What is a performance review?
When you employ and manage people, it’s important for you to provide regular feedback.
This is typically done during a performance review but shouldn’t be restricted to that. Feedback should be continuous.
You might call them annual reviews, personal development plans, or appraisals.
Whatever you call it, the purpose remains the same; to review an employee’s performance and behaviour, and to provide positive or constructive feedback, with a view to giving clarity on what the employee should focus on next.
Providing feedback in this way is vital. Employees feel more valued, listened to, and they get to see where there’s room to progress and grow within your business. And for you, the employer, you can reward good work, discuss performance issues, and you benefit from increased engagement and loyalty from your employees.
Despite all of these benefits, a lot of businesses don’t hold regular performance reviews for their staff.
Maybe because they don’t see the benefit, or they don’t feel they have the time, or perhaps because they don’t feel entirely confident with the process…
If you don’t already hold regular performance reviews, it’s time you started. This guide has been designed to help you. It should also answer your questions and concerns along the way
Why are performance reviews important?
When conducted properly, performance reviews can be an extremely useful tool for both parties involved.
It’s a process that helps to create good back and forth communication between employee and manager. It strengthens working relationships, and it opens up a regular opportunity to talk honestly about performance, expectation, and development, amongst other things.
Of course, this is when you’re taking the process seriously. If you’re simply doing it to tick the boxes, it may have a detrimental effect on your staff instead.
Performance reviews can be the best way to improve employee happiness, motivation, and performance.
The most obvious benefit of performance reviews is that you can, well, review performance.
With the right structure, you can make sure your employees are working to the required standard, you can identify which employees are performing either above or below expectations, and you can see who has hit their objectives or targets for bonuses, pay rises, or other rewards.
It’s also the ideal opportunity to address any concerns you have over unsatisfactory performance (if it hasn’t yet reached the point of misconduct).
You should always use performance reviews to create objectives for your people. Objectives help direct, record and measure future performance against what you expect of them. The objectives you set should be reached before your next performance review or given a realistic timescale if the objectives are shorter term.
The appraisal and objectives go hand in hand. Appraisals look back at performance, against objectives set for previous periods, and objectives look forward at what people need to achieve next, ready to be reviewed at the next performance review. It’s called a performance review cycle!
Your performance reviews are also an ideal opportunity to identify skill and knowledge gaps and discuss and plan relevant training programmes for improvement or further development.
On the other side of the coin, you can use the opportunity to help people to map out their future career path and goals. This could include identifying the skills that will be required for future roles and planning the training and development that will be useful to start now. The whole process can help you spot potential that you may not have seen otherwise.
How should I perform a performance review?
So now you know the benefits that can come from regular, structured appraisals, both for you and for your employees. But if it’s not something you’re used to doing, where do you start?
The best tool you could have to hand is a staff appraisal form.
It helps in giving structure to your conversation and keeps things on track. It’s also a fantastic way to document discussions and achievements, and agreed actions and future objectives.
While there’s no ‘one size fits all’ performance review form (each company tends to create their own based around its own goals and targets), typically, every form should include the following…
- What level your employee is currently performing at
- Their ability to accomplish tasks and responsibilities
- The development they’ve made since your last meeting
- Whether they’ve hit their objectives
- Examples of outstanding performance
- Their understanding of their role and how that fits in with the organisation
- Suggestions for improvement (from both sides)
- What areas they would like to develop, or what areas you would recommend they develop
To go alongside a performance review, you may also consider a 360° appraisal. This considers the opinion of your employee’s colleagues, direct reports, manager, and potentially even customers.
It would involve a scorecard of sorts. Is the person underperforming (scoring 1) to exceptional performance (scoring a 5) with scores in between that calibrate performance between those two extremes.
The first thing to ensure when starting the process of staff appraisals is your commitment to making sure they’re a regular occurrence.
How often you hold them is at your discretion, though typically it is around every 6 to 12 months. The more regular the performance reviews, the more positive impact you’ll see. Outside of formal reviews, it’s a good idea for managers to hold less formal catch-up meetings with staff, say every month. This helps to keep communication open, and staff engaged. Equally, it means that, when it comes to the performance review itself, there are no surprises. A good performance review always starts with the statement, “Nothing I say today will come as any surprise.”
Before each performance review, it’s wise for you and your employee to take some time to prepare. Review previous performance reviews, looking at the objectives you set and improvement targets. This will give you a better understanding of what’s been achieved since last time. It could also be beneficial to ask your employee to self-appraise before your meeting.
There’s no fixed way of conducting your performance review. You’ll probably naturally settle into a rhythm that suits you and your team best. That said, here’s a series of steps that act as a good outline to help you get started…
Begin with a general chat
Put your employee at ease and create the right atmosphere. Check how they’ve been, both personally and professionally. It helps to create a more comfortable, easy conversation throughout. How do they feel?
Outline the period you’re reviewing
Make sure you’re reflecting on the same timeframe to avoid confusion.
Discuss both the positives and concerns
Put your employee at ease and reassure them that you’re happy with their work, but don’t duck the difficult conversations. Keep it constructive and balanced. Ensure that the person being reviewed owns the actions or their development – the best way to do this is through questions….
“How might you do this differently next time?”
“What’s the real challenge here?”
“What help or support do you need going forward?”
Consider possible areas of development
Even when your employee is a star performer, there will be developments to be discussed for future roles within the company. People are happiest when they’re growing, learning, and gaining new skills. This will not only help with business growth, but with engagement and productivity, too.
Allow time for discussion
Make time for your employee to raise any issues or concerns not directly related to what you’ve already discussed. This may include issues with other members of staff, or even personal problems that are affecting work. Avoid discussions on salary. This is a performance review not a salary review.
Agree measurable objectives
Together, create an action plan, setting objectives and targets that your employee can work on between now and your next appraisal or their next series of one to ones. End your meeting on a positive note for both of you.
Your first meeting may feel awkward or stilted, but as a manager or business owner, it’s your job to make sure this feeling disappears quickly for both of you. Practice makes perfect!
If you’re stuck with an employee who likes to use one-word answers, use your questions wisely to get them to really open up. Here are some good examples…
What do you think is going well right now?
What’s not going so well?
What are you most proud of achieving this month/quarter/year?
What’s the most challenging aspect of your role?
What could we do differently?
Which of your skills could we better utilise?
What are your goals for the next 3/6/12 months?
You should always keep a written record of your discussion and ask your employee to sign and keep a copy for their own records.
As you can see, a performance review is one of the best tools at your disposal when it comes to getting a real insight into not only how your employees are progressing, but also how they see themselves growing in your business, and what they think of the business.
It’s also a brilliant way to create better relationships in the company, creating easier, more open conversations, and making sure your people know you’re there for them and are happy to speak to them if and when they need it.
Once you begin regular appraisals, you’ll wonder why you didn’t start sooner. But like anything people-related, it can be a big task to try and start by yourself. If you’d like some expert support or guidance along the way, just give us a call or get in touch here.