Best Practices for Performance Reviews

Performance reviews are traditionally daunting, intimidating, and overwhelming. It can create stress for employees as their every action is reviewed. Employers have to review all employees, and often base raises on those reviews. Worse still, performance reviews often happen around the holidays, which is already a stressful time of year. But what if performance reviews could be different? What if there is a better solution? Below are the top Performance Review Best Practices to minimize the pressure and stress of the performance review crunch.

#1: Make It a Priority

Performance reviews can easily fall to the wayside when there are other pressing tasks. But, they are critical to keeping a workforce engaged and improving. Best practice requires businesses to prioritize performance and enter a performance conversation thoroughly prepared.

What does preparation look like? Managers should review any documentation from the past year – compliments or complaints from colleagues or clients, performance on important projects, the employee’s day-to-day attitude, or anything else. Open the employee’s job description and compare the description with their performance. Did they meet the basic requirements laid out in the job description, or are there areas where they are falling short or exceeding expectations? If you have performance reviews from prior years, review those. Has the employee improved, remain stable, or declined in any aspect?

Lastly, managers should be thorough, fair, and factual in their reviews. Provide specific examples so the employee knows exactly what went well and what did not. Enter the discussion prepared with further examples in case they ask for elaboration. The more concrete a review can be, the easier the conversation will go.

#2: Make It an Anniversary

We firmly believe that formal performance reviews should be based on anniversary dates rather than by calendar year, and there are so many reasons why. First, using an employee’s anniversary date makes it easier for managers and employers by spreading the time commitment throughout the year. It creates less management, which can lead to less stress on employees.

Second, raises are often given right after performance reviews. While it is great to give larger raises to those with exceptional performance reviews, company finances can’t always accommodate this. Additionally, someone not getting a raise for moderate to lesser performance doesn’t always help motivate improvement. By spacing out these two events, it lets a raise be just a raise without the expectation of performance automatically translating to a high compensation increase.

Lastly, it changes management’s mindset from performance being a single, annual discussion to a conversation throughout the year. The saying “use it or lose it” can ring true in performance management. Having performance conversations year-round trains the brain to think more about performance on a daily basis. And the more performance conversations that happen throughout the year, the less stressful the annual conversation is for everyone.

#3: Make It Quarterly

There should never be any surprises in an employee’s annual review. To ensure this is the case, we recommend having performance conversations quarterly, at a minimum. Having these formal conversations more frequently lessens the stress of the annual review. It gives managers and employees the time to discuss performance early and come to an agreement on how the employee is performing. In doing so, there should be no surprises in the annual review.

Quarterly conversations also give managers the opportunity to address concerns early. It is easy to get focused on day-to-day tasks, but having this time set in a schedule can ensure performance conversations don’t fall by the wayside.

#4: Make Performance Reviews Collaborative

Often, performance reviews can become a manager rating an employee on their performance with little feedback from the employee. In these types of conversations, employees can feel demotivated, unheard, or undervalued even if the manager is accurate in their review.

Instead, we facilitate a collaborative review discussion. Both the employee and manager have to rate performance and provide comments before any discussion is had. This allows the employees to share their own thoughts on how they are performing, and gives the opportunity to create greater alignment between the employee and manager once they proceed with a discussion. By employees providing their own reviews, they are more likely to feel heard and valued, and this creates more motivation to improve and progress.

#5: Make It Positive

This seems the most basic, but it is often the most overlooked. Positivity can be challenging if you have an employee who is struggling. While reviews need to be fair, reasonable, and factual, always try to highlight everything the employee does well. If performance reviews are only negative, it can decrease morale and motivation. So, be sure to highlight the positives wherever possible.

Not sure how to start implementing performance reviews, or want help reviewing your current process? Contact Eli Advisors today – we are happy to help!

author avatar
Eric Thieringer President
Eric Thieringer is president of Eli Advisors, an HR, payroll and employee benefits firm focused on serving small to mid-size organizations. Eli's services and support address the frustrating gaps that challenge employers and their employees. By solving these problems, Eli Advisors creates financially sustainable programs and services that help organizations attract, retain, and engage the talent needed to succeed.