How to Conduct an Effective Employee Performance Review

How your employees perform has a big impact on the day-to-day operations of your business. Performance reviews, (also known as performance appraisals) are an important aspect of any workplace.

But if you get them wrong you could alienate employees and leave them feeling harshly judged. That's why it's important to manage the process correctly. Doing so can ensure that your employees understand that you're there to provide helpful feedback.

In this guide, we'll look at what a performance review is, the benefits of them, and how to manage the review process.

What is a performance review?

A performance review is a formal assessment of an employee's work performance. They can help managers evaluate an employee’s strengths and weaknesses before offering valuable feedback.

They're also a chance for line managers to set goals to help motivate employees for the upcoming year or quarter.

A performance review should be a two-way conversation. Effective employee performance reviews allow staff to provide feedback on how they think they've performed since their last review.

Put simply, appraisals are a chance for you to discuss how an employee is performing. Whether it's to address issues with an employee's behaviour or celebrate their accomplishments.

Who conducts a performance review?

A performance review can be conducted by a range of people within your organisation. The size of your business and the industry you are in will help determine this. For example, their role may require specific knowledge that can only be assessed by someone with a similar level of experience.

For example, if you are a small business owner, you may conduct the review yourself. This is because you are likely to work closely with every member of your team. However, larger organisations may instruct a senior team member to conduct the review process.

Performance reviews may also be carried out by your human resources (HR) team.

Avoiding bias

When conducting a performance review, you need to ensure that all the information you gather is completely accurate. However, employee appraisals can hold the potential to be bias. This is often done unknowingly but can create issues for you as an employer.

Examples of a bias performance review include:

• A manager giving an employee a better review because they hired the employee.
• An employee receiving a negative review following a personal workplace conflict.
• An employee raising their self-evaluation scores in effort to achieve a raise.

If an employee believes that their review has been handled unfairly this may lead to claims of bullying or unfair treatment. This can have a serious effect on employee morale and potentially result in a tribunal claim.

What are the different types of performance reviews?

There are many different types of performance reviews. The type that you choose to conduct will depend on what goals you want to achieve. The industry or job description of the employee will also determine the type of review you choose.

So, let's look at some performance review examples.

Traditional performance reviews

Traditional approaches to the performance review process consists of a superior sitting down with their employee. Often, managers will use a performance review form that utilises a score system. This can help them to better assess an employee's behaviour or performance.

While a score system may seem objective and fair, they can be demotivating. A numerical system can lead managers to focus on negative aspects of an employee's performance. This can mean that soft-skills and other positive attributes, like employee engagement, are ignored.

360 degree review

A 360-degree review is when an employee receives feedback from all directions. This includes their managers and employees that work under them as well as peers.

360-degree feedback is often anonymous to avoid any potential conflicts related to negative criticism. While this method can provide more detailed and diverse feedback, it can leave you open to unconscious bias.

Appraisals like this are often managed through performance management software.

Employee initiated review

An employee-initiated review is when a member of staff asks their employer for feedback. This is often done following a recent role change or after the completion of a large project.

When employees initiate a performance review, it is often to discuss a specific issue such as pay or compensation. However, this does not mean that you should let them take the lead. Employers should prepare for this type of review the same as any other.

Upward appraisal

Performance management is important for everyone in your company. That means both managers and employees can benefit from performance conversations.

All employees should receive a performance appraisal, even senior team leaders. That's why many businesses choose to ask direct reports to discuss their manager's performance. This can help you assess the effectiveness of your management team and address any issues.

Negotiated appraisal

An impartial third party can sometimes help you manage performance conversations. This is especially effective if the working relationship between the manager and employee isn't great.

A mediator can help keep the performance conversation on track. They can also ensure that all criticism is objective and relates to actual performance. If the performance evaluation goes well, a mediator may not need to be needed for the next performance review.

Self-performance review

A self-performance review allows employees to identify their own areas of improvement. They encourage employees to think critically about their individual performance and objectively about their behaviour.

During a self-evaluation, employees should identify their own strengths and weaknesses to help set future goals. However, they're not an opportunity for employers or line managers to step back completely. Employers still play a critical component in this process as they must communicate any expectations that they have.

How often should you conduct performance reviews?

How often you conduct performance reviews, will depend on your employees and their roles.

