The Ultimate Guide to Performance Reviews

Performance Reviews
By: ClearCompany
Updated: October 2021

Individual employee performance is both important and impactful.

That’s why it’s essential to get performance reviews right. But often, performance reviews are inconsistent. Employees and managers are not properly prepared. There’s confusion about where performance reviews should sit in a company’s overall performance management strategy. You’ve likely heard that annual performance reviews are unpopular and ineffective.

But with the performance review being such a crucial part of managing and developing your employees’ performance, what are you supposed to do?

This guide will help you determine what kind of performance reviews are right for your organization, how to plan review cycles, and how to implement your plan. It also offers suggestions and resources to help HR professionals get through what is often the busiest time of the year.

How Have Performance Reviews Changed?

It’s likely that performance reviews at your company don’t look the same as they did in previous years.

During the pandemic, many companies chose to delay their performance reviews. Even companies that continued conducting performance appraisals may have made changes to their review templates. For example, some chose to assess different core competencies like agility, flexibility, or adaptability. Other organizations took the opportunity to rethink the structure of their reviews to ensure they meet the needs of their employees.

As workplaces adjust to new remote or hybrid environments or return to the office, performance reviews are making a comeback. However, a shift in priorities and workloads during the pandemic has had a lasting impact on the ways we evaluate and empathize with one another. Companies are offering feedback and performance insight more frequently and informally. Many have implemented a new digital review system and increased transparency around company goals.

The bottom line? COVD-19 has fundamentally changed what employees expect from their performance reviews, how companies give feedback, and performance management as a whole. No matter how your company’s performance reviews have changed, ClearCompany has the resources you need to create an effective performance review process.

How to Prepare for a Performance Review Cycle

Conducting an effective performance review might seem simple — to those who have never done it before. However, for the HR professional, there’s nothing simple about it. The human resources team is responsible for deciding many of the foundational elements of a successful performance review plan. HR also monitors results and keeps track of the effectiveness of reviews.

HR is involved in every aspect of building and managing performance review plans:

• Type(s) of reviews
  
  • New Hire Reviews (30, 60, 90 Day Reviews)
  • Competency and Roles-Based Reviews
  • Time-Based Reviews
  • Peer and 360 Reviews

• The frequency of reviews or review cycle
  
  • Quarterly
  • Bi-Annual
  • Annual Performance Reviews
  • Feedback Loop
  • Continuous

• Employee evaluation criteria
  
  • Employee Goals
  • Company Performance
  • Hiring Competencies
  • Earnings
  • STI/LTI Compensation Schedules

• Constantly and consistently gather performance data from a variety of sources
  • Microfeedback platforms
  • Reward and recognition program
  • Manager and team lead feedbackFellow employees
• Build processes and documentation to support your reviews program
• Find and assess the best technology to support an efficient, effective performance review process
• Select, train, and prepare managers on effective performance review practices
• Manage employee responses and feedback post-review, including dissatisfaction 
• Document and manage goals and performance data throughout review cycles

Taking all of the above into account, there are strategies and tools available to HR to keep reviews streamlined and organized. That means less stress for everyone involved, from HR to managers to employees.

How to Conduct an Effective Performance Review

HR professionals need to understand how to conduct an effective performance review. This skill also prepares you to train managers and leaders to give reviews.

During an effective performance review, employees are informed of and evaluated on their past performance. Managers recognize outstanding performance or discuss inadequate performance. Employees and managers collaborate on areas for growth, how to improve performance, and plans for the future.

Addressing these four points are pillars of an effective performance review:

• Illustrating to employees how their goals fit into the company’s bottom-line goals
• Connecting constructive performance feedback, as well as praise and recognition, to employees in a personal way
• Creating a feedback loop that is both fair and meaningful for employees
• Aligning performance management with business priorities and company values

When you establish a performance review cycle that hits all these notes, both your company and your employees will benefit. No matter how you choose to structure your plan, performance appraisals are a key part of any performance management strategy. After determining the right approach for your company, you’ll need to prepare for the next review cycle — and help employees and managers prepare, too.

