7 Tips on How to Conduct a Successful Performance Review

Did you know that a survey of 1,000 millennials discovered that 22% of employees have called in sick on their performance review day?

An annual performance review can be one of the most uncomfortable parts of being a manager. Not only will you be stepping in to discuss how your employees have been performing throughout an entire year, but you are also there to hold employees accountable for the many or few goals each of them have not met yet, recalling all the specific moments throughout the year that may have been challenging, and figuring out how to best approach (or avoid) the topic of pay.

According to Deloitte, 58% of CEOs stated that their existing performance review methods do not improve employee performance or employee engagement.

In addition to that, only 14% of employees strongly believe that their performance reviews have encouraged them to develop, and only two out of every ten employees strongly agree that their performance appraisal is handled in a way that drives them to accomplish excellent job performance.

In an ideal world, performance reviews would conclude with a 100% effective performance review rate, but that is not always realistic. However, it can be improved to ensure that all parties in the discussion feel much more understood, motivated, and positive when leaving the room. It is a crucial task for managers to try and create uplifting experiences that will encourage employees to drive high performance.

How can you do so? Read on to find out the seven best tips you as a manager can employ in your next performance review.

What's in this post:

• What is a performance review?

• Why is a performance review necessary?

• Tips for conducting a successful performance review

• Traditional performance reviews vs. Modern performance reviews

• What to avoid during a performance review process

What is a performance review?

An employee performance review is a formal evaluation of an employee's work habits, productivity, behavior, and impact on other team members. Each individual performance review focuses on an employee's behavior throughout a certain time frame.

Managers can do these reviews yearly, biannually, quarterly, or monthly, depending on the company's preference. The annual review might be conducted a the same time for all employees or based on the date each employee was hired.

During a performance review, managers and employees review all areas of success and areas of improvement. These discussions are typically a jumping-off point to creating a long-term plan on how an employee can build on their strengths and better their weaknesses. Managers can also take this discussion as an opportunity to also ask for feedback on how they can support the employee better, and what they can do to help build strong performance.

Performance reviews should always be a two-way conversation. It can also serve as a time for managers and employees to get any performance-related concerns off their chest.

Why is a performance review necessary?

A performance review is one of the best ways to bring out the best in all employees as well as yourself as a manager.

Gallup shared that managers who have received feedback on their performance strengths showed 8.9% greater professional growth and profitability.

Your company's success relies on the efforts contributed by each employee. Therefore, annual performance reviews help to clarify organizational goals and expectations, as well as give a baseline to detect when an employee's work performance deteriorates.

Performance reviews also help ensure that the future performance of employees is top-notch and ever-developing. They present an opportunity for both the company and employees to provide constructive feedback to one another based on past performance. They provide the opportunity for employees to be recognized for their efforts and for managers to highlight any areas that need further improvement.

Motivation and improvement grow through acknowledgment and constructive criticism. Without feedback, employees may not become aware of their poor performance and will not know how to change it without supportive guidance.

Effective employee performance reviews can also bring your company numerous advantages such as:

• Improve future performance: A study by Gartner found that organizations that don't conduct performance reviews experienced 10% lower employee performance. This is because your business's success is reliant on each of your employee's efforts. Performance reviews help to provide you and your company clarity on the company goals and expectations, as well as providing a baseline to identify when an employee's performance begins to slip. This will also give you the perfect chance to step in at the right time and give them the support they need.

• Nurture employee talent: When going through an employee performance review, managers should always document feedback. By doing so, it allows you to see how employee performance has changed over time. When you see an employee thriving in a specific skill, you can continue to nurture that skill to make sure that it develops into a stronger level or you can help them use their strengths to expand onto other useful skills.

• Identify Learning and Development (L&D) opportunities: Performance reviews are vital for managers to identify learning and development opportunities, for their employees. These reviews involve evaluating employee performance using systems like performance ratings and assessments. By examining examples and feedback from performance reviews managers can pinpoint areas of excellence well as areas that need improvement. This valuable insight helps managers to identify skill gaps, specific training needs, and opportunities for growth. Ultimately it enables managers to provide personalized learning and development programs that enhance employee competencies and overall performance leading to growth and success, within the organization.

• Increased remuneration: Performance evaluations can help companies determine salary raises for their employees. These evaluations offer an assessment of performance by examining employees' contributions, accomplishments, and areas of expertise within the organization. By using measures such as performance ratings, feedback, and specific examples these evaluations provide a basis for justifying changes, in compensation.

  Employees who consistently exhibit skills and achieve results are often rewarded with significant increases, in compensation as a way to acknowledge their valuable contributions. Furthermore, performance evaluations help identify areas where employees can improve allowing them to focus on enhancing their skills and performance.