While some of your staff may want frequent feedback and performance ratings, others may prefer to be left to their own devices. If you conduct reviews too frequently it can become frustrating to employees and could be perceived as micromanagement.

Weekly performance reviews

When a new employee joins your business, it can be useful to hold weekly, or fortnightly performance reviews. This can help you manage how the employee is progressing and allow for regular feedback.

Weekly reviews are also helpful for target driven roles like sales positions. This is because they provide a chance for managers and employees to discuss whether a goal was hit and if not, address why.

Monthly performance reviews

Some businesses choose to conduct monthly performance reviews with their staff. These are especially useful for companies that employ temporary staff or employees on fixed term contracts.

If your employee works on longer term projects, then they may benefit from a monthly performance review. Some employees prefer this type of review as it allows managers to reassure them that they are on the right track. It also gives them the chance to raise any issues and correct them before it is too late.

Quarterly performance reviews

Many businesses work to quarterly targets. A quarterly review allows you to measure an employee's efforts against your company's quarterly goals.

Quarters are split into three-month periods. This time frame allows staff to work and develop on any areas of weakness that may have been addressed in the previous quarter.

Annual performance reviews

Traditionally, businesses have conducted annual performance reviews. These types of reviews allow employers to assess an employee's progress over a 12-month period.

An annual performance review means you can look at a larger amount of data. This helps you to give a fair evaluation on how an employee has performed overall. However, it may mean that you fail to spot an issue early enough to fix it.

With so much data to assess, yearly reviews can often focus too much on past behaviour instead of future performance.

What do you cover in a performance review?

An effective performance review process will cover a few elements. The key points that you should discuss include:

• The quality and accuracy of an employee's work.
• An employee's ability to meet deadlines.
• Attitude and other on the job behaviours.
• Attendance.
• Teamwork and collaboration skills.
• Future performance and goals.

Performance reviews may also serve as a chance to review salary and benefits. However, this will be related to employee success and performance data.

Benefits of a performance review

Businesses conduct performance reviews for many reasons. It could be a tool they use when assessing performance. Or it could be a way for them to address negative behaviour that is affecting an employee's professional growth.

Whatever the reason, all businesses can reap the benefits of performance management. Let's take a look at some of the benefits.

Clarifies expectations

Sometimes employees can become complacent. If you notice an employee's output or work ethic beginning to slip, a performance conversation is a great way to address this.

Managers may need to reiterate their expectations to help an employee understand their day-to-day role. If this doesn't work, you may need to consider more formal methods like a performance improvement plan.

Career development

Good performance management can have a big effect on an employee's career. During a review you should discuss how an employee would like to progress within their career. Identifying internal talent early is a great way to reduce staff turnover and develop your succession planning strategy.

Rewards good performance

It can be easy to focus on the negative when conducting performance evaluations. But reviews should have a positive intent.

Performance conversations are a great time to reward staff for their hard work and achievements. This positive reinforcement can have a great effect on an employee's levels of motivation and productivity.

Provides opportunity for feedback

An employee performance review creates an opportunity to address any issues. While it is a time for managers to share their opinions, you should encourage employee feedback.

A two-way conversation is much more productive for you and your company. This is because it allows employees to address any concerns and ask questions about what is expected of them.

How to prepare for a performance review

Preparation is key when it comes to performance reviews. Fail to plan effectively and you could lose focus on the key points of your meeting. This could waste both yours and your employee’s time.

Although each performance review is different, there are few steps that everyone should take before beginning the process.

Let's explore the steps below.

Choose a time and location

When and where you hold a performance review is important. The location will play a big role in how formal or serious you want your review to be.

For example, if you have weekly, less formal reviews you may choose to hold them at an employee's desk. This can help with speed and convenience for both you and the employee.

However, if you are planning a more formal annual review you may choose a private location like a meeting room or closed office.

It’s always best to conduct a review away from an employee's team members or colleagues. That way you can gain a more honest insight into employee performance.

Gather data

For some companies, it may be easy to measure success. This is because employees have clearly set targets and goals that they must achieve. For example, sales positions or call handlers.

For other team members, success may be more subjective. In this instance you may have to speak to an employee's colleagues and peers. This can help you learn more about their productivity levels or general attitude towards work.

Arranging one to one meetings with senior managers can help you fully gauge the employee's performance on a day-to-day basis. This is because they can help measure their current output against past performance.