Before the Performance Review:

• Get to know who your employees are based on their interests, strengths, personalities, and work style.
• What defines great, good, or poor performance? Define your ideal comprehensive list. The list may include:
  • • Job-specific tasks
    • Contextual behavioral performance
    • Specific and measurable goals
• Record your employee's performance through an automated system to help you keep better track of reports and ensure timely feedback.
• Make use of self-assessments to get employee feedback and create a comprehensive view of performance.
• Focus on building lasting relationships and trust with each employee. Ultimately, performance reviews are in place to guarantee that employees have the essential tools to succeed in their roles.
• Assemble a list of opportunities and goals with your employees to help them develop, improve or maintain their performance. Hold them accountable for achieving those goals.

During the Performance Review:

• Be sure to give positive feedback on tasks that the employee has done well through the course of their position.
• Assess employees’ job performance honestly and thoroughly. Make sure to explain the factors that went into their overall performance rating.
• Ensure that both you and the employee have a shared, complete understanding of the employee's duties and tasks. The difference between excellent and poor performance should also be mutually understood.
• Thoroughly explain to the employee how performance is measured and provide reasoning behind high or low ratings.
• Provide as many (specific) examples as possible. Feedback is only effective when you clearly explain which areas need improvement, rather than just generally stating that performance needs improvement.
• Feedback should be focused on improving performance. Offer guidance or develop a plan for how the employee can do better.
• Provide a clear explanation regarding any actions the employee needs to take to improve performance. Ensure that the employee understands the designated actions.
• Always clarify and be open to questions if an employee is unsure about the feedback that is presented.
• Ensure that strengths and weaknesses are highlighted. Once identified, managers will be able to assess what training needs to be done. Combining performance feedback with a plan for the employee will allow them to perform their job effectively.
• Set new performance goals for the employee. Don’t forget to plan for how to accomplish those goals and a timeline for their completion.
• End the performance review on a helpful note. Let employees that you are there to help them succeed and achieve their goals.

After the Performance Review:

• Schedule a follow-up meeting with the employee to create a personalized developmental plan.
• Tie your company’s core objectives into the individual’s performance. Managers should align individual goals to company objectives to motivate and engage employees. This allows them to see how their performance contributes to the overall company objectives.
• Take time to develop contextual performance goals with the employee that includes set tasks. When developing goals, establish SMART goals: specific, measurable, achievable, relevant, and timely.
• Make certain that feedback is ongoing, consistent, and task-specific. Don’t wait until a formal performance appraisal to address issues or successes with employees.
• Set up weekly or monthly meetings to review the individual’s progress. Use this time to ensure they are still on track to complete their performance goals.
• Request input or advice from other members of your team to enhance the employee’s performance.

Why Performance Conversations Matter So Much

Performance reviews are so valuable because of the dialogue they open up between employees, their managers, and the company. Regular conversations about an employee’s job performance, engagement levels, contributions, and other key metrics gauge job satisfaction and productivity. These conversations provide a space for two-way feedback and performance evaluation centered around job duties. That time can also be used to consider compensation, bonus, or promotion opportunities.

Performance conversations also help strengthen the relationship between supervisors and employees. They provide time for individuals to provide feedback on how well their own needs are being met. It’s an opportunity for managers to provide valuable constructive feedback. It’s also a chance to set new goals that drive performance and build A Players.

Both managers and employees play a key function in these meetings. Both parties should leave the meeting with full buy-in on any improvements, changes, or increased responsibilities. Both should have a firm understanding of where an individual stands based on a formal, documented assessment.

Performance reviews are vital to your employees’ growth and development. Knowing what they need to work on and where they excel keeps them engaged while ensuring their work quality always improves. The experience you give them during this process also matters quite a bit. Employees are more likely to feel disengaged if they didn’t receive the feedback needed or felt unappreciated. Disengagement often results in lower productivity and overall decreased performance.

How to Conduct a Performance Review Remotely

Now that remote and hybrid workplaces are here to stay, conducting a remote performance review is a necessary skill. Your company may have made other permanent changes to the performance review process, like a shorter review cycle or a new method of scoring performance. Communicate any changes to your performance review process, especially if there were significant changes or your workplace became fully remote.

There is a difference between in-person and remote evaluations. Remote reviews mean that managers need to be more intentional about following up on their feedback. Performance review standards may have also changed during the pandemic. While many companies have successfully handled remote work and performance management, it’s a brand new experience for others.

