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Employee Engagement

The Ultimate Guide To Conducting Performance Reviews

Jasmine Panayides

It’s that time of the year again: the ‘dreaded’ annual performance review time, where managers and employees come together to discuss the highs and lows of the year. Often consisting of one-sided conversations and death by documentation, performance reviews typically leave everyone feeling uncomfortable, uninspired, and unappreciated.

In fact, research from Gallup found that only 1 in 5 employees felt that their company's performance review motivated them. And it's not just employees who are not a fan. A study by McKinsey found that CEOs don't believe employee performance reviews help them identify top performers.

But performance reviews don't have to be dreaded occasions! With the right approach and strategies, they can become an opportunity for meaningful dialogue between managers and employees.

As HR professionals and people managers, it's our responsibility to ensure that the performance review process works in favor of both the organization and its employees. We must create an atmosphere where managers are equipped with the necessary tools to conduct meaningful conversations, so employees leave the conversation feeling heard and encouraged.

To help you on your way towards employee performance review sorcery, we have created this guide on the fundamentals of successful performance reviews.

What Is A Performance Review?

Performance reviews are an essential part of the HR process. They provide a structured way for managers and employees to assess performance, identify strengths and weaknesses, and set goals for future development.

  • The performance rating is an overall score that serves as the anchor for any performance review conversation.
  • The performance evaluation is a written description of the employee's performance over the past year.
  • Finally, managers/employees work to outline objectives and steps to help employees reach their goals in the future.

Best practice suggests employee performance reviews should be completed at least yearly to ensure everyone is held accountable and performance conversations remain open. However, even if you could also conduct quarterly reviews if needed.

What Are The Benefits Of Annual Performance Reviews?

Annual performance reviews are a great way to get a broad performance overview of the past year. In addition, they provide an opportunity to recognize staff accomplishments.

They also serve as an essential source of feedback for employees, giving them insight into what they've done well and what areas may need more work. This performance feedback is vital for career progression. When done correctly, reviews can provide valuable insight for employees into how they can reach their performance goals.

If we look at the statistics:

  • Employees are likely to be four times more engaged when they receive meaningful feedback.
  • 83.6% of employees feel that they are motivated to do their work when their efforts are recognized.
  • Productivity and performance are 14% higher in employees who work for a company that conducts performance reviews than those who do not.

Performance reviews are a valuable tool for employers and employees, but only when done correctly. So in this article, we'll look at performance review best practices and how to conduct annual reviews that drive performance and employee engagement.

Two employees at a computer going over a report

How To Prepare For A Performance Review

As the infamous Benjamin Franklin once said, “By failing to prepare, you are preparing to fail.”

The same can certainly be said for performance reviews. Preparation is critical if we want performance reviews to be a success.

So before the performance review starts, three essential steps need to be taken to ensure productive and meaningful performance conversations.

1. Gather Performance Information From Multiple Sources

To get the most out of performance reviews, you must gather performance information from various sources. This could include customer feedback, employee performance data, and 360-degree feedback. Gathering a range of performance information before the performance review meeting can ensure conversations are as accurate, objective, and balanced as possible.

2. Takes Notes On Employee Performance Throughout The Year

Instead of relying on your employee's performance over the past few weeks, performance reviews are much more successful when performance is considered over the past year. Therefore, you must note your experience throughout the year and keep track of employee accomplishments and performance issues. Taking notes throughout the year will help you avoid recency bias and give you tangible examples to refer back to when you conduct performance reviews.

3. Look At Notes From The Previous Performance Review

Each performance review should build on performance conversations from the past. Look back at performance reviews from the previous year (if available) to identify how your employees have been progressing. This will provide a good baseline and allow you to recognize performance improvements or issues.

When conducting your preparation, consider grading your employee on the following:

  • Collaboration and teamwork
  • Problem-solving
  • Quality of work
  • Attendance and punctuality
  • The ability to meet goals and deadlines
  • Communication
  • Role or company-specific accomplishments

Once you have graded performance on the criteria above, you will be ready to go into performance review meetings feeling prepared and confident.

Venngage has nice performance review templates to help you prepare.

An employee sitting at a computer writing in a notebook

12 Tips To Make The Most Out Of Performance Reviews

At this stage, you would have already gathered performance information, taken notes, and graded performance on critical criteria.

