Performance reviews are arguably one of the most challenging initiatives a company undertakes. Done well, the company reinforces its culture and continues to develop and retain top talent, with employees and managers feeling positive about the process. But in many cases, the dreaded performance review time frame becomes a burden, or worse, something left to the last minute with minimal thought given beyond completing a form.
In today’s talent-competitive environment, companies cannot ignore the importance of employee development and the performance evaluation is at the heart of these actions. Benefits of a strong performance evaluation process include:
- Increased employee engagement
- Optimized performance
- Retention improvements
- Growth in manager effectiveness & leadership skill development
So how do companies build a performance review process that not only works, but also is embraced by the organization?
Building Blocks for Quality Performance Review Processes
The first step is to make sure your process is not just a one-time exercise. Instead, the performance process is an ongoing sequence of events that culminates in the performance review and setting of new goals for the upcoming year. Done correctly, by the time the formal review is held, there are no surprises for the employee or the manager, because the process has guided their communications all year long. Additionally, the process needs to reflect the company’s culture, embracing the values employees strive to achieve every day.
Experts agree that there are five components in a strong performance review process. They aren’t linear. The elements all work cohesively to provide effective performance management and include:
- Planning – Objectives and goals are set for the year, aligned to corporate goals, often with milestones to gauge progress. These goals include job performance and personal skill development.
- Monitoring – Through regular 1:1 meetings, the manager and employee discuss progress to goals and jointly determine how to continue forward or adjust as needed. The manager provides constructive feedback to help guide the employee’s development and ensure business goals are achievable.
- Developing – The employee and manager highlight skill development areas and build them into the employee plan. These may include internal training resources or external opportunities.
- Rating – At least quarterly, the manager and employee discuss progress toward goals. This frequency allows the two of them to course correct along the way, enabling positive outcomes.
- Rewarding – in some cases, organizations separate the performance review from the reward discussion to maintain emphasis on the employee’s growth and performance. In other cases, performance-based raises, bonuses and other compensation perks are discussed.
Best Practices for Performance Review Processes
It’s not enough to have a documented performance review process. There are ideal components to a strong performance review process that need to be considered before embarking on a new course of action:
- Alignment of individual tasks to team and department annual goals. Each employee should be able to draw an imaginary line from their goals and objectives to the company’s. Managers need to ensure this is clear regardless of job function.
- Clarification of expectations and resources to achieve goals. This is necessary both when goals are set and then throughout the year at check-in meetings.
- Leadership, managers and employees take on a shared responsibility for a collaborative and open feedback process. Leadership must model this for their own performance evaluations.
- Ongoing recognition for contributions throughout the year, coupled with coaching for any identified improvement areas.
- Managers’ acknowledgement of personal biases and prioritizing efforts to mitigate them. HR can play a key role in this part of the process, providing coaching and training to help managers grow in their roles.
All of these are healthy discussions that begin at the leadership level, and then trickle down through to managers prior to rolling out a performance review process to employees.
Launching an Improved Performance Review Process
- Once the performance review process is determined for the organization, the next step is to map the entire process to get everyone on the same page. This includes development of review templates, goal setting forms, etc. Leadership works with Human Resources to set the launch time frame, considering business requirements. For example, if the company is a retailer, Q4 performance reviews during the busiest time of the year probably isn’t the best idea. Employees are toiling to meet annual goals during that time frame, and Q4 results contribute heavily to their annual performance.
- Set and share corporate goals and objectives for the year as the organizing framework.
- Have employees create a set of initial goals and meet with managers for review and input. Using the SMART goals framework (specific, measurable, attainable, relevant and timebound) makes the evaluation much simpler at the end of the year. Managers and employees agree on the goals and measures jointly.
- Managers set quarterly check in meetings with employees for the year. Above and beyond regular business 1:1 meetings, these are focused on performance vs. goals to date. The employee preps results for that time frame, and the two discuss next steps and any adjustments that need to be made.
- In the final performance quarter ask employees to complete self-evaluations and have managers evaluate each employee.
- Managers hold a calibration meeting. The first time the performance review process is rolled out, leadership and managers need to agree on consistent measures which can require a significant amount of discussion. In subsequent years, performance calibration meetings bring together managers to determine and agree again upon (or adjust) the criteria for high, average, and low performers and evaluate employees appropriately. Done correctly, calibration eliminates inconsistencies in evaluations across the employee base, while providing visibility for high performing employees to managers across departments – potentially aiding in future career development opportunities.
- Managers deliver the employee review. Delivering a review requires preparation and thought by the manager. The review impacts the employee’s attitude and motivation for the next year. Given that communication has been consistent and frequent throughout the year, at this point, the review should not reveal any surprises.
- Managers need to recognize the employee's accomplishments and efforts from the past year. Lead with this rather than jumping into the discussion with goals met or unmet. When employees are doing something that helps the organization, reinforcement of those actions is important. Employees are likelier to hear constructive feedback after they hear positive recognition. Take care to deliver constructive feedback that clearly demonstrates how the employee can improve and grow in that area.
Finding an Expert
Building a strong, effective performance review process that is immersed in a company’s corporate culture is not a simple task and requires careful planning and consideration. Growth Operators offers fractional and interim Human Resources professionals who bring the needed experience to build a strong performance review process for any company. All of our GrowthPros were operators in the corporate world before joining us, so they have practical, hard-won expertise to share. Additionally, because of their knowledge base, they quickly identify how to improve an existing performance review process or build a new one from the ground up. We do much more than performance review plans and processes, read one of our client case studies here. Interested to learn more about the solutions we provide? Reach out and set up a convenient time for a free consultation with us. We’re excited to take on your challenge and take this and other tasks off your list.