What is a performance review?
A performance review is a formal meeting where a manager assesses an employee’s performance in their role, provides employee feedback, discusses strengths and opportunities to improve performance. They may also review the employee’s goals and objectives and adjust these in line with the employee’s performance.
Performance reviews are sometimes referred to as appraisals, 360 degree reviews, or performance evaluations. Traditionally, performance reviews were carried out annually and focused on an employee’s performance over the previous year. Because so much can change over a year, it can be more useful to hold performance reviews at regular intervals throughout the year.
Why is performance review important?
Performance reviews are an important way to engage employees with an organization’s goals and improve their productivity. They help both employees and managers identify development opportunities, boost motivation, provide important information about how an employee is doing in their role, and give feedback that can be used to adjust the performance management process.
Performance evaluation is also an integral part of organizations’ talent management strategies. However, more than this, performance reviews are important because they support:
Training and development
With regular reviews, managers can identify where employees need extra support to meet their objectives. As well as improving an employee’s performance, this is motivating for the employee and improves retention. A LinkedIn report stated that 94% of employees would stay at a company for longer if it invested in their development.
In order to adapt their performance as the company changes, employees must know how they are performing against both long-term and short-term goals. Performance review allows managers to adjust these as required, whether this means changing objectives or making adjustments to how to review they will be measured.
Effective performance management can improve managers’ ability to build a strong company culture. This helps attract, retain, and motivate employees, which can positively impact business performance.
Employee performance reviews are beneficial for managers too, as they allow them to reflect on how they are performing overall, including their leadership style and overall approach to the performance review process.
Giving an employee feedback on their performance encourages them to engage with the organization’s goals and, therefore, helps develop a clear understanding of how they contribute to these.
In turn, this contributes towards improving performance - both for the employee and the organization as a whole.
Regular reviews help employees understand exactly what is expected of them and what they can expect from their employer in return.
This reduces frustration on both ends; employees understand more about how their work contributes to the organization’s performance, while managers can focus on rewarding employee contributions.
Reward and recognition
Reviews are a practical method of recognizing strong performance and sharing positive feedback. It is clear when an employee has over-or underdelivered with well-written objectives, making it easy for managers to reward and recognize fairly.
This can also help reduce conflict between managers and employees if an employee has not met their objectives and is shown to be underperforming.
A good performance review can act as a first step in agreeing on the next steps for an employee’s career development. With performance against objectives, feedback from a range of individuals, and the employee’s input, it becomes easy to see where an employee thrives and how they may be able to develop their career within your organization.
This can support retention – regular and meaningful career conversations are shown to improve employee engagement.
Performance review phrases and tips
- Tell employees about their performance in general terms, using behaviors and results.
- Performance reviews shouldn’t be one big surprise every year, it shouldn’t take workers by surprise when they receive their review ratings or salary increase.
- The performance review process should always give feedback to the employee so they know how to improve.
- In your performance review, discuss all areas of an employee’s annual performance – not just their work. This will help meet the needs of both the organization and the employee.
- Your employees may also be happier if they feel that they are recognized for more than just their work. During an employee performance review, discuss their personal development. This will help them understand how they are performing in the context of the organization’s success.
- Using impactful performance review phrases for managers should include for example: 'You have achieved results well above what is required and/or 'You have done x, y & z, and we are very pleased with your performance.
How to conduct a performance review?
A good performance review is one that is well-planned for by both the manager and employee and held regularly.
Here are some of the key factors managers should bear in mind when conducting a performance review:
Before the performance review
- Set a date and time that works for both the manager and the employee. This should be at least one month in advance so that the employee has time to prepare and the manager has time to review their notes.
- Choose a place that is quiet and where you won’t be disturbed. Make sure you have enough time to conduct the review.
- It is helpful for both managers and employees to discuss expectations beforehand. Let the employee know what they are expected to cover during the performance review, how long this will take, and whether there are any tasks they should carry out before it takes place (such as preparing self-evaluations).
- Ask the employee to review their objectives and to create their own review against their objectives.
- Gather feedback from a wide range of people who work the employee. This should include co-workers, direct reports, clients, and suppliers.
- Review the feedback you receive together with the employee’s performance against their objectives.
- Consider rehearsing difficult conversations you may need to have with the employee, for instance, if you have negative feedback from a co-worker or if their work is behind the target. It can be helpful to talk through concerns with an HR professional in advance of the meeting to get their advice and support.
During the performance review
- Make sure the focus is 100% on the employee. Avoid distractions such as emails, instant messages, and calls. The best practice is to leave devices out of the meeting.
- Start by asking the employee to tell you how they think they have delivered against their objectives. In most cases, they will be aware of the reality of where they have under or overperformed. This can make the job of the manager easier.
- Ensure what you say is factual and relevant to the employee’s performance. Rumor, speculation, and comparisons are unfair and unprofessional and should not be part of a performance review.
- Focus on the future. Although managers are reviewing an employee’s past performance, the emphasis should be on how this affects the way the employee will work now and in the future.
- Consider if any of the employee’s objectives need to be changed. Perhaps they were too easy, perhaps they are no longer applicable.
- Discuss ways in which you can help the employee deliver objectives that are proving difficult – this could include coaching, mentoring, or on-the-job training.
- Be clear about what the next steps are. Will the employee receive ongoing coaching? Or could they be supported by a different manager who has experience in these areas?
How should you end the performance review?
Ensure that you give feedback on how well the employee did against their objectives, not just comments on how they need to improve.
If you’ve given the employee written feedback, ask them to acknowledge it, and check they understand what you have said.
Be sure to focus on what they can do differently next time rather than just focusing on problems, and if there are areas where the manager is happy with the employee’s performance or contributions, make sure you mention these.
An effective performance review can help managers understand their employees’ strengths and weaknesses, and how this impacts the business. They give employees a chance to talk about what they have achieved and what they would like to do next. This also enables them to share information on their career plans and ambitions – ultimately creating a more open, trusting, and productive relationship between them, and improving their future performance.
Don’t put performance reviews off any longer. It is never too late to ask employees if they are happy with their performance. It provides you the opportunity to share your expectations of what success at work looks like for each employee and how they can do their self-evaluation and get on track for achieving that goal.
If employees are not meeting their objectives remember it may be an emergency or a personal issue that is distracting them from work. Ask open-ended questions to find out more and give employees a chance to explain their situation before going down the formal route of formal performance reviews.