The Right (And Wrong) Way To Do Performance Reviews

There are two words that are sure to make both managers and employees shudder simultaneously: performance review. A universally dreaded process, performance reviews are a necessary evil in most workplaces. But there are ways that you can make them more effective and less painful.

This guide to performance reviews will tell you what they are, why you need them and how to get the most out of them. We’ll also share the six mistakes you’ll want to stop making in your employee evaluations going forward.

What is a performance review and why do we do them?

Essentially, a performance review is a method of evaluating the job performance of your employees as well as analysing their behaviour and the results they achieved in a given time period. While performance reviews are usually done annually, we believe they should be conducted more frequently, but we’ll get to that later.

Do performance reviews have a place in a hybrid workplace?

Yes, yes, yes. In fact, we would argue that performance reviews are more important than ever. A changing world has resulted in a disconnected workplace. There’s never been a better time to hone in your performance review strategy and reassess the effectiveness of your evaluations.

With new ways of working and constantly shifting benchmarks, performance reviews are vital for keeping you on track with your business goals.

Before we go any further, let’s cover a very important reminder. Motivating people comes down to three key things: autonomy, mastery and purpose. It is essential that every performance conversation reflects on ways to achieve while keeping autonomy of their role, mastery of their craft and a purpose to everything they do. With this in mind, here are our top tips to get the most out of your performance reviews:

They should happen regularly

The biggest mistake we see managers make is waiting a full 12 months to conduct their reviews. Instead of building up the nerves by making your employees wait for this once-a-year conversation, make it a conversation that happens regularly. We recommend conducting reviews every 3 months, allowing it to become a continuous conversation that takes place between managers and their team. 

It’s disorienting, not to mention unhelpful, to discuss instances that occurred six months previously. By having these conversations regularly, you’re more likely to see progress across your team.

They should be a two-way conversation

A performance review isn’t just an opportunity for a manager to tell their employees how they can improve. If you take this simplistic approach, they will work towards the goals you have specified and stop there. Instead, both parties should have an opportunity to clarify and identify goals, outcomes, potential training and more. Think of it as a conversation to allow both parties to identify gaps, and then put a plan in place to close them. 

This way it becomes a problem that can be solved together and your employee will feel as if you're in partnership with them. So for example, you can frame the question in a way that sounds like: "As a business, we want to fix the way something works... what do you think you can do to help us get there?" Always allow and encourage creativity in the solution.

They should cover remuneration

Discussing salaries and pay rises can often be an awkward conversation, so it’s important to go into each performance review prepared for it to come up. So what do you do when an employee asks for a pay rise during their performance review? Firstly, don’t react right away, even if your mind is screaming “We’ll give you whatever you want as long as you stay!” or “Are you kidding? You’re lucky you even have a job here!” Be aware of your body language and facial expressions so as to not give too much away.

Secondly, ask for more information. Simply asking “tell me more” indicates that you’re not dismissing the request, and it gives you more information to be able to process their request. You can ask follow up questions if this helps you gain all the information you need. Be saying that you will consider the request within a certain timeframe i.e. two weeks, you’re giving yourself enough time to come back to them with an appropriate answer.

Also be aware that not every employee is brave enough to come out with a direct request for more money, no matter how deserving they may be. Listen out for less-direct requests and take these just as seriously. This could be the mention of a headhunter getting in touch with them, or another job in the same field advertised with a higher salary.

When it comes to deciding on a pay increase, remember that money is not an intrinsic motivator for all people, so be wary of tying their bonuses to their goals. Instead, save that for performance. When giving rewards, look for the 'Goldilocks Zone.' Rewards that are too big can cause them to become complacent. On the other hand, rewards that are too small might cause them to decide it’s not worth the effort. Your challenge is to find the right amount that will make them feel special and appreciated.

They should focus on the future

A performance review is not your opportunity to berate your team for the mistakes they have made in the past. Only bring up past errors if you are using them as a learning tool. Instead, focus your conversation around future goals for both the individual and the business as a whole. This is your chance to let your employees know what is expected of them, and it sets a benchmark to track career progression.

Bonus: Set clear expectations and goals and mention that you will be checking in on these in the next performance review which, as we’ve already discussed, should take place regularly.

They should be documented

Most organisations have performance management software which is brought out once a year to be used at the annual review. But if you're now running them quarterly, how do you track the conversations if you don't have a system? While an HRIS is the best way to track, the truth is, as long as they are tracked and shared with the employee, the system doesn't matter. If that means you use Word or Excel, that's fine, so long as every performance management conversation is accurately documented.

They should include stakeholder feedback

As a manager, it is YOUR responsibility to seek out feedback from stakeholders that your team members worked with over the past term. While your employee may come to you with feedback, it is not their role to do that. You need it to be candid and the only way to get that is straight from the source.

If you have worked with someone in the business who doesn't report to you, and they have either been a star or need development, now is the time for you to proactively take the opportunity to let their manager know now, so it can be included in the review.

Not that you know what you should be doing in your performance reviews, here’s a quick guide of what NOT to do. Steer clear of any of these to get the most out of your appraisals:

DON’T get too personal. Performance reviews shouldn’t be subjective and should not be encouraged to become emotional. Keep is strictly work related. Remember, this is not an opportunity to discuss how much you like/dislike a person, this is all about their performance at work.

DON’T be vague. Get specific about what areas need work and make clear recommendations on how to improve them. It helps to set tangible goals too.

DON’T do all the talking. Remember, it should be a two-way conversation. If your appraisals involve you speaking at your team for an hour straight, you’re not doing it right.

DON’T do them every 12 months. Make it part of your regular routine to have these conversations. This way, you can address any issues in the moment and see improvements faster.

DON’T focus on the negatives. While it’s fine to bring up areas of improvement that need to be addressed, the whole conversation should not be focused on this. Offer constructive criticism, as well as positive feedback too.

DON’T ignore feedback from your employees. This is an opportunity to learn from the experience of your team. Use this to improve systems and processes going forward.

Have you planned your performance reviews yet?