With that in mind, conducting a remote performance review cycle is possible. Here’s how:

• Communication is key. Your communication with your employees should start well before the reviews. Let your employees know exactly what to expect from the technology you’ll be using and tips on troubleshooting any issues to the length of time the review will take. Consider some or all of the following variables to communicate to your workforce:
  • Type of review taking place
  • Agenda for the review
  • Self-evaluations
  • Company mission, vision, values, and/or goals to review
  • Notes or documentation from the last review to have handy
  • Whether the review will be audio or include video
  • When to log on (you don’t want employees overlapping one another)
  • If they need to prepare questions for you/their manager
  • How or if you will be using different metrics during this time
• Be transparent. If there were major changes to how performance is handled at your company, clearly communicate the new process or expectations. Train your managers to be as open and honest with employees as possible. Help employees understand company goals and objectives. Give them a clear line of sight into what’s going on in other departments. That creates additional empathy and clarity in the workplace.
• Be specific. When on video, context cues are a little harder to pick up on. Do NOT be vague. Now is the time to be explicit with praise, specific with constructive feedback, and offer solutions to your employees. When setting new goals, discuss specific expectations and timelines.
• Document everything. A great performance review process is only as good as the performance management software that supports it. Ensure all your employees have access to their performance reviews and the career plans or goals that came from them.
• Plan for interruptions and technical difficulties. With so many using remote conferencing technology, an alternate time, a second line or tech option, and being flexible are all important. Your employees may be dealing with homeschooling, a partner or spouse working at the same time, dogs barking...the list goes on. Perhaps you and your managers are also dealing with these things. Setting the stage for handling interruptions makes them seem like less of a disaster if and when they happen.

How Do You Structure a Performance Review?

What is the goal of the performance review?

Whether it’s assisting an employee in refining their goals, fixing poor habits, or creating a career plan, write down the ultimate objective of the review. The objective of the review will help determine how it should be structured.

Ask employees to prepare for their review and do the same to ensure you make the most of the review. Before the formal appraisal, create an agenda to ensure you cover the main topics and discuss the employee’s next steps. That way, you leave the review knowing you didn’t forget anything. Your employee leaves feeling confident and set up for success.

As a manager, constructive feedback is part of your job. 53% of employees said it’s the number one thing they want from their bosses — even ahead of extra compensation. 68% of employees receiving consistent feedback feel fulfilled in their jobs. It’s clear that feedback is a key driver of engagement and consequently, performance.

Be sure you’re ready to offer up potential solutions if performance is lacking and needs improvement. Work with managers to brainstorm solutions for employees who are struggling or not meeting goals.

Accurately represent employee performance since the last review. Take into account any goals that were set, individual projects, disruptions, big wins, and other personal circumstances. This means you have to have a reliable means of tracking issues, goals, employee-company alignment, manager feedback, and so much more.

One of the biggest complaints among employees is that performance reviews are confined to their most recent work. Managers must evaluate the body of work that occurred in the months between their current appraisal and last review. This is particularly true in light of the pandemic. Many employees’ productivity and performance may have declined due to circumstances beyond their control.

Performance Review Statistics

From the Workers' POV

• Peer feedback improves the utility of performance management systems by 3.5% and increases performance by 14%.
• Performance reviews are largely conducted by managers, and 70% of companies use self-assessments. However, only 17% of companies ask for peer evaluations.
• 96% of employees want more frequent feedback from their managers.
• 37% of employees say recognition from their managers is the most important type of support they can receive. 
• When Deloitte US switched to more frequent check-ins with managers (at least every other week), employee engagement increased by 10%.

From the Companies' POV

• 91% of companies with an effective performance management system link employee goals with company priorities.
• 89% of HR leaders say that constant employee feedback and training are essential.
• Annual reviews cost around $3,500 per employee and 210 hours per manager.
• Effective performance reviews increase engagement, and highly engaged employees result in companies that are 21% more profitable, 17% more productive, and 20% higher in sales.
• 95% of managers are dissatisfied with how their company conducts annual performance reviews.
• A strengths-based approach to performance has been shown to increase performance by over 36% year over year.

What to Ask During a Performance Review

What do you want to learn during performance reviews, and what do you want employees to learn?