  This ultimately leads to productivity and overall success for the company. As a result, performance reviews create a transparent process that recognizes performers while also motivating all employees to strive for excellence. This in turn fosters an workforce that positively impacts the company's financial growth.

   

   

  
  

  

Tips for conducting a successful performance review

Performance reviews encourage team members to become their best selves and boost performance levels by focusing on the right goals. However, without a proper execution plan, those ideal goals can only go so far before slipping back into their old ways.

It is critical to make the employee performance evaluation process as pleasant as possible. Your aim is to give performance reviews that employees actually look forward to attending.

The following tips will help you in learning how you can conduct quality performance reviews and foster a culture of continual development among your employees.

Prepare ahead of time

The first step in conducting a successful performance review is to prepare. This preparation should come from both sides. Your team member will come prepared with notes and talking points, and so should you. Some items for preparation can include:

• Documents of past performance reviews, previously set goals, objectives, and any concerns that were addressed before.

• Feedback and notes from other team members.

• Any performance data or customer feedback

This information can help you lay a solid groundwork on what you and your employee can discuss in terms of their work quality and behavior. The purpose is clear which would already increase the effectiveness of the actual performance review.

Moreover, having a shared agenda for the meeting is also effective as it creates a productive atmosphere. Some employees may approach the review with anxiety thinking it will directly impact their compensation. Providing them with an agenda. Prompting them to consider questions can help shift their mindset towards growth rather than being guarded and cautious about sharing information.

Another way to prepare is to ask employees to share any topics that they would like to discuss ahead of time. This goes for any concerns, comments, or feedback that they would like to give to you as a manager as well. Doing so, allows them to tailor the performance review agenda to their needs as well as giving you a chance to demonstrate your willingness to listen.

By establishing this two-way connection employees will feel encouraged to contribute during the review process and take ownership of their development journey.

Some more extra tips when preparing ahead:

• Analyze their outcomes rather than outputs: With that being said, try to focus on the employee's accomplishments and positive contributions that the employee has performed rather than focus on how many hours or efforts they have put in.

• Talk to other team members: You can request any further feedback from coworkers and managers that they have interacted with for further insight.

• Put your biases to the side: Try to set your personal judgment from the unconscious biases of any employee to the side before stepping into the conversation.

Set SMART Goals

One of the best ways to execute a productive and positive performance review is to set SMART goals. These goals stand for Specific, Measurable, Achievable, Relevant, and Time-Bound. These goals help managers and employees to set realistic and achievable expectations, track progress and see the results.

The SMART goals should identify the desired outcome of what you and your employee decide they want to achieve. These goals should also be aligned with the company's vision, and the employee's role and responsibilities.

You and your employee can then proceed to break down the desired outcome into the specific and measurable actions that they will take, and how you can support them along the way. These goals will help you and your employee stay realistic but optimistic about the goals they want to achieve to better themselves. It will also help them to be in control of what they choose to succeed in. Thus, it can be an opportunity for them to conduct self-assessment themselves. Finally, you would need to discuss a time frame for each goal to create a sense of accountability and motivation.

You can also keep track of this part of the discussion by using performance review templates as well.

An extra tip for setting good SMART goals? make sure that you are specific with your words and avoid unclear language. For example, instead of saying "Improve your sales", you can say "Aim to increase sales revenue by 10%". Additionally, when tracking progress to measure success, establishing KPIs or metrics can help evaluate your employee's achievements even better.

Curious about KPIs, metrics, and how they can boost your success? We've got you covered. Click here to read all about it.

Be mindful of words

Your wording is everything when it comes to positive and constructive discussions. By using the right words and tone of voice, you can help motivate employees even if you are conveying negative feedback.

92% of respondents agreed with the assertion, “Negative (redirecting) feedback if delivered appropriately, is effective at improving performance.”

 

- Zenger and Folkman

When discussing, try to focus on communicating in a way that makes employees think in positive terms. For example, you can emphasize that the goal for this performance review is to solve any issues that have rise and identify ways to help both the employee and the company grow. Having this positive approach can help to keep employees engaged in the conversation and make them look forward to the future in achieving their goals.

Activate your active listening skills

Even though performance reviews should always be a two-way conversation, it often times leads up to becoming a one-way conversation with you as the manager doing most of the talking. This can be due to employees feeling hesitant to share any opinions and information for fear of saying something false.

With that being said, it is important to know that a two-way conversation is not an opportunity for interrogation, but an opportunity for healthy discussion where your employee listens to you and you listen to them.

It is important that everyone being evaluated feels comfortable to be genuine in the review process, and you can do so by showing that you are actively listening to their ideas and concerns and that you are also actively interested in what they have to say.

Be sure to venture into topics that can also lead to more conversation. Ask them how they have been feeling in the past year in their job role, and what have they enjoyed or disliked. If an employee mentions any feedback, you can also lead up with another question to dive deeper into the topic.

