The employee performance review has received a lot of criticism in recent years. Traditional employee appraisal processes have been causing headaches for both managers and employees, yet most employees believe performance reviews are ineffective at driving performance.
There’s still a place for the annual performance review. But success-driven organisations know it must be part of a bigger performance conversation strategy.
Regardless of whether you’re conducting an annual appraisal, a quarterly review, or a monthly performance check-in, performance conversations can be challenging if a consistent review process isn’t followed.
A goal for all business managers is to create a positive experience that motivates employees and consequently drives high performance.
Before we dive into the tactical side of performance reviews, it’s important to understand what it is and why it is important. This will give you the foundation you need to start using them more effectively in your business.
What is a Performance Review?
A performance review is a two-way, individualised conversation between managers and employees about performance impact, development, and growth; related to the objectives set for an individual. It is a critical component of an organisation’s overall performance management strategy.
Traditionally, performance reviews have occurred once a year and have focused on evaluating past performance.
But reviews are now changing.
Modern performance reviews work well when they happen monthly, where logistically possible, and focus on driving and improving future performance through motivational and developmental feedback.
The classic performance review has taken a lot of flak over the past several years. Yet, the reality is, performance conversations are a crucial part of effective employee engagement and retention strategies, especially in the current economic climate.
How Performance Reviews Improve Individual, Team, and Business Success
Why are performance conversations important? Because they have a big impact on the success of your employees, teams, and general business.
Discussing performance isn’t always easy. It’s tough for managers to give feedback and even harder for employees to receive it. How employers handle these conversations plays a huge role in an employee’s engagement and overall experience.
Performance conversations will often make or break trust. An open, honest, and regular dialogue helps build trust among employees, managers, and your individual teams.
Ongoing performance conversations can boost employee success by:
- Helping employees identify their needs, goals, and challenges.
- Informing line managers on challenges, obstacles, and decisions before they impact performance.
- Opening opportunities to discuss feedback, celebrate recognition and reinforce alignment.
Performance conversations help managers evaluate team performance by giving them a clear picture of that of their team members. They’ll know where the team is strong and where the team needs help or development.
If employees aren’t aligned and on a clear path to success, organisations will have difficulty achieving important goals and objectives. Performance conversations allow managers to connect employees to the bigger mission, vision, and goal of their employer.
They also give managers and leaders the data to make important decisions about compensation, promotions, development, role changes, exits, etc.
Knowing all the benefits a performance review can bring, what are the key elements that make up a successful review?
The Vital Elements of Performance Reviews
Performance reviews give employees and managers a chance to discuss how they meet their objectives and do better together.
Delivered well, they can engage and motivate employees to maximise their efforts. Delivered poorly, they can send employees down a disengagement spiral—and even decrease performance. How do you choose the right performance appraisal method? Below are a few elements to consider.
Frequency Is Critical
Our experience as a specialist recruiter for over 25 years in the industry has shown that successful businesses, and those highly coveted by professional candidates, ensure performance conversations happen more frequently. They also make them more engaging too.
Managers and employees equally contribute to the discussion, and employees are as invested in the preparation.
While there isn’t a one-size-fits-all solution for all performance discussions, every conversation should promote trust by reducing anxiety while creating clarity for all concerned.
Performance conversations like these aren’t only about performance; they can also address:
- Career growth, development, and training
- Business objectives versus time
- Changes or key messages from senior leadership
- Peer feedback
- Customer feedback
Make Them Future Focused
Old-school style performance reviews would often look at the past, what happened versus what didn’t, mistakes made, values not aligned, and the list goes on. Unfortunately, something that happened months ago could have been continually repeated because it wasn’t addressed at the time.
Contrary to what you might think, this isn’t exactly motivating for an employee who hasn’t been given an opportunity to change because they weren’t given feedback at the time.
However, employees do have the power to change what happens in the future—and this is where the bulk of your performance conversations should focus. It’s good to reflect on the past, but managers and employees should also spend time looking forward.
Make Them Transparent & Objective
Performance reviews can be anxiety-inducing for any of us. One of the best ways to reduce anxiety is to bring employees into the process early and involve them in the preparation and planning.
Managers should work with each employee to create a clear, shared, and collaborative agenda with main discussion points. Both parties should know exactly what to expect. And if you have implemented the suggestions about frequency, there really should not be any surprises.
Reviews have no excuse not to be objective. Today we have a huge volume of data to use alongside our ability to base our assessment on behavioural observation versus our judgment about what we think we saw or heard. Managers can come prepared with data from various sources such as recent recognition, 360-degree feedback, talent review ratings, one-on-one notes, goal progress, observational coaching, feedback, and more.
Every statement made should be fueled by data or observation—not by a manager’s personal opinion.
To recap, here are some key differences between traditional performance reviews and modern performance reviews.
Traditional Performance Reviews
These tend to be a six-month or annual affair. It is generally one-sided, with a line manager informing the employee what they did wrong and right, focusing on developmental feedback.