Start with your employees. If you’ve had your employees fill out a self-evaluation, you already have some information to guide the review. Talk to them about their self-appraisal and ask where they see progress, success, or struggle. Get a feel for how employees see their own performance before launching into manager and peer review notes.

Get peer feedback. Peer reviews give employees a chance to provide praise to their peers, which 76% of employees say is extremely motivating. It also gives employees a chance to get valuable feedback from those they work with on a day-to-day basis. Peer feedback can be especially useful in a remote environment where employees may have less direct interaction with their managers. Gathering feedback from a variety of coworkers can reduce bias that may come from one individual (the manager) evaluating another individual (the employee).

Go back farther. When discussing their overall view of their performance, ask for specifics, and encourage them to think back to the previous review. Performance reviews suffer from something called “recency bias,” and it doesn't only impact the reviewer. An employee's answer about their proudest moment could be different from what it was six months ago. Help them remember all they’ve done over the time since their last performance review. Use your performance review software to access past reviews.

Frame constructive criticism within company values and goals. This allows for a slight separation between the criticism and the person’s performance. It offers up a yardstick applied to all employees and gives the employee a north star in terms of alignment. Help create a plan for moving forward and improving after offering constructive feedback.

Search for meaning. Employees who are engaged can see how their work relates to overall company goals. Ask your employees if they are finding meaning in their work. If they can’t see the meaning in their role, work with managers to ensure their projects align with the company’s mission and vision and can be directly related to the company goals.

Focus on the behavior, not the person. When managers deliver feedback focused on improvement, it needs to be seen as actionable and supported by facts. Feedback should always be about the behavior, not the employee or their intentions.

For instance, an effective approach for managers to address an employee’s behavior can go as follows: “I’ve noticed that you’ve arrived late to our weekly meetings four times this month. Is there a conflict in your schedule we can resolve?” An ineffective way of addressing employee behavior would be a statement like, “Your late arrival to the team meeting is inconsiderate.” Valuable feedback focuses on the problem directly and looks for solutions without making character judgments.

Performance Review Conversation Starters

No two performance reviews are the same. After all, every employee has different goals, and their performance reviews should be as customized as possible. However, these conversation starters can help you and your employees begin those performance discussions.

Here, we’ll share ways to phrase compliments to convey how the employee created a better work environment with their performance successes. We’ll also share some conversation starters employees can use to reflect on their performance and ask for feedback.

Results and key accomplishments

You impressed leadership and exceeded expectations with [accomplishment/achievement/project] which impacted the company in the following ways...

Your project was completed ahead of the deadline. This impressed the [client/manager/your coworkers] and helped the company meet its goal of [company goal].

Your work on the ____________ allowed your coworkers/colleagues/team members to ___________.

You completed ___________ by ____________ resulting in [number/percent/key metric] for the company.

Tying values to performance

You exemplified[company value] when you did ___________. 

Your performance on the ____________ project showed[company value] in action. 

You’ve been a key contributor to our success and culture by showing others how[company value] is done in real life. 

You regularly do/exhibit [BEHAVIOR, which is in total alignment with our [company value]. 

Bottom-line goals

The project you led contributed significantly to the team/department/company goal of ____________.

You made a huge impact on the bottom line by taking the initiative to do ___________ when you were only assigned _________.

Your work on [project] helped us reach [company goal] on time/ahead of schedule. 

Individual Strengths

On this team, you are well known for doing ___________, and this has made the team better at _________.

It’s clear you’ve been working hard on ___________ and it’s made a noticeable difference in achieving/completing [company goal/project]

Teamwork and Collaboration

Your handling of [specific situation] between [client/coworker/leader/vendor] and client/coworker/leader/vendor really helped move [project] along. Thank you. 

Your willingness to sacrifice ____________ so your team/coworker/boss could take on __________ made a huge difference on the team.

I’ve noticed you do _____________ lately to assist ___________. That is particularly helpful right now.

Help Employees Articulate Needs

Most likely, employees have four or fewer performance reviews per year (if their company offers anything beyond annual reviews). With that in mind, it’s no wonder that asking for performance feedback is often harder than it seems.

Here are some phrases (courtesy of Robin Blandford, CEO of D4H Technologies) employees can use during self-evaluation or even as a fill-in-the-blank exercise during the review. They’re an effective way to help employees articulate their thoughts and needs.