Now it’s time to conduct performance reviews with confidence and ensure performance conversations stimulate employee productivity and performance.

To help you get the most out of performance reviews, here are 12 tips that will ensure your conversations have a positive outcome:

1. Host It Privately

No one, and I mean absolutely no one, wants their performance review to be conducted in front of their peers.

You want your employees to feel comfortable enough to open up and give honest answers. So find a private space away from prying eyes and ears, and create an environment that is open, respectful, and non-judgmental.

Not only that, but you want to ensure that you give your employees your undivided attention. So make sure you conduct performance reviews in a room away from distractions and interruptions.

2. Allow Ample Time

Time is precious, and performance review meetings should not feel rushed. You want to ensure that you have enough time to conduct them properly and make them productive and meaningful.

The last thing you want to do is to conduct performance reviews that feel rushed and unfinished. It defeats the whole purpose and could put a real damper on the entire process.

So make sure you book at least forty-five minutes to an hour of uninterrupted time. Finally, ensure that all performance review participants are aware of this so they can also manage their day accordingly.

3. Have Forward-Facing Conversations

Performance review meetings can be daunting for employees, and the last thing you want to do is make the process more intimidating than it already is.

That's why performance conversations should always be forward-facing. Of course, you will want to mention past performance issues and successes, but try to focus primarily on performance moving forward and how it can be improved. This will encourage employees to think proactively instead of feeling discouraged by past mistakes.

4. Let The Employee Lead

It may be easy to take the lead and dominate performance conversations. But it is important to remember that they should be a two-way street.

Performance reviews should be collaborative. These conversations should create a healthy dialogue between you and your subordinates, so let your employee take the lead in performance conversations.

Ask them questions such as, “What do you think your performance looks like?” and “What do you think are your performance strengths and weaknesses?”

This will put the onus back onto the employee rather than relying on your opinion and judgment. Plus, it gives you an insight into performance from their perspective – which could be invaluable!

Two employees sitting down to talk with coffee in their hands

5. Be Honest

Beating around the bush and treading lightly around performance issues will not benefit anyone in the long run. So be honest and frank with performance conversations, and provide constructive feedback throughout performance review meetings.

By all means, don't be rude or disrespectful. But don't sugarcoat performance issues, either. Instead, you want to lay performance issues and successes on the table and provide employees with tangible ways to improve.

So be honest, direct, and open during performance reviews. Honesty will respect both parties and ensure employees walk away with correct knowledge of their workplace contributions.

6. Choose Your Language Carefully

Further to the point above, while you want to ensure that you are honest and open with your employees, it is important to note that how you communicate performance issues is equally as important.

Choose your words carefully during performance conversations, and avoid absolute terms such as "always" or "never."

James E. Neal, in his book, "Effective Phrases for Performance Appraisals," highlights some great phrases that you could use that demonstrate understanding, empathy, and a willingness to work together. For instance, using terms such as "seeks creative alternatives" or "continues to grow and improve" are far more constructive than "inadequate performance" or "lacks initiative."

It's about being mindful of your language and being a performance partner rather than a critic.

7. Reference Clear Examples

This is where your yearly observation notes come in handy. You need to reference tangible examples to make your conversations more concrete when conducting performance reviews.

So if performance is lacking in certain areas, reference specific instances of when the employee fell short – and vice versa for their successes. This will help ensure that performance conversations remain on track and validate why they are exceeding or falling short of expectations.

And remember, the conversation should be a two-way dialogue. So ask your employee to provide some examples of their successes and shortfalls, too!

8. Express Gratitude And Appreciation

The art of gratitude and appreciation should be the cornerstone of every employee performance review. At the end of every conversation, take some time to express your gratitude and appreciation for all their efforts, regardless of whether performance exceeds expectations or falls short.

This won't just ease their anxiety and create an environment of mutual respect, but our recent research found that 77.9% of employees would be more productive if they received a little recognition for what they do for the company.

So, express a little appreciation and gratitude throughout, and you’ll be sure to see improvements in performance moving forward!

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9. Focus On The Individual

It's easy to get caught up in organizational silos, performance metrics, and top-down performance expectations. But performance reviews shouldn't be a one-size fits all approach. Instead, you should be catering them to the individual employee in question.

Focus on their goals and objectives, performance expectations, and career aspirations. This will allow for the conversation to be tailored specifically to them and create more realistic and achievable expectations.

