Mastering Performance Reviews: A Comprehensive Guide

It's that time of year again: the "dreaded" annual performance review, where managers and employees come together to discuss the ups and downs of the year. They often consist of one-sided conversations and death by documentation, leaving everyone involved feeling uncomfortable, uninspired and unappreciated.

A Gallup study found that only 1 in 5 employees feel that their company's performance reviews motivate them. And it's not just the employees who aren't enthusiastic. A McKinsey study found that CEOs don't believe employee performance reviews help them identify the best employees.

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

As human resources managers, we are responsible for ensuring that the performance review process benefits both the company and the employees. We need to create an atmosphere in which leaders are equipped with the tools necessary to have meaningful conversations so that employees leave the conversation feeling heard and encouraged.

To help you on the path to a successful employee appraisal, we have created this guide on the basics of successful performance appraisals.

What is a performance appraisal?

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

The performance evaluation is an overall grade that serves as an anchor for any performance evaluation conversation.
The performance evaluation is a written description of the employee's performance over the past year.
Finally, supervisors and employees jointly define goals and measures that are intended to help employees achieve their goals in the future.

Best practice suggests performance reviews should be conducted at least annually to ensure everyone is held accountable and performance discussions remain open. However, you can also conduct quarterly assessments if necessary.

What are the benefits of annual performance reviews?

Annual performance reviews are a great way to get a comprehensive performance overview of the past year. They also offer the opportunity to recognize employee achievements.

They are also an important source of employee feedback, giving them insight into what they did well and what areas they may need to work on more. This performance feedback is crucial for career advancement. Done correctly, appraisals can provide employees with valuable guidance on how to achieve their performance goals.

A look at the statistics shows:

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 among 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. In this article, we'll look at performance review best practices and how to conduct annual reviews that drive employee performance and engagement.

How to prepare for a performance review

As the famous Benjamin Franklin once said, “If you fail to prepare, you are preparing to fail.”

The same goes for performance reviews. Preparation is key if we want the performance review to be a success.

Before the performance review begins, three essential steps must be taken to ensure productive and meaningful performance discussions.

1.Collect performance information from various sources

To get the most benefit from performance reviews, you need to collect performance information from a variety of sources. This can include customer feedback, employee performance data, and 360-degree feedback. Gathering a range of performance information before the performance review meeting can help ensure that the discussions are as accurate, objective and balanced as possible.

2.Take notes on the employee's 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 need to note down your experiences throughout the year and keep track of employee achievements and performance issues. By taking notes throughout the year, you avoid recency bias and can rely on specific examples when assessing performance.

3.Review previous performance review notes

Every performance appraisal should be based on past performance discussions. Review performance reviews from the previous year (if any) to see how your employees performed. This gives you a good starting point and allows you to identify performance improvements or problems.

As you prepare, remember to evaluate your employee based on the following criteria:

Collaboration and teamwork
Troubleshooting
Quality of work
Attendance and punctuality
The ability to meet goals and deadlines
Communication
Role-specific or company-specific services

Once you have evaluated performance based on the criteria mentioned above, you can go into the performance review interviews well prepared and confident.

12 tips for getting the most out of performance reviews

At this stage, you have already collected performance information, taken notes, and evaluated performance against key criteria.

Now is the time to confidently conduct performance reviews and ensure performance conversations drive employee productivity and performance.

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

1.Run them privately

Nobody, and I mean nobody, wants their performance review to take place in front of their colleagues.

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 open, respectful and judgment-free environment.

Additionally, you should ensure that you give your employees your undivided attention. Therefore, conduct performance reviews in a room free of distractions and interruptions.

2.Plan enough time

Time is valuable, and performance review conversations shouldn't feel rushed. You should ensure that you have enough time to complete them properly and make them productive and meaningful.

The last thing you want is a performance review that feels rushed and unfinished. This defeats the whole purpose and could really put a damper on the whole process.

So plan on at least forty-five minutes to an hour of time where you won't be interrupted. Finally, make sure everyone taking part in the performance review is aware of this so that they can plan their day accordingly.

3.Have proactive conversations

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

For this reason, performance discussions should always be forward-focused. Of course, you'll want to mention past performance issues and successes, but try to focus primarily on future performance and how to improve it. This will encourage employees to think proactively rather than being discouraged by past mistakes.

4.Let the employee take the lead

It may be easy to take the lead and dominate performance conversations. However, it's important to remember that conversations should go both ways.

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 discussions.

Ask him questions like "How do you rate your performance?" and “What do you think are your strengths and weaknesses?”.

This way, the responsibility falls back on the employee rather than relying on your opinion and judgment. It also gives you insight into performance from the employee's perspective - which can be invaluable!

5.Be honest

Beating around the bush and making light of performance issues won't benefit anyone in the long run. Therefore, be honest and open during performance discussions and provide constructive feedback during performance appraisal discussions.

In any case, don't be rude or disrespectful. But don't gloss over performance issues either. Instead, you should put performance problems and successes on the table and show employees specific opportunities for improvement.

So be honest, direct and open in performance reviews. Honesty respects both parties and ensures that employees leave with accurate knowledge of their contribution to the workplace.