• I'd like to tell you about...............
• Here's a status report on...............
• I need more authority on...............
• This is what I'll do on...............
• A new goal or project I'd like to tackle is...............
• I'd like your help in acknowledging...............for the success they had with...............
• I'm concerned about............... and need you as a sounding board so I can decide what to do.
• What do you think of ...............? I'd like to discuss it before I go further.
• I'm stuck and need some encouragement to move ahead with................
• I'd like your vote of confidence on my idea to...............
• Why do I want to ................?
• I need more clarity on ...............
• I need perspective. Am I making progress on...............?
• I need feedback on my work on ...............
• I'm confused about...............
• I'm overwhelmed by...............
• Who could help me with...............?
• Why is............... important?
• What do you want me to do on..............?
• What are my goals for ....................?
• What does a good .............. look like?
• What do I need to know about ...............?
• How do I start ................?
• What are the next steps on ..............?
• What resources are available to help me with ...............?

What not to say in a performance review

COVID-19 was a catalyst for many companies to overhaul performance management processes and change how performance reviews are conducted. Many HR professionals and managers used the past few performance review cycles to ensure their employees were not suffering from burnout. There was increased empathy and flexibility around performance evaluations.

As workplaces return to a new normal, companies have the perfect opportunity to revamp performance reviews again. They can keep what worked and approach performance conversations with more understanding.

Don’t discontinue one-on-one conversations. If your company exchanged performance reviews for one-on-one check-ins during the pandemic, why stop them? We know that 96% of employees want more feedback from their managers. Employees are also three times more engaged at work when they regularly communicate with managers. This signals that more communication is wanted and beneficial, especially if your teams are remote.

Don’t give only top-of-mind feedback. It can be tempting to share lots of feedback around the employee’s most recent performance. But that doesn’t create a complete picture of how they’re doing. Be sure to give feedback around great performance and problem areas from the time of the last performance review. If your company uses performance management software, it’s far easier to evaluate progress over a longer period of time.

Don’t make generalized statements about personalities. Often, managers fall into the habit of evaluating employees based on their personality traits rather than performance. It’s recommended instead that managers focus on behaviors and results. Did a sales team member spend extra time nurturing a lead that turned into a big new client? Did a front desk attendant at a gym meet 150% of their goal for new member sign-ups?

On the other hand, maybe a customer service rep did not meet their goal for the number of tickets resolved. Those accomplishments can be recognized or issues addressed without referencing employees’ personality traits. Center specific actions and results to give concrete, constructive feedback.

Don’t let bias effect evaluations. Research from Harvard Business Review found that women are 1.4 times more likely to receive subjective critical feedback instead of constructive critical feedback. Women are also more likely to be assessed according to personality traits than actual performance. It’s important to be aware of the types of biases you might hold to mitigate their effects on performance review.

How Do I Train Managers in Performance Reviews?

Training managers to give great feedback can make the evaluation process more accurate and fair, since managers work closely with their employee(s) every day. However, managers can’t conduct great reviews just because they know the reviewee well. Here’s how you can give managers the training they need to create a fantastic performance culture.

• Managers should send and review self-appraisals before scheduling or conducting the performance review. Self-evaluations can provide a framework for the review and help the manager build an agenda. They also indicate to employees that review time is approaching. This gives the manager and the employee being reviewed time to prepare.
• Teach managers to establish early in the review that it is a two-way conversation. Your managers should be talking and listening in addition to reviewing self-assessments to understand employees’ perspectives.
• Teach your manager to focus on any gaps or inconsistencies among company values, self-appraisals, and how peers rated their performance.
• Educate managers about potential biases and coach them on providing feedback based on behaviors and results instead of personality traits. 
• Emphasize the importance of being specific. Managers often try to couch their feedback in vague statements, hoping to spare employees’ feelings. However, employees need to hear specifically where they are excelling and where they’re struggling as well.
• Ensure that managers stay consistent with their performance reviews and other feedback meetings. Every employee being evaluated should know precisely when reviews are happening and when to expect feedback.
• Remind your managers that performance reviews are not personal: “We do not evaluate people, we evaluate results.”

