What is the Best Structure for a Performance Review (PDR)?

A performance development review (or PDR for short) is not a new concept. In fact, many HR professionals discourage their organizations from adopting them, but they still serve their purpose and are far from extinct.

And rightly so, especially in growing companies.

A PDR helps your employees focus on the tasks that contribute to the company's overall mission, and they know exactly where they stand in terms of their expectations, performance and job security.

PDRs also provide managers and HR teams with a written record of performance to better reward your top talent and provide guidance for your weakest employees (underachievers). Essentially, an employee should never be surprised by a particular outcome such as a promotion, raise, training, or even firing.

Regular communication improves the relationship between manager and team member. This ensures that the team's priorities are implemented in accordance with deadlines and any skills gaps are addressed.

With all of these considerations, it is clear that there is still a place for performance development conversations.

What is the best way to structure a performance review?

Step 1: Set annual goals and expectations

Whether your fiscal year begins in January or April, you should start your annual PDR here. This means you have new company goals to align your team's performance and goals with.

Each and every goal should be SMART (Specific, Measurable, Achievable, Results-oriented and Time-bound). Remember that these goals are specific to each employee's role and should be clearly aligned with overall company goals. This way, the employee knows exactly how their role contributes to the bigger picture and they feel valued within the organization.

For example, if the company goal is to increase sales by 10% by the end of December 2020, a sales representative's individual goal could be to win £200,000 in new business by the end of December. This is directly aligned with the company's goal.

Step 2: Have regular meetings, preferably monthly

Now that the employee knows their annual goals, it's time to track their performance and set smaller, more frequent goals to achieve those goals. For example, with an annual target of £200,000, a monthly target might be to make 400 calls per month to ensure the sales pipeline is filled so that the annual target can be achieved more easily.

Each meeting should discuss the previously set goals, provide feedback to the employee and set goals for the next month. Every performance review should be prepared by both parties, have a short agenda, and provide space for constructive feedback.

Step 3: Mid-term discussion

You should have an interim interview every six months (or three months during the probationary period). You should discuss the last three or six months in detail and not just the last month. This is where your notes from the regular monthly meetings come in handy as you can refer back to the points discussed.

Similar to monthly meetings, you will discuss progress toward the annual goal and the employee's overall performance. This meeting can also be a good time to discuss training needs or other things the employee needs to achieve their goals.

Step 4: End of year discussion

As the title suggests, this is a summary of the employee's annual performance. This is the most important performance appraisal you will conduct as it helps set goals for the next year and highlights whether rewarding top talent is appropriate or where there are gaps in an employee's skills.

Important tips for a successful performance appraisal

PDRs can be difficult to manage. The manager needs to ask the right questions and give constructive feedback, while the employee needs to reflect on their workload and performance and be open and honest. Otherwise, the entire PDR process is pointless.

These tips will help you turn a mediocre PDR into a positive experience for your employee.

1. Avoid bias
   As a manager, you must stick to facts gathered from analysis, observation and feedback. Don't discriminate or jump to conclusions - be fair and honest.
2. Privacy is important
   Each PDR conversation should be a private matter so that you can have an open conversation. Any feedback or documents should be kept confidential so your team members know you value them.
3. Two ears, one mouth
   Allow your employee to do most of the talking. You should listen at least twice as much as you talk. PDRs are a great way to hear honest opinions that can give you ideas for better running your department or company. Also, do not forget that if you speak and present your views first, the employee will most likely agree and not fully communicate his true feelings. Give him plenty of opportunity to express his opinion.
4. One-on-one coaching
   Coaching your employees should be an ongoing process to ensure their progress and building it into the PDR is a must. Use the time to discuss what success looks like and even role play to help the employee overcome uncomfortable situations.

The best questions for a performance review

With IceHrm, our all-in-one HR and payroll system, you can run your entire PDR process within the system. For this purpose, we have created a standard template for our customers that contains everything you need for a successful employee interview.

Questions you should ask at any regular review include:

• Name of the employee
• Date of review
• Have the measures from the last conversation been completed?
• If not, what can be done to ensure that the outstanding actions are completed by the next meeting?
• Is there progress on individual annual goals?
• What did you do well this month?
• What could you have done better this month?
• What do you need help or support for?
• Do you have any problems or concerns?
• Is there anything else you would like to discuss?
• Manager's observations/comments

You should also set a series of action items/goals for the next month that will provide you with the information you need for next month's performance review.

How to record the results of each PDR

As mentioned earlier, you should use an HR system like IceHrm to capture the information from each conversation. With ever-changing employee legislation, you need a central database that stores previous conversations with each employee.

With an HR system, you can quickly look back at previous appraisals and goals to decide the best course of action. You'll also save time, reduce the amount of paperwork involved in a performance appraisal, and require the employee to complete their appraisal form before the interview.

If you would like to know how IceHrm can optimize your PDR process, schedule a demo appointment with one of our HR system experts.