Performance Review

Ryan Archibald
Ryan Archibald
Performance reviews are an opportunity to celebrate the employee and identify what opportunities are next for them. This data then helps the organization measure the efficacy of their talent and make better decisions. Read on to learn more on why performance reviews are important and the types of performance reviews that exist. In addition, discover what you as HR can do to help ensure effective reviews, how to conduct a performance review and what questions to ask during the performance review.

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What Is a Performance Review?

A performance review is an assessment of an employee’s performance measured against goals and expectations.

Why Are Performance Reviews Important?

Aside from ensuring that the employee is accomplishing tasks and goals, there are multiple reasons as to why performance reviews are important.

  • Relationship Building. The conversations between manager and employee, often one on one, are the best time to build trust with each other. Managers who promote a safe environment and have shown their teams their main focus is to support them will ensure the best possibility their employees will be open and communicative in return. The more a manager and employee know each other, the more trust will be built and success will follow.
  • Employee Engagement. In addition to discussing performance, these reviews are a good opportunity to allow employees to discuss anything that is on their mind. When an employee is allowed to speak their mind with a manager that is actively listening, job satisfaction for the employee will increase. When job satisfaction increases it helps to retain those employees.
  • Training Needs. Over the course of the conversation, the manager and employee may identify gaps in the employee’s skill set. Once a need is identified, the manager will then ensure the training is provided to the employee.
  • Promotion Opportunity. As an employee works with their manager to build their competency and skill set, the employee may cross the threshold that makes them eligible for promotion. A performance review allows dedicated time to identify when an employee is ready for promotion.
  • Opportunity for Wage/Salary Increase. As an employee works with their manager to build their own competency and skill set, the employee may cross the threshold that makes them eligible for a raise in their salary. A performance review allows dedicated time to identify when an employee is performing at a level to justify a salary raise.

Types of Performance Reviews

Every type of performance review has its benefits and challenges. The key to remember with every type is setting clear definitions and scales so that it’s easy for managers to follow when conducting performance reviews.

Ranking

This involves ranking the employees from the highest to the lowest. The challenge here is to avoid the contrast bias where the manager may use distinctions not related to performance to determine rankings. For example, consider this scenario: a manager is forced to rank two employees both of whom perform well and meet all expectations, contrast bias creeps in allowing personal characteristics of these employees changing a managers perception when ranking them.

Forced Distribution

Employee ratings are placed along a typical bell curve (see picture) with the manager allowed to place each employee on their team to a certain group along the curve. Each group or rank is limited to a number or percentage of the total team, the picture below displays what this looks like. You may have 10 great employees but, to ensure a normal bell curve 10% or one employee must be labeled a non performer. This sends a false message to that employee. An employee who is falsely labeled as low performing may become resentful and leave the company.

360-Degree Feedback

Feedback on employee performance is gathered from an employee’s manager, colleagues and subordinates regarding their work and their impact on the team. Feedback is usually kept anonymous. At most, the employee knows what category the author fits into.

Competency Based

An employee’s performance is measured against set competencies for each position. These competencies are values that the company has determined to be integral to success for a position. Competencies define the skill set and abilities that set the standard for recruiting when looking to fill this role as well. Then, once hired, competencies assist with monitoring the new hire’s performance.

Examples of competencies can include:

  • Respect for others
  • Honesty
  • Operating machinery
  • Utilizing software or other technical skills
  • Problem solving
  • Ethical leadership
  • Flexibility
  • Customer service
  • Communication

Management by Objective (MBO)

Objectives are set collaboratively for the company and individual employees. Employee performance is measured against specific results as defined in these objectives. This method is useful for managers at all levels of the organization.

Graphic Rating Scales (GRS)

Employees are rated on specific behaviors and characteristics on a scale (e.g., unsatisfactory, marginal, satisfactory, highly satisfactory and outstanding). Managers can easily use this scale because they rate employees along a continuum. The challenge is that if these behaviors and ratings are not specifically defined, managers may rate each employee as average. This false record of employee performance may prevent an employee from earning a raise or prevent a toxic employee that may no longer be a fit for the organization to continue working at the company.

