In recent years, many organizations have realized that the traditional performance review process needs to change. With the switch to remote work and an increasingly diverse workforce, HR professionals must adapt their strategies in order to provide effective, unbiased, and truly motivating reviews. To accommodate these needs, numerous companies have already pioneered significant transformations in their performance reviews.
In this article, we’ll share best practices for modernizing your own performance review process, supported by real-world examples. We’ll discuss innovative formats, suggested time frames, and how to provide actionable feedback. Dive in to discover how to conduct performance reviews that truly resonate with today’s workforce and drive continuous improvement.
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The Importance of Upgrading the Performance Review
Gallup research has shown that just 14% of employees feel their performance reviews help them improve. And the process can be quite expensive, totalling $2.4–$35 million for an organization with 10,000 employees, in terms of work hours used.
Further, the traditional performance review process has a high prevalence of bias. It often leaves employees feeling admonished for mistakes that happened throughout the past year, rather than encouraged and hopeful. With this focus on the past, they may lack a clear path forward.
Additionally, the traditional performance review process tends to lack transparency. Employees may not understand how managers assign ratings, as Elaine Diane Pulakos and Mariangela Battista detail in Performance Management Transformation.
In contrast, a modernized performance management process brings significant advantages:
- Enhancing employee morale by truly nurturing their growth.
- Providing higher quality feedback that drives real change.
- Increasing the timeliness of feedback.
- Strengthening team and individual performance, so people can grow together.
- Supporting achievement of high-level goals by appropriately motivating and challenging employees.
- Improving the quality of remote work by boosting engagement and providing much-needed coaching.
Let’s explore some unconventional performance review formats. Then, we’ll delve into how often to hold these reviews, how to share actionable feedback and other best practices for employee evaluations.
Best Practices for Today’s Performance Reviews
Utilize these tips to maximize the value of your employee reviews.
Innovative Performance Review Formats
By streamlining the discussion, you’ll make it much more productive. Here are some key ways of doing that.
Narrow the Scope
“Most performance reviews are trying to do too many things in a single conversation,” says Gallup. The traditional review combines a discussion on how to improve performance with decisions on promotions, raises, or bonuses. That’s difficult or impossible to pull off, they note. Instead, parse these topics out into different conversations—and focus the performance review itself on improvement.
Think in Terms of Cycles
More frequent performance reviews feel lower-stakes and lower-pressure, say Bruce E. Winston, Debra J. Dean, and Mihai C. Bocarnea in Handbook of Research on Advancements in Organizational Data Collection and Measurements. With the increase in remote work, more regular performance conversations are especially crucial. Managers and employees can cycle continuously through the goal-setting and performance review process rather than following a strict annual schedule, they note.
As we have suggested in the past, project-based performance reviews tend to deliver more relevant feedback. “In a world of project-based work, employees want leadership to evaluate their performance after each project,” asserts Gartner. Discuss project outcomes, consider input from coworkers and clients, and evaluate the employee’s contributions to the project.
Hold Less Formal Conversations
Some companies are rethinking the tone and approach of their performance reviews. For instance, instead of annual reviews, Deloitte began holding frequent performance conversations between managers and employees while leveraging performance management data. Conversations are open-ended. “Without a formal list of things to discuss, our people steer the conversations to what they most need to talk about in the moment: current performance, challenges with an assignment, or … how and where to stretch [their] skills for growth,” write Jeff Orlando and Erica Bank of Deloitte.
In its performance reviews, Deloitte asks raters to consider several key questions, which helps minimize inconsistency in ratings. For example, they reflect on whether they would always want to keep the employee on their team, and whether they would recommend them for promotion right away. They also consider whether they would recommend that an employee receive the highest level of compensation increase and bonus. Revamping their process in these ways has significantly enhanced employee motivation, supported data-based decision-making, and enhanced workplace culture, note Orlando and Bank.
Focus on the Future
The traditional performance review focuses on correcting past mistakes. That’s why employees (and managers) tend to dread it so much! Instead, focus on the future through practices like these.