6.Choose your language wisely

While you want to ensure that you are honest and open with your employees, the way you communicate performance issues is equally important.

Choose your words carefully in performance discussions and avoid absolute terms like “always” or “never.”

James E. Neal, in his book Effective Phrases for Performance Appraisals, highlights some good phrases you can use to demonstrate understanding, empathy, and a willingness to collaborate. For example, phrases like “looks for creative alternatives” or “evolves and improves” are far more constructive than “inadequate performance” or “lack of initiative.”

It's about paying attention to your language and being a performer rather than a critic.

7.Give clear examples

This is where your annual observation notes come in very handy. You need to refer to specific examples to flesh out your performance review conversations.

So if performance in certain areas leaves something to be desired, you should point to specific instances where the employee failed - and vice versa when they succeeded. This way, you can ensure that performance discussions stay on track and confirm the reasons for exceeding or falling short of expectations.

And don't forget that the conversation should be a two-way dialogue. So ask your employee to give some examples of their successes and shortcomings!

8.Express gratitude and appreciation

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

Not only will this ease their fears 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 small recognition for their contributions to the company.

So, keep expressing a little appreciation and gratitude, and you will definitely find that your performance will improve in the future!

9.Focus on the individual

It's easy to get caught up in organizational silos, performance metrics, and top-down performance expectations. However, performance reviews shouldn't be the same for everyone. Instead, you should tailor them to each employee.

Focus on employees’ goals, performance expectations, and career aspirations. This allows the conversation to be tailored specifically to the employee and creates more realistic and achievable expectations.

And if you have the performance review conversations right, you will have a more motivated and performance-oriented workforce!

10.Ask for feedback

Performance reviews are ultimately the highlight of employee performance during the year. But feedback shouldn’t just focus on employee performance. They also want to know how you perform as a manager.

So take the time to ask employees for their feedback and be open to any constructive criticism they have. This feedback can include anything from how they felt supported throughout the year to how their performance expectations were communicated.

By having an open conversation and listening to employee feedback, you will promote a culture of transparency and collaboration throughout the company and create a performance-oriented environment for everyone!

11.Active listening

There is no denying that active listening can go a long way in strengthening relationships and conversations. This is particularly true for performance appraisals.

When you actively listen to what your employee has to say, you will better understand how you can help them. It also shows your employees that you are open to discussing their performance and value their opinions. Below are some tips to help you actively listen:

Avoid interrupting or making assumptions.
Make eye contact and listen without judgment.
Summarize points to ensure you understand them.
Ask clarifying questions if necessary

Active listening allows you to have productive and meaningful conversations. And it contributes significantly to a better relationship between both parties!

12.Conclude with actionable steps

Before you end the performance review, you should determine the steps that both parties will take in the future.

These may include performance improvement plans and goals, training or development opportunities, or other performance targets that must be achieved.

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

Whatever performance goals you set, agree on the resources or support needed to achieve those goals and set a date to review those goals together. If you set concrete measures, everyone is responsible for the future!

What to do after a performance review?

Hopefully everything went well at this stage and the discussions about employee performance evaluations were a success. However, that doesn't mean you can just tick things off and do it again next year.

Employee appraisals should not be a one-time event! Instead, they should take place year-round to keep the momentum going.

According to a study by Josh Bersin, an estimated 75% of companies are adopting more frequent performance appraisal models.

Regular performance reviews do not have to take the form of a long and complex appraisal process. Instead, they can be as simple as providing feedback after each completed project or milestone, or through quarterly performance reviews.

Regular performance reviews throughout the year make performance reviews more valuable and help you build meaningful relationships with your employees.

How to improve employee performance through frequent recognition

It's not just performance discussions that should be conducted continuously. Recognition should also flow throughout the year.

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

Not necessarily. If you limit recognition, you're sure to miss out on performance improvements between appraisals.

Our research shows that weekly or monthly recognition has the greatest impact on employee value.

So how can you use frequent recognition to improve performance?

Frequent recognition can come in different shapes and sizes, such as: in the form of verbal or written recognition, awards and rewards or even a simple pat on the back.

No matter what form the recognition takes, it is important that it is timely and meaningful.

To stay on top of things, you can always invest in an employee recognition platform like IceHrm.

Tools like IceHrm can be used alongside performance reviews to encourage excellence when it occurs. For example, with IceHrm 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: Acknowledging an employee's behavior soon after it occurs can ensure that the positive behavior is remembered and repeated.
Personalize your messages: Showing your employees that you understand and value their contributions with a personal message will create a stronger emotional connection with them.
Make sure the rewards are relevant: Choose recognition rewards that are relevant to the person being recognized or the task they completed to make them feel even more valued.
Celebrate successes publicly: Make sure your entire team knows about employees' successful efforts by announcing them on the platform.

Conclusion

Performance reviews are important, but performance reviews don't just have to happen once a year. By making performance reviews and recognition part of your team's routine, you can achieve the performance results you want.

With this guide, you can look forward to your employee performance reviews instead of dreading them. So let’s conduct performance reviews regularly and get the results you want!

And with powerful employee recognition tools like IceHrm, you can help make recognition much easier to manage all year long.

Make performance reviews a routine for success! Enhance with IceHrm's recognition tools for year-round appreciation.