To show that you listened, you can repeat back what they shared with you to confirm that you listened carefully, understood what they meant, and clarify if there were any misunderstandings.

Turn meetings into conversations

The term "meetings" can often come off as serious, which is not the tone that managers should go for when it comes to a performance review. To transform a meeting into a meaningful conversation, you can adopt an open and collaborative communication approach that provides a safe space for the employees to talk openly about their concerns as well as aspirations.

Therefore, managers should focus on two-way communication so that employees can ask questions, seek clarification and provide input on their own performance goals.

Ultimately, by having conversations rather than "meetings", performance reviews become a session that fosters a sense of trust, and mutual respect which also further develops the relationship between you and your employees, leading to a more successful and productive outcome for everyone.

An extra tip: below are some uplifting and effective performance review phrases that can be used in your next employee performance review:

• "You have a positive attitude and mindset that other coworkers benefit from."

• "You positively contribute to the team's success by producing high-quality work."

• "One of our most reliable team members."

• "In all circumstances, you are very dependable."

• "You consistently show that you care about your job."

• "You can always be counted on to complete tasks on time in an accurate manner."

• "You are motivated to finish assignments on time."

• "You effectively handle difficult customer service situations."

• "You are capable of dealing with difficult challenges and providing solutions for them."

• "You need to be more adaptable and learn to allow changes that will help boost your productivity."

• "It would be suggested if you showed up on time for meetings to show respect for others."

• "You show a talent for taking innovative ideas and transforming them into solutions."

Ask for feedback

Once a safe space has been created during the performance review, you should also remember to ask employees for feedback on you can become a better manager of the team. That brings it back to the importance of a two-way conversation. Employees may be nervous about opening up about how you can support them better, so you can initiate this process by asking open-ended questions that encourage candid responses such as:

• "What part of my management style do you think is beneficial, and where you do think there is room for improvement?"

• "How can I help you to achieve your goals more effectively?"

You should actively listen to the responses without becoming defensive and show a desire to make necessary adjustments to become a better leader for the team. This can only make your relationship with your employees more positive and transparent and sets the ground for honesty and trust in future conversations.

As a result, you will begin to create a culture of continuous improvement, strengthen the manager-employee relationship and drive positive outcomes in the performance review process.

Discuss the next steps

A performance review is one step in a long process. Once the review is completed, round it up on a positive note, you can re-highlight the positive parts of your employee's progress, and go through everything that was discussed. That's why it is also important to take notes so you can always have something to look back on.

A performance review should not simply end once it's over. You should define the next steps with each employee - asking them what their first steps will be in achieving their goals, where you can support them, and follow up with any final shared comments and feedback that you or they may have forgotten during the discussion.

This is also an excellent time for you and your employee to construct an employee development plan that outlines the tasks that employees must do in order to enhance their abilities and get new information for their positions.

After a performance review, be sure to put in regular follow-ups on the schedule to show that you remain engaged and supportive of your employee's career and growth process. It is also a chance for you to keep assessing performance, see how they are progressing, and what roadblocks they may be facing. This all leads to an effective performance review process as a whole.

Additionally, as mentioned in the beginning, the conversation of pay can be a dreaded one but more importantly - it is vital to keep the annual reviews separate from discussions about salaries and bonuses. Keeping these conversations separate will help you and the employee to really focus on receiving and giving constructive feedback, behaviors, and goal-setting, otherwise, emotions might get in the way.

That being said, don't forget to circle back to the discussion of compensation with employees. Don't put it off as it might cause a sense of unknown for employees which can make them feel uncertain about their job position.

Traditional performance review process vs. Modern performance review process

Traditional performance review processes emphasize rating each employee's personality traits such as their dependability for certain tasks, their drive and creativity, intelligence, initiative, leadership potential, and so forth. On the other hand, modern performance review processes are more inclined towards the positive achievements of their employees, and an evaluation of the work results.

The modern performance review process is best suited for companies that prioritize employee performance, employee engagement, and employee productivity. Below is the table showing a comparison.

What to avoid during a performance review process

Here are a few things to keep in mind that you should avoid keeping things positive and smooth sailing in all performance reviews:

• Comparisons: A performance review is not a space for you to rank your employees from top to bottom or to encourage competition amongst them. You should focus on each employee as an individual and how they can improve, and not compare them to other team members.

• Being repetitive: if you notice that you keep giving the same advice or praise in each performance review, think about how you can change the way you convey your message that might not be getting through to the employee in the way you were hoping it to. It may require further discussion or a different approach. Being too repetitive might cause you and the employee to run in circles.

• False praises: If you are looking for a positive statement to share with your employee but find it to be difficult, try to avoid giving false praise to avoid misleading the employee and rob them of an opportunity for improvement. Instead, try to highlight the strength and suggest a follow-up improvement area for them.

   

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