The success of an organization is not built by an individual but by the entire workforce doing their work to the best of their abilities. Only when employees perform at the optimum levels can they produce desired results, meet the organization’s objectives and push the organization on a growth trajectory. So, there is a clear need to optimize the performance of individual employees and teams to manage the organization’s performance, productivity and profitability. As with every aspect of a profit-oriented organization, there is a method in the madness behind managing, nurturing and documenting the performance of employees as well.
What is a performance review?
The method adopted for scientifically measuring and managing the performance of the employees of an organization is called the performance review. Employee performance review involves subjecting every employee to a structured review, where their performance will be evaluated based on a few predetermined criteria such as how they have achieved their goals in the review period and how they have overcome the challenges in work, etc. After evaluation, the manager shares feedback with every employee. The employees are expected to incorporate that feedback into their work to improve performance, which will be followed up and analyzed later in the next review.
- Performance review is a comprehensive method of employee performance evaluation that covers various aspects of an employee’s performance at work.
- It involves extensive planning, which takes a lot of time. So the cadence of a formal performance review is usually between a quarter and a year.
- Performance review also evaluates employee behavior, analyzes its impact on performance and suggests changes.
- Employee performance review ends with the reviewer sharing feedback and a plan of action with the employees for the next review period.
- Managing performance requires frequent and continuous evaluation through weekly meetings, one-on-one meetings, informal conversations, etc.
- A formal performance review with more frequent conversations works together to manage the performance and productivity of an organization.
- Performance review helps to build a bigger picture of an organization’s performance and the ability of its workforce, which helps in planning for the future.
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What is the purpose of a performance review?
The purpose of the performance review is to:
- Assess how the efforts put in by every employee translate into productive work and achievement of short-term and long-term goals.
- Identify gaps in understanding of goals and expectations.
- Realign the employee to their goals and clarify the roles and responsibilities to prioritize the right things and produce outcomes aligned with the organizational objectives.
- Assess the strengths and weaknesses of employees and help them address their weaknesses.
- Keep the employees adaptable to changes dictated by market conditions and other factors.
- Manage the career growth of employees in line with their expectations and plans.
- Enable employees to get the proper pay and ensure job satisfaction.
- Identify employees’ achievements and reward them accordingly through bonuses and better compensation.
- Build conversations with the employees, improve employee engagement strategies and reduce employee turnover.
- Identify the employees who need training, upskilling, or reskilling to create and nurture a talent pool within the organization.
Seven Reasons Why performance review is important
Performance Management is a science that needs to be based on data and relevant metrics. Employee performance reviews act as a tool to measure, verify and optimize the performance of employees in the organization. It helps to identify and measure strengths and weaknesses, opportunities and challenges, successes and failures. Employee performance reviews have become indispensable as a tool for measuring essential parameters.
1. Feedback about performance guides employees towards high performance:
Performance review comments point out the strengths and weaknesses of employees, making it possible to appreciate a good performance. Creates an opportunity for employees to improve. It builds conversations around an individual’s performance and the quality of work in the organization, paving the way for performance culture. It helps determine what the organization expects from individuals.
2. Recognizing employees at the right time motivates them to go beyond expectations:
Lack of appreciation at the right time is one of the most critical factors leading to dissatisfaction at work. Performance reviews act as a platform for giving due recognition to employees and rewarding them for good performance with incentives and bonuses. Acts as a motivational factor for employees to push their boundaries further and surpass expectations to fulfill the roles exceptionally.
3. Aligning individuals to goals pushes the organization toward its vision:
For the organization to work as a single entity towards its objectives with laser-sharp focus, it has to have its employees aligned to the overall objectives without any exceptions. Employee performance review acts as a calibration tool to verify alignment and realign employees if needed so that every employee will productively contribute to the organization’s objectives and the organization’s long-term success. It helps to consider how an individual’s contribution fits into the bigger picture of an organization’s outcomes, highlighting the importance of an individual’s contribution to the organization.
4. Clarifying roles and responsibilities help employees do the right things:
Employees may often misunderstand their roles, duties and what they need to do in their job. Employee performance review enables employees to ask doubts and questions to their managers about the roles and get clarity so that they will always do the right thing, avoid distractions and work only on tasks that create outcomes.
5. Career management makes employees feel secure and consider a career path within the organization:
Every organization needs to provide employees with a career path that involves promotions, opportunities to learn, and the space they need to put their skills to the test. Employees with stagnant careers may lose interest in their jobs and look for alternatives. Employee performance reviews help managers create an appealing career path for every employee and ensure that they progress in their career as per the plan. It helps to promote employees on time and identify training needs at the right time.
6. Taking an audit of the skills and competencies within the organization helps to plan for the future:
Employee performance reviews take into account the training the employees have attended and the skill sets they need to get the job done efficiently. Using this data, the management can determine whether they need to hire new employees to meet the organization’s future needs or upskill/reskill existing employees. Reviews help to manage human resources and forecast future needs.
7. Keeping the workforce at their productive best makes them adaptable:
Performance reviews help keep your employees trained, aligned and skilled enough to perform at their optimal best levels. This is important because a solid and efficient workforce ensures the agility and adaptability required to manage drastic changes dictated by volatile market conditions and other external factors.
Performance Review Process
A performance review process is not done in a day, and it takes a long time to plan and prepare. Many other factors must be considered while conducting the review, and even after the review is over. The performance review process involves the following steps.