Prepare questions

It's important to plan exactly what questions you will ask before a performance review. Performance management is a tricky thing to manage.

The questions you choose should relate closely to the data that you have gathered and the issues you want to address. Performance review templates can help you stay on track and focus on the most important issues. They can also remind you to set future goals and relay any essential performance feedback to the relevant employee.

How to manage the performance review process

Every employer should consider performance management one of their top priorities. The main focus of any employee review is to assess, manage and measure performance. Get it wrong and it could lead to poor employee relations and low staff morale.

By following the below steps, you can help ensure that you conduct an effective performance appraisal.

Manage expectations

Conversations around performance can cause anxiety for a lot of employees. Before beginning the process, it can be helpful to explain what will happen during the meeting.

This can help eliminate some of their nerves and allow employees to come to the meeting prepared and fully present.

You may ask employees to prepare for the meeting by filling out a self-assessment. This may include a list of achievements that they are most proud of as well as any areas that they would like to develop.

Set the tone of the appraisal

When conducting a performance review, it's important to identify the end goal. If the employee has performed well this may be a chance to reward this. However, if there are issues you need to address, it’s always best to be direct.

If there are problems that need to be discussed, these should be confronted first. Doing so can allow for a more positive conversation later on.

Provide constructive feedback

Performance conversations aren't always easy. An employee performance review can sometimes turn sour, especially when discussing issues like bad attendance or poor performance.

It's important that you try to avoid dwelling too much on past performance issues. Instead try and remain future focused and discuss how they can work to fix these issues.

Set clear objectives

All your employees should have a goal to be working towards. Whether it's improving their sales records or completing tasks in a shorter time frame.

It's important to set objectives that are measurable. This can help your employees focus on specific areas of improvement. For example, you may challenge your employee to sign up ten new clients. If they gain five before their next review, they will have completed 50% of their goal.

Encourage employee feedback

Staff should be encouraged to respond to any criticisms raised in a performance review. They may have a different point of view, or mitigating circumstances that explain certain behaviours.

While this is not an opportunity for them to back track or explain away any misconduct, you should hear them out. Doing so can help eliminate any feelings of ill will. It can also help you assess your own performance and appraisal techniques to help you improve your future performance.

Outline future actions

The end of every performance review should focus on reiterating the employee's next objectives. Both you and your employee should agree to these and document them on a review form. This should be signed and dated so that it can be referred to in future.

Having a documented copy of an employee's goals can help them stay focused and motivated. It can also hold employees accountable if they fail to meet these targets before their assigned deadline.

Examples of performance review questions

Whether you're conducting weekly or annual reviews, it's important that you ask the right questions. Many managers will prepare a list of effective performance review phrases to help keep the conversation moving in the right direction.

Open ended questions

Asking open ended questions can help gauge how an employee feels about their overall performance. Your choice of questions will depend on what outcome you would like to achieve and how recent your last review was.

Some examples of employee review questions include:

• What project or action are you most proud of since your last review?
• How has your manager supported you since your last review?
• What skills have you recently developed or improved?
• Have you achieved all the goals you set out to complete? If not, why?
• What would clients or colleagues say about your recent interactions and performance?

Questions for managers

When conducting a review with senior managers, you may need to rephrase your questions. This can help you assess their performance as a manager and allow you to compare their answers with their direct reports.

Examples of questions for managers include:

• What has been [name]'s most successful project since their last review?
• How have you supported [name] since their last review?
• What skills has [name] recently developed?
• Has [name] achieved all the goals they set out to achieve? If not, why?
• How has [name]'s handled interactions with clients and colleagues?

Your managers will likely have different objectives compared to their direct reports. While managing employee performance is a key part of their role, ensure that they receive their own measurable goals.

Get expert advice on performance reviews from Peninsula

As an employer, it's important that you manage your employee’s performance as best you can. Good performance management can help improve your productivity, boost employee morale, and reduce staff turnover. It can also help you better manage internal talent and employee soft skills.

But get the process wrong and staff could end up feeling demotivated and underappreciated. Whether you want advice on weekly or annual reviews, Peninsula's expert advisors can help you to get the most out of your employee appraisals.

We offer a 24/7 HR advice line available 365 days a year. Contact us on 0800 028 2420.