- Share examples of what the employee can do differently rather than dwelling on what went wrong. Set SMART objectives and key results (OKRs) for the next review period.
- Plan for the employee’s longer-term future, which will boost motivation to improve and help them channel their efforts appropriately. Begin by asking, “Where do you want to go from here?” Then discuss steps toward that goal.
- Review the existing set of expectations and update them as needed. The demands for any given role can shift quarter by quarter—or even month by month—as the Association of Legal Administrators says. Discuss how to support the employee in meeting any new requirements.
Gallup prefers to frame performance review discussions as “progress reviews.” This emphasizes the ongoing nature of development and guides employees in visualizing the next steps of their career.
Consider Incorporating Peer Feedback
Traditionally, organizations are advised to decouple 360 review feedback from reviews, as it shouldn’t directly influence conversations on compensation and promotion. However, if you’ve separated such decisions from the performance review, managers could draw from 360 feedback during performance evaluations. One law firm, Altitude Community Law PC, sends a 360 survey to each employee’s colleagues prior to the performance review. Open-ended feedback from these surveys informs the conversation.
Hold Candid Conversations
Candid conversations feel less daunting when they happen more often, as Patagonia found. The company abandoned annual reviews for frequent candid conversations about performance, using a mobile app to guide the process. In a relatively brief time, employees grew to appreciate and seek out honest input through this continuous feedback loop.
“By the end of the second year, managers built a ‘muscle’ about having candid developmental conversations, and people felt comfortable that check-ins and feedback would be useful, positive, and not punitive,” says Deloitte. “Patagonia has shown that people and teams who participate more regularly in check-ins and feedback outperform their peers on a wide range of financial and talent measures.” Individual engagement and performance improved at Patagonia as a result, along with the company’s financial performance.
Use a Clear Goal-Tracking System
Relying on a clear system for measuring goal achievement will avoid misunderstandings. Plus, it will minimize potential bias, supporting equity within a diverse workforce. The manager and employee can refer to clear goal criteria and evidence of progress, as SHRM points out. Reviewing milestones achieved will enhance objectivity in your performance reviews.
With the rise of remote work, companies are increasingly adopting tools for leveraging big data in performance reviews. “Automated data collection and analytics around employees’ activities can be powerful for helping individual employees understand how they are performing and where there is room to improve,” notes Gartner.
Refer to a Star Profile
Create a “star profile” for each role that reports to you, suggests Janove Jove in SHRM. This goes beyond the official job description to explain what true excellence looks like. Discuss the star profile well before the actual performance review. Then reflect on the star profile to determine where the employee exceeds or falls short of these qualities.
Give Actionable Feedback
Actionable feedback gives employees clear direction for how to improve. Using the following tactics, you’ll share more meaningful input in a way that employees can hear.
- Use performance review software to help structure your conversations. These tools can provide valuable prompts based on the employee’s role and specific goals.
- Refer to your manager log or instant feedback shared during the review period. Look for key themes that emerge. Choose 3–5 of the most important ones to focus on, sharing specific observations related to them.
- Have a two-way dialogue about each key point you raise. “Two people can observe the same event or outcome yet interpret it differently,” says Frank V. Cespedes in HBR. “Dialogue is important, therefore, not just because it’s polite and typically characteristic of effective organizational cultures, but also because it tests assumptions and reasoning.” Ask the employee for her thoughts on what you have said.
- Share the potential impacts of positive changes on the team’s broader goals. This will boost motivation to improve.
Giving actionable feedback will catalyze lasting improvement. Now, let’s move on to the final step: following up afterward.
Follow Up Promptly
Provide a same-day summary sharing key takeaways from the performance review in a bullet-point format. Ideally, send it within the hour. Frame statements in terms of what you’ve agreed upon, as Jove says.
By using these strategies, you’ll ensure your performance reviews support lasting growth and development. Through these efforts, you’ll also strengthen engagement, motivation, and morale. All of these changes will have a measurable impact on your company’s success.
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