3 Crucial Tasks to Complete Before Employee Reviews

3 Crucial Things to do Prior to your Employee Review Meeting:

Review their Previous Performance Documents

Determine Goals and Objectives

Create an Agenda and Rehearse

There are a few crucial tasks to complete before your employee review meeting:

• Review employees’ previous performance documents. Doing this gives you benchmarks against which you can compare their progress. Read their past self-evaluations and performance plan documents. Determine whether or not they met their goals and evaluate their overall contribution to achieving your business’s goals. Take note of any areas of struggle or standout achievements.
• Determine new goals and objectives. Once you have reviewed their previous performance records, you can come up with goals and objectives for the next review. This conversation’s framework should revolve around what they can do to make your business more successful using their core competencies. It can also include skills that need improvement and new skills the employee wants to develop.
• Create an agenda and rehearse. In your agenda, include any follow-up comments relating to their previous review meetings. Discuss the goals you’ve just created and leave time for them to reflect on their progress and address concerns. Provide a list of action items. Rehearsing may sound weird. But, it’s an effective way to prepare yourself for the conversation and avoid any hesitation during the meeting.

Preparing for performance conversations shows that the employee’s success and development are important. Completing these tasks will help managers and employees feel empowered and motivated by performance reviews, instead of stressed or frustrated.

How Do You Write Effective Goals for Performance Reviews?

Setting new goals is itself one of the main goals of performance reviews. Goals are a big driver of performance. They increase transparency around what is expected of each employee and can even serve as motivation.

But which goals should you include in your employee review plan to ensure you accurately measure their progress? While goals will vary widely based on roles, responsibilities, and individual needs, your approach to goal-setting can remain consistent.

When creating new goals, consider core competencies, your company’s objectives and goals, and how they both tie into the employee’s specific role. Then, your organization might use an approach such as the SMART method to set goals for each employee. SMART goals are:

• S - Specific 
• M - Measurable 
• A - Achievable 
• R - Relevant
• T - Time-bound or timely

Regardless of the goal-setting method your organization uses, be sure to maintain consistency and keep track of goal progress. Talk to leadership and coworkers about the company’s short- and long-term goals. Work together to figure out how to align employees’ individual goals with company goals for improved engagement levels.

Best Practices for Giving a Performance Review

During the review process, you will be gathering a lot of information that will require feedback, dialogue, and action. Without those elements, employees can be left feeling like they weren’t heard or that their development isn’t important.

Send out a follow-up account of the review. Include what was discussed, what goals were set, and the plan of action going forward. This is a useful formality that passes the baton to the employee to work on their goals and use constructive criticism to improve. It also creates a written record with details of the review, including action items and new goals.

During the review process, you will be gathering a lot of information that will require feedback, dialogue, and action. If these things don’t happen right away, employees are left feeling like they weren’t heard and the entire process was a royal waste of time. In fact, a majority of employees expect feedback from their review as soon as possible.

Performance Reviews Post COVID-19

COVID-19 threw a wrench into many of the processes that organizations had set in place. With so many employees working remotely, leaders needed to overcome many brand-new hurdles when preparing and executing performance reviews. For many, this entailed implementing and learning new technologies to help facilitate a remote performance discussion. For others, it meant changing performance management processes altogether.

If there were changes to your performance review process during the pandemic, be clear about those changes and how reviews will be handled going forward. Remember that since the onset of the pandemic, many employees have had to:

• Learn and implement new technologies at home
• Adjust to a rapidly changing workplace as we adapt to the new normal
• Grapple with new challenges and responsibilities both at work and at home
• Shift to a remote work environment and create a productive workspace at home

Taking what has changed into account — in the world and the workplace — can shape how your organization moves forward as we all adjust to new normals. Maintaining transparency and communication around expectations is key to ensuring successful performance reviews post-pandemic.

Preparing for performance reviews this year is a challenging experience as your company decides if or how performance management will change. It’s still important to keep the effects of the pandemic in mind as teams adjust to new processes and expectations.

With proper planning and support, HR leaders and managers can facilitate insightful and productive performance reviews across the company. ClearCompany can assist and support your team as you navigate new processes or return to standard review cycles. Our solutions can help your organization more effectively manage your team’s performance, whether your teams are remote or back in person. Reach out today to speak to a ClearCompany expert or set up a demo of our Performance Management system.