This is usually subjective with a grading that either does or does not result in a salary increase.
Modern Performance Reviews
Everything a traditional review isn’t. They happen every month or quarter at least and involve two-way conversations and focus on the future.
They review recent performance and involve coaching to impact the employee’s development and growth. The conversation is always based on data and facts. The conversation is then followed up the next month too.
Preparing To Run A Performance Review
There is nothing worse than being unprepared at work. Even though our knowledge and experience can get us through most situations, somehow, that never seems to work when interacting with another human being.
What makes it even more critical to prepare in advance is the impact your lack of planning has on your employee. Always approach any performance conversation with thoughtful preparation and lots of data and examples.
Making Time & Setting Expectations
You have a lot of responsibilities on your plate as a manager in a company and conducting performance reviews with each team member can be time-consuming. But the payoff is worth the investment, and it’s critical that you carve out appropriate time for each member of your team.
If you forgo important performance conversations, you risk missing out on new opportunities for promising employees, and the negative actions of under-performers will go unchanged.
You begin setting expectations the moment your invite arrives in their inbox. Hot tip: Don’t just send a calendar invite out of the blue; a personal email works so much better.
Schedule the meeting at least one week out, or ideally at the end of your last review. You want to give yourself adequate time to look into an employee’s recent performance.
Make it clear what will be covered in the meeting; a clear agenda works well. Employees should have a complete understanding of what will be discussed, one of the many benefits of conducting reviews regularly.
These topics should be a part of any performance conversation:
Current performance: Both parties should enter data on how the employee performs against the objectives originally set at the start of the year. Have your employee consider current barriers and if there’s anything you can do to help them.
Make sure you get an update on why they are failing or achieving their objectives so far.
The original performance objectives were set in good faith between the two of you, and they play a big part in determining whether the employee is succeeding or failing.
Career goals: Employee performance is usually fueled by their view of the future. Motivated employees continually push themselves and seek additional responsibilities and the potential of their next promotion. Get employees to consider where they want their career to go and how those motivations impact their performance.
If there are performance issues, make sure your employee understands that it’s about developmental feedback and a plan to move forward.
When employees aren’t achieving goals or objectives, these meetings can help determine why and how to help an employee improve.
Start on the right foot by aligning expectations for the meeting itself.
An employee should know their role in preparing for the meeting. They should review the agenda, add topics they’d like to cover, and know where and when the meeting will occur.
Second, employees should know what to bring to the meeting and what information might be referenced or pulled into the discussion from the manager’s side.
Finally, employees should have a clear idea of their responsibilities after the meeting and how their manager plans to help them succeed.
Above all, managers and employees should have a shared understanding of what good performance looks like.
When necessary, managers should clarify each employee’s role and how the business perceives their contributions. By aligning expectations with your company’s established performance criteria, your employees won’t feel misguided or alarmed when their review begins.
Select Your Setting
Depending on the culture in your business, there may be a standard procedure or way of conducting reviews. If in doubt, a private setting is best. It demonstrates to your employee how important they are and the level of respect you have for them.
Catch-up chats are fine in communal areas; performance reviews are different.
How long should the review be? That is up to you, and remember it is key to make your staff member feel important. Managers in a fast-paced work environment are often stretched for time, but this is one area to allow more time. An hour is a time frame to consider.
If it is physically possible, choose a training room or conference facility away from your own office. Neutral ground, no matter what you are discussing, is always best so that all parties can have at least a few minutes of processing what has been said before they return to their desk.
For example, suppose you are meeting with specific developmental feedback, and creating an improvement plan. In that case, you’ll want to choose somewhere private, so your team member can focus on the plan and less on what others might overhear.
The Power of Questions
As a manager, it is your role to lead the review and ask questions to reveal what is related to the objectives.
One of the easiest ways to do this is to list performance objectives and related questions.
Brainstorm a list of open questions that encourage more than a yes or no answer. These generally start with who, what, where, why, how, and when.
Always build rapport and put your employee at ease. Though you might feel awkward carrying out a review, remember your team member is feeling that too.
Here are a few examples of questions you could use.
- What results from last month are you most proud of?
- How did you achieve X, Y, or Z?
- What disappointed you about your performance?
- What will you stop, start, and continue next months?
- Tell me more about what happened with A, B, or C?
- What roadblocks are in your way?
- What impact has your performance had on the business?
- How can I support you as your manager?
Using questions like this will give you more information and data to add to what you already have. Performance conversations should be two-way, so make sure you’re facilitating a discussion and actually listening.
Remember to take notes so you have a record of how the discussion proceeds. As human beings, we have an innate desire to be heard. Asking questions, listening, and taking notes demonstrates this to your team member.
Listening to your employees helps you learn and understand rather than simply giving someone equal air time. Ask follow-up questions to help you dig deeper and paint a fuller picture.
Now is the time to focus on feedback, both developmental and motivational.
The Gift of Feedback
I know some people think there is irony in this phrase, yet the truth is, how can we improve unless we are given feedback on how we perform and how to get better?