Planning an employee performance evaluation starts with the basics, such as cadence and purpose of the review. If the review’s objectives are unclear, it can cause confusion and anxiety among the employees. It is advisable to write down the purpose, objectives, and expectations in a document and share them across the organization. It ensures that the performance review’s purpose is communicated to every employee properly. A few weeks before the review, the managers should inform the employees about the impending performance review.
On finalizing the objectives of the performance review, the metrics to assess the performance of every employee should be selected. Performance reviews are not standard surveys where everyone fills the same questionnaire, and every role is different, and the review needs to be customized for every function. Quantitative questions should have a precise, fixed scale to quantify the achievements and performance. However, the review should also have qualitative questions that encourage two-way conversations.
Before the actual review, the manager can share a self-assessment template that the employees can use to assess their performance. This will help them prepare for the actual review and decide how they will present their achievements and challenges.
The review’s tone should be clear, so the employee does not take it entirely positively or negatively. The manager must remain unbiased, fair, and objective during the review.
Review does not necessarily have to follow the template strictly; however, significant digressions can be avoided. When an employee has specific problems or challenges that require a lengthy discussion, the manager can schedule a separate meeting to keep the focus on this formal employee performance review. During the performance review, the reviewer primarily reviews the goals set during the review period and assesses how the employee has achieved them. The reviewer has to ensure that the flow of the review, questions, and conversations are coherent and logical so that the employee does not have to go back and forth and struggle to keep up with it.
The manager should ensure that the feedback is given as constructive criticism rather than complaint. Further, the prescribed changes and action plan should be presented as suggestions rather than orders. A 360 degree feedback should be presented to the employee in a constructive manner that conveys a manager’s good intentions to improve the employee’s performance. This establishes a better working relationship between the managers and the employees while supporting the employees to perform better.
The reasons for failures/poor performance should be analyzed, and the root cause should be addressed with suitable suggestions that the employee will implement during the next review period. This will help the employee accept the problem and work towards overcoming it.
Documentation and dissemination
While performance reviews are conducted at the individual level, the outcomes collectively visualize the organization’s performance. So, it is essential to properly document the answers and outcomes of an employee performance evaluation. It should put together a comprehensive report for future reference, complete with all the data, analytics, insights, and other supporting documents. The information should be made available to all the stakeholders. At the same time, the feedback given to every employee should also be made available to them confidentially so that they can look up to it anytime and work on the suggestions. The manager’s responsibility is to document the feedback and send emails to the respective employees.
Once the performance review is over, employees are likely to forget the outcomes. Especially if the following employee performance review will be conducted only after a year or a few months later. Every employee must consider feedback and implement the action plan to show tangible progress during the following performance review. Failing to implement the suggested changes will make the purpose of the review redundant.
It is the responsibility of the managers to make sure that the employees internalize learnings and takeaways and implement follow-up actions. They can achieve this by following up with every employee during weekly meetings and informal conversations.
It is vital to have a culture of open feedback and conversation so that the employees will share without hesitation the difficulties they face in implementing the suggested changes. This allows managers to play an active role in nurturing the employees’ performance and make the performance reviews far more effective and fruitful.
5 essential qualities of a good performance review
How to conduct a good employee performance review?
1. Promoting open conversations and feedback:
Performance reviews are not a one-way channel. There should be conversations where the reviewed employees also have a space to give feedback, ask questions and voice out their concerns regarding the challenges at work, team issues, training, career growth, promotions, engagement, etc. Two-way conversations create trust amongst employees and establish a better working relationship with the superiors and their teams.
2. Followed-up frequently
The outcomes of an employee performance review need to be documented and followed up constantly to verify if the feedback has brought desired changes in the employees. This can be done using one-on-one meetings, informal conversations, weekly reviews, etc.
The managers must ensure that the points discussed during the employee performance review are clear for both parties and consensus is reached. Performance review is all about working with the employee to bring out the best from them. If there is a lack of transparency, it can lead to erosion of trust and the purpose of the review is defeated.
4. Fair and objective
The reviewer should keep their own subjective opinions away from the performance review and evaluate an employee purely based on the data from previous studies, feedback from other employees, goal achievement, etc.
While a performance review is usually conducted based on achievements in the review period, the outcomes of the review should be focused on the plan of action based on the review results. On a bigger level, the entire review exercise must align with preparing the workforce to fulfill the organization’s long-term vision and growth.
20 questions commonly asked in a performance review
1. What were your goals?
2. Have you achieved your goals?
3. What were your successes and failures?
4. What were the challenges you faced in achieving your goals?
5. How do you plan to address your weaknesses and overcome the challenges?
6. What are the skills that helped you achieve your goals?
7. What are your goals for the next review period?
8. How do you plan to achieve your future goals?
9. Do you have all the tools and facilities to meet your goals?
10. How will you contribute to the achievement of organizational objectives?
11. How do you expect the organization to support you in work?
12. How are you planning to do your job better?
13. What are the things you want to change in the organization?
14. Do you get recognized by your team members?
15. Does your team accept your ideas and contributions?
16. Do you have any grievances with your team?
17. What are the things you like about your team?
18. How happy are you to work with your team?
19. How would you rate your experience working with the organization?
20. What are your career plans for the future?
With the Profit.co performance management software, you can adjust competency ratings, questions, and review frequency to meet your specific needs. You can tailor reviews directly to each department, team, or even individual, depending on what you feel you need from your performance reviews.