Eight Ways for Effective Performance Reviews

Does the thought of performance reviews fill you with dread?

In many organisations’, managers spend hours frantically scrolling through emails in attempt to recall who has done what throughout the year while questioning the value of what often becomes a box ticking exercise enforced by HR. From an employee’s perspective, they often have no idea what they’re supposed to write in the supporting documentation and dread being presented with a list of things they need to improve on.

Performance appraisals are sometimes criticised for being subjective, time-consuming and admin heavy. However, their core function of presenting feedback to employees on their performance is as important as ever.

When carefully planned, conducted and followed-up, performance reviews can lead to an employee’s performance, productivity and motivation increasing. So, here’s our eight ways to conducting effective performance reviews.

1. Start with your business objectives

Performance reviews are most effective when the process is informed by a shared understanding of what the organisation is trying to achieve as set out in their business plan.

Employers should be able to evidence a clear link between their business plan and employee objectives. Employers should think carefully about what is required from particular functions, departments, teams, managers, and individuals. Essentially individual objectives should support manager objectives which should support department objectives and so on.

2. Develop a structure for performance reviews to ensure consistency

You need to consider the structure of reviews (e.g. formal or informal) and the frequency should coincide with your business plan (e.g. annually, half-yearly, quarterly or monthly).

Performance reviews should cover:

• Past and present performance against previous objectives
• Assessment of performance against the core skills required for the role (sometimes referred to as key competencies)
• Agreement of performance objectives for the next period
• Assessment of training requirements and agreement of training and development plan

3. Set SMART objectives

Clear and specific objectives lead to a higher level of performance than non-specific goals, such as ‘do your best’. In addition, setting achievable objectives helps to motivate your staff and boosts their confidence when they successfully hit their targets. SMART – specific, measurable, achievable, realistic and time-bound – is a well-known acronym for setting objectives.

Here’s a quick reminder of the framework:

• Specific – objectives should state a desired outcome. What does the employee need to achieve?
• Measurable – how will you and the employee know when an objective has been achieved?
• Achievable – is the objective something the employee is capable of achieving but also sufficiently challenging?
• Relevant – do objectives relate to those of the team/department/business?
• Timebound – when does the objective need to be achieved?

4. Take equality policies into account

Performance reviews should be fair for all staff. Decisions should be based on merit, recognising that employees will have different ways of getting a good job done. For example, reasonable adjustments, culture and gender may affect performance assessments.

5. Have regular conversations

Many businesses still view performance reviews as annual events. However, in the space of a year, positive and negative activity is sometimes forgotten, and identifying areas for improvement and successes to celebrate is challenging. Conversations on performance should be a central element of regular one-to-one meetings with employees. This enables line managers to discuss progress towards objectives, review performance and gives employees the opportunity to ask questions and/or voice concerns.

6. Performance reviews don’t need to link to monetary rewards

Performance reviews are usually linked to pay/rewards. For example, an increase to basic pay, accelerated progression up a salary scale (or lack of progression if performance is not assessed at a high enough standard), a one-off bonus or share options. However, there are alternative ways to reward your staff for excellent performance including employee benefits packages, increased development opportunities and special recognition awards.

7. Documenting reviews is essential

Performance reviews should be appropriately documented to ensure both the employee and manager know what needs to be achieved to meet the goals and contribute to the business plan.

Our HR Software has an easy-to-use performance management tool that automates and tracks your review processes – helping you to improve employee performance and engagement.

8. Measure the effectiveness

Make sure you take time to review how well the performance review process is working. Simply ask all those involved through the communication channels available to you. E.g. general discussions at staff meetings, one-to-one meetings, focus groups, staff surveys and intranet discussion forums. You can also analyse completion rates for appraisals/record forms, the number of appeals against assessments/ratings and how well the appraisal documentation is being completed.

Next Steps

To find out more about how our HR Software can help you to automate your performance management review process you can contact us to discuss your requirements.