And by getting performance review conversations right, you'll see a more motivated and performance-driven workforce!

10. Ask For Feedback

Ultimately performance review meetings are the culmination of employee performance throughout the year. But the feedback shouldn't just be concentrated on their performance. You also want to know how you are doing as their line manager.

So, take the time to ask for their feedback, and be open to any constructive criticism that they may have. This feedback can be anything from how they feel they have been supported throughout the year to how their performance expectations have been communicated.

By having an open conversation and listening to their feedback, you'll cultivate a culture of transparency and collaboration throughout the organization and create a performance-driven environment for everyone!

11. Actively Listen

There is no denying that active listening can go a long way in fostering stronger relationships and conversations. When conducting performance reviews, this is especially true.

By actively listening to what your employee has to say, you'll better understand how you can help them. Plus, it also shows your employees that you are engaged in the performance conversation and value what they have to say. Here are a few tips to help you actively listen:

  • Avoid interrupting or making assumptions
  • Make eye contact, and listen without judgment
  • Summarize points to ensure understanding
  • Ask clarifying questions as needed

By actively listening, you'll create performance conversations that are productive and meaningful. And it will go a long way in creating a better relationship between both parties!

An employee sitting at a computer on a video call while smiling and listening

12. End With Actionable Steps

Finally, before ending performance reviews, set out the actionable steps both parties will take moving forward.

These can be anything from performance improvement plans and objectives, training or development opportunities, or any other performance benchmarks that need to be achieved.

One way to do this is by setting SMART goals that are specific, measurable, achievable, relevant, and timely.

Whatever performance goals you set, agree on any resources or support needed to help achieve them and set a date when you can revisit them together. When you set specific actions, everyone is held accountable moving forward!

What To Do After A Performance Review

Hopefully, everything went swimmingly at this stage, and the employee performance review conversations were a success. But that doesn't mean you can pack things up and revisit them next year.

Employee performance reviews shouldn't be a one-time event! Instead, they should continue to take place throughout the year to keep the momentum flowing.

According to research from Josh Bersin, an estimated 75% of organizations are adopting more frequent performance review models.

Regular performance reviews don't have to take the form of a long and complex appraisal process. Instead, they can be as simple as giving employees feedback after each project or milestone is completed or through quarterly performance check-ins. 

Regular performance check-ins throughout the year will make performance conversations more valuable and help you develop meaningful relationships with employees.

How To Use Frequent Recognition To Improve Employee Performance

It isn't just performance conversations that should be continuous, either. Recognition should also flow freely throughout the year.

But you're probably thinking: ''Can't we just leave the recognition to our performance reviews?''

Not necessarily. By limiting recognition, you’ll be sure to miss out on performance improvements in between reviews.

Our research has found that weekly or monthly recognition has the highest impact on employee value.

So how can you use frequent recognition to improve performance?

Frequent recognition can come in various shapes and sizes, such as verbal or written staff shoutouts, awards and rewards, or even a simple pat on the back.

Whatever form the recognition takes place in, the important thing is that recognition is timely and meaningful.

To help you keep on track, you can always invest in an employee recognition platform like Nectar.

Tools like Nectar can be used alongside performance reviews to encourage stellar performance when it happens. For example, with Nectar, you can use shoutouts to reward performance in real time.

Here are some tips on how to use employee recognition tools effectively:

  • Provide immediate feedback: Recognizing an employee's actions quickly after they have occurred helps ensure that the positive behavior is remembered and repeated.
  • Personalize your messages: Showing employees that you understand their contributions and appreciate them with a personalized message will create a stronger emotional connection with them.
  • Make sure rewards are relevant: Choose recognition rewards relevant to the person being recognized or the task they completed to make them feel even more appreciated.
  • Celebrate successes publicly: Make sure your entire team is aware of successful employee efforts by announcing them on the platform.
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Performance reviews are important to get right, but performance conversations don't need to be a once-a-year event. By making performance reviews and recognition part of your team's routine, you can get the performance results you need.

With this guide, conducting employee performance reviews can be something to look forward to, not dread. So, let's make performance reviews regular and get the performance results we need!

And with the power of employee recognition tools, such as Nectar, you can help make recognition much easier to manage throughout the year. Are you ready to see Nectar in action? Request a demo of our platform to learn more.

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