Successful business owners employ a coach to improve their performance. The good news is that you can become a performance coach for your team.
Mastering the art of giving feedback is one of the single most important things you can do as a manager.
Feedback comes in two forms. Motivational feedback is when you’re congratulating or praising a team member for something they’ve achieved or done well. Developmental feedback is where you highlight a performance issue or behaviour that requires development to improve.
Of course, the key lies in balancing the two types of feedback and how they are delivered.
Many managers focus on developmental feedback only, which the team interprets as only noticing ‘the bad things.’
Sometimes the manager does this because they appreciate developmental feedback. They think that others prefer this style too – or more commonly, they had managers who didn’t give motivational input, so they’re not accustomed to its benefits.
On the other end of the scale, some managers praise a lot but don’t offer enough feedback for development. They don’t know how to give good developmental feedback, and so avoid giving it. Many managers haven’t been sufficiently trained in giving feedback or have had poor role models in their past managers. As such, no one knows where they’re going wrong or how their performance could improve.
It isn’t helpful to give vague or ambiguous feedback to your team members, whether it’s positive (motivational) or negative (developmental).
Yes, it can be helpful to tell someone they are doing a great job, yet it’s far more beneficial to let your team member know exactly what performance traits you have seen that has contributed and want to see them continue to use.
As a generalisation, it’s easier for individuals to receive motivational feedback compared to developmental. However, suppose you invest time nurturing your relationships with each team member and stocking up their emotional bank account with sufficient motivational feedback. In that case, it is then easier for them to handle the developmental side.
Too often, managers focus on what an employee can improve first and consider praise as a second thought. While this can be quickly rectified if you see someone every day, it’s not always the case if some of your teams are now working remotely.
Research from the CIPD suggests that anything from five to six pieces of motivational feedback to one developmental is the right balance. This will vary by individual, and there is no better person than a manager to know which team members need more praise than others.
As the review ends before developing a follow-up process, let’s discuss a topic that is often pushed aside, the conversation around compensation and benefits.
The Compensation Conversation
We are currently in a volatile hiring market, which is highlighting discrepancies in salaries and compensation in some companies.
Interestingly, a recruiting MD colleague in an aligned sector shared with me how a candidate he was working with was made a counteroffer from her current employers when she submitted her resignation.
They offered to increase her salary by 35%, and, with one of their star performers about to leave, they were also willing to consider remote working – something they had refused a year earlier.
The employee took up the offer from a new employer as her trust in her current company had been ruined.
This isn’t a one-off occurrence.
If compensation conversations are not commonplace in your organisation, maybe they should be.
If a high-performing employee asks for a pay rise or additional benefits, be prepared. No matter who’s making the request, your star performer or an average one, you’re likely to feel taken aback or annoyed at being put in this position.
Don’t react with the common platitudes I am sure all of us has heard; “not my decision”, “if it were up to me, of course, I would give you an increase.”
Depending on the size of your organisation, you may have flex; however, take stock as you plan your next steps.
Be curious and use the time-tested strategy and phrase, “Tell me more.” Then listen and take notes.
Ask open questions to uncover as much information as possible, depending on the individual’s explanation and reasons why you can then make a case or not for their request.
Ensure your employee feels heard and agree when you will get back to them. Though you might have been ‘miffed’ at their request, remember it won’t have been easy for them to raise the issue in the first place.
As a first step to handling the situation professionally, are you paying the ‘going rate’ for the role and responsibility? If you are unsure, ask your current recruitment partner, who will know the answer.
If you are underpaying, then be prepared for the consequences in the current market, which will be losing a good employee with knowledge and experience of your business and how you operate. With reports that over 79% of professional businesses gave their people a pay rise in January this year, wages and general remuneration are being scrutinised more closely than ever, in part because of the current economy and cost of living crisis. Consider therefore that, for the sake of a small pay increase, in the bigger scheme of things, is it worth losing a valuable employee?
The conversations have happened, so what next?
Post Review Follow Up
One of the common errors in managing effective performance reviews is the lack of follow-up. A great conversation happens, and then no follow-up communication occurs, and the impact gets lost.
Your employees need support to achieve the next steps you have agreed to together. Ideally, put a development plan in place with milestones, timelines, and actions.
Plan in the diary your next meetings and agree on what all parties will do between meetings.
Follow this process, and you will have a comprehensive and fair process that will benefit your employee, team, and overall company.
About Clayton Recruitment
Clayton Recruitment has been partnering with organisations across the country since 1989 and during that time has built up an excellent reputation for trust and reliability.
With specialist divisions covering Commercial, Financial, and Engineering appointments, on a permanent basis.
If you are building your existing team or looking for your next career move, we can help. And, if you are currently employed, you can be assured of complete confidentiality, professionalism, and honesty throughout the process – as standard.
Click here to speak to one of our experienced specialists or call 01772 259121 for more information on how our exceptional recruitment experience can help your career aspirations.