Behaviorally Anchored Rating Scales (BARS)

This method focuses on rating an employee’s behavior. Behaviors are determined on a handful of dimensions about the job and not certain tasks. Developing this method for your organization will take a long time due to the extensive job analysis and determining the critical behaviors for each position. Check out the Academy to Improve Human Resources if you are ready to develop BARS for your organization.

What Can HR Do to Ensure Effective Performance Reviews?

The best plan for HR to ensure effective performance reviews is to train before performance reviews are completed and while new managers are conducting performance reviews. After training, managers should be able to conduct performance reviews on their own.

Training Managers

It’s especially important to train newly promoted managers. These managers should be guided to understand their role and impact on each employee that now reports to them. Every manager should attend performance review training each year as a refresher to ensure every employee has similar experience with their performance review. In these manager trainings, cover the following tips for conducting successful performance reviews:

  • Avoid administrative details. Instead, make the conversation about performance on an organizational level and their individual teams. Employee performance shows how each role contributes to accomplishing the mission and provides data on the efficacy in accomplishing the mission. The paperwork will get completed when the manager understands the purpose of these reviews.
  • Focus on difficult conversations. Role play certain scenarios (attendance issues, setting goals, communication etiquette) highlighting what approaches work and learning from what does not work. Leverage the experience from the experienced managers to learn new approaches that will allow managers to learn from each other.
  • Set appropriate goals. During performance reviews, the employee should know specifically what is expected of them. Have managers guide the conversation to focusing on improving the employee’s job performance. The performance review should also establish clear goals for each employee.
    1. Examples of bad goals:
      • Make more cold calls per month
      • Come into work earlier
    2. Examples of clear goals:
      • Make 200 cold calls per month
      • Come to work on time every day at the start of your 8:00 AM shift
  • Evaluate performance. Before the end of the review, managers need to go over with the employee the methods they will be evaluated on. This allows the employee to check their own work from day to day to ensure they are on track.
  • Keep notes on each performance review. Each manager will need to keep notes on each performance review and store them to review later. This is critical in order to measure employee progress to identify employee successes, promotion potential and potential for a salary increase. This data is how the organization measures the efficacy of their talent.
  • Partner with Human Resources. This is your chance in the manager training to give your “elevator pitch” and explain your commitment to their success as managers. Recommend to the managers that HR be present for any performance review regarding employee misconduct to ensure the employee understands expectations.

During the First Performance Review

New managers have been trained and are conducting performance reviews for their teams. This is your chance to provide support in real time, whether through positive affirmations or through helping managers avoid potential errors or biases.

In the training, inform the managers of the following biases that can crop up during performance reviews.

  • Central Tendency Error. This occurs when a manager doesn’t know their team well and rates everyone as average in order to finish the task quickly. This error sends a message to high performers that they are not being recognized. Additionally, low performers are not receiving the direction needed to improve their performance.
  • Recency Effect. Managers complete reviews with the most recent task or project the employee completed in mind. This does not accurately reflect the employee’s performance and can falsely lead an employee believing they are performing well or are worried about their job security, depending on how well they did on their last project.
  • Contrast Effect Bias. This occurs when managers compare employees to each other and not to job performance expectations and goals.

How To Conduct a Performance Review

Performance reviews are a great opportunity to celebrate the employee and identify what opportunities are next for them. Read on to learn more about how to navigate the logistics of the performance review process.

Preparation

The success of the performance review depends on the preparation of the manager.

  • Rate Behavior. The managers can use the form below to review and rate employee behavior, identifying strengths and opportunities.
  • Review Goals. Managers will review goals set in a previous performance review. Next, the manager will look for evidence if the employee accomplished the goal or ask the employee if there’s no obvious evidence.
  • Plan the agenda. Along with a list of what the manager will cover with their employees, managers should communicate to their team beforehand regarding what to expect and emphasize they are grateful for them and the work they do every day.

Clarification Needed

For employees who have had questionable behavior or performance, allow the employee to speak openly while the manager listens without interruption. If managers need clarification after listening to the employee, they should partner with HR to confirm expectations.

Managers should follow up with the employee after the performance review when they have the clarification they need. The manager may adjust goals and expectations going forward. The manager should review changes to goals with the employee in this follow up meeting.

