times a year should you have performance reviews?
This depends on your business but once a year is a good start, allowing you to set goals in advance and then talk about how they have been achieved. It’s still important for managers and employees to check in about development goals throughout the year but an official performance review can take place annually.