Best Practices for Conducting Effective Performance Reviews

Arrr the good old performance review! Managers hate doing them ……… employees hate attending them…… so why do we bother?

Well, it’s not that performance reviews are bad per se… it’s just that we’ve been doing them wrong! For many years the annual performance review was conducted in a formal setting, with meaningless generic questions designed to intimidate the employee with, in some cases, an incremental pay rise attached regardless of the outcome (motivating right?)! On top of this managers failed to see the value and simply did not have time to complete them thoroughly. However, over the last few years, this has all been thrown on its head since the rise of companies wanting to keep their top talent and creative strategies surrounding retention by companies such as Google and Netflix! Read on to discover best practices for EFFECTIVE performance reviews.

1. Keep them frequent – Research shows that employees feel intimidated by a one-off annual review. It’s also more difficult as a manager to bring up negative performance if that behaviour was a year ago! Regular reviews on a three-month basis keep the opportunity for feedback and goal setting in the present rather than discussing once and then waiting a whole year to revisit. Booking.com is well known for its expert results from implementing regular performance reviews and building on its annual one.
2. Keep them informal – Nothing intimidates employees more than going into a formal setting knowing they are about to receive feedback on their performance. Keeping tones conversations and asking for the employees’ feedback at all stages.
3. Have both employer and employee participate – Building on the last point, effective performance reviews don’t just include the opinion of the manager, ensure you have questions relating to the employee and their self-assessment. This will allow the employees to truly reflect on their performance and will help to secure buy-in from them as they were part of the decision process. Employees also feel valued and that their opinion matters.
4. Have a structure/use a template – Effective performance reviews should be generic across each employee to an extent. Use a template for consistency and uniformity across the business. This can also help to keep the review objective. Share the template prior to the review to allow the employee to complete it prior to the meeting. Keep a record of the final completed paperwork and share this with the employee.
5. Welcome company feedback – Performance reviews are also an opportunity to collate qualitative and quantitative feedback regarding the company. For example, their induction experience and how well they feel integrated with the business (if they are a new employee of course!)
6. Keep pay separate – If you give everyone a pay rise during performance reviews then the pay rise becomes meaningless for the high performers. Sure, allocate annual pay raises based on inflation. But keep a discretional pay raise for those top performers. This keeps employees motivated and gives them a target to work towards.
7. Create goals – The most effective performance reviews set goals for the upcoming period. It’s about keeping engagement levels high and ensuring our employees are challenged. Use a tried and testing approach like SMART goals and implement them into your template.
8. Assess company values – In addition to assessing performance against tasks/responsibilities, consider assessing performance against the company values. A strong way to remind your employees about what’s important to the business and its expectations.
9. Discuss professional development – What better way to promote employee value and engagement than creating a plan of how you can upskill your employees?
10. End of a positive – What you discuss at the end of the meeting will impact how the employee feels when they leave and the takeaway that they hold on to. Be sure to end your meeting with a summary and a genuine thank you.

There you have it; the future of performance reviews is changing forever. My only question now is – how will you stay ahead of the game and adapt these practices to your company? For further training about performance management and motivation consider choosing a CIPD course to upskill your managers.

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