Employee Dedicated Time

This time allows the employee to discuss new ideas, concerns, or problems in the workplace. Managers show their employees they care by responding to concerns or problems in the workplace. This also benefits the organization in retaining talent. The simplest way to keep an employee is to listen to them.

The Form

The Society of Human Resource Management has provided a form to help managers to rate employee behavior.

Employee Name:                                Position:

Supervisor Name:                                   Department:

Review Period:                                                Date:

Instructions: Rate the employee’s performance during the review period by checking the most appropriate numerical value in each section. To determine the overall performance rating, add the numerical values together and divide by eight (or 11 if the supervisor section was completed). Prior to the performance discussion with the employee, a detailed plan to address areas rated needs improvement or unacceptable must be submitted to the department head and human resources for review.

Rating scale:

5   Excellent (consistently exceeds standards)

4   Outstanding (frequently exceeds standards)

3   Satisfactory (generally meets standards)

2   Needs improvement (frequently fails to meet standards)

1   Unacceptable (fails to meet standards)

​5 ​4 ​3 ​2 ​1
Job knowledge

Knowledge of products, policies and procedures; OR knowledge of techniques, skills, equipment, procedures, and materials.

Quality of work

Freedom from errors and mistakes. Accuracy, quality of work in general.

Quantity of work

Productivity of the employee.

Reliability

The extent to which the employee can be depended upon to be available for work, to complete work properly, and complete work on time. The degree to which the employee is reliable, trustworthy, and persistent.

Initiative and creativity

The ability to plan work and to proceed with a task without being told every detail and the ability to make constructive suggestions.

Judgment

The extent to which the employee makes decisions that are sound. The ability to base decisions on fact rather than emotion.

Cooperation

Willingness to work harmoniously with others in getting a job done. Readiness to respond positively to instructions and procedures.

Attendance

Consistency in coming to work daily and conforming to scheduled work hours.

Complete this section for employees with supervisory responsibilities:

​5 ​4 ​3 ​2 ​1
Planning and organizing

The ability to analyze work, set goals, develop plans of action, utilize time. Consider amount of supervision required and extent to which you can trust employee to carry out assignments conscientiously.

Directing and controlling

The ability to create a motivating climate, achieve teamwork, train and develop, measure work in progress, take corrective action.

Decision-making

The ability to make decisions and the quality and timeliness of those decisions.

Questions to Ask in a Performance Review

Give managers a form with these questions to help facilitate the conversation. This will help them avoid personal bias during the performance review process.

How do you prefer to receive feedback?

The manager should take notes and do their best to accommodate the employee’s feedback.

What would you want to discuss in our one on one meetings?

Employees can take this chance to dedicate time to their own professional development and tracking progress on projects.

What do you hope to achieve during the next ____?

The blank can be filled with any time frame. An employee’s goals might be accomplished in a month or a year. In addition, their manager should use this time to set goals for the employee that helps them successfully onboard in a new role and continue to build competency or skill.

What support can I provide to help you succeed in your goals?

The employee may not know how to answer this question and that is ok. This is the chance for managers to show their commitment to the employee’s development by looking over their goals and identifying opportunities to provide additional training and development for the employee. Any job related training, completed by the employee, should lead to building confidence in the employee — confidence in their job and in their manager.

Standard Prompts for Every Performance Review

The Society for Human Resource Management has provided standard discussion points that can be used for every review. These prompts will allow the manager and employee to easily track the employee’s progress and success in their position.

  • Noteworthy accomplishments during this review period:
  • Areas requiring improvement in job performance
  • Actions taken to improve performance from the previous review

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Questions You’ve Asked Us About Performance Reviews

How can effective performance reviews improve company culture?
Performance reviews provide a dedicated time to praise the employee. This is also an opportunity to tell the employee how they help accomplish the company’s mission and vision.
Why should HR leaders care about performance reviews?
Performance reviews provide the data on the skill set and competency of the company’s workforce. From this data HR professionals will make decisions regarding recruiting, budgeting and promotions.
Who runs an employee performance review?
The manager of the employee facilitates the review. Nevertheless, the employee should be prepared for this review to ensure it runs smoothly.
Ryan Archibald
Ryan Archibald

Ryan is an HR Director with four years of experience and three masters degrees. One accomplishment he is proud of is the design and launch of a learning and development program for 800+ employees.

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