HR’s Guide to Effective Performance Reviews

Updated:

January 20, 2022

Few company-wide strategies are so critical, yet ineffectively implemented as performance reviews. 

A great performance review cycle can calibrate employee performance, identify top performers, reward excellent work, and help a company in its strategic planning. 

On the other hand, poorly implemented performance reviews can lead to confusion, frustration, endless meetings, and a real dip in company performance.

So how can you ensure that your organization implements effective performance reviews?

As you develop or update your performance review cycle, there are a number of steps you can take to focus, modernize, and streamline performance reviews so that each review cycle works for your employees.

We’ll take a look at those steps in this article to help you create and implement effective performance reviews.

See how PerformYard can streamline your performance review process. Learn More

What Makes an Effective Performance Review?

Effective performance reviews don’t just happen—they are the product of thoughtful and proactive systems that stress objectivity, achievement, and transparency.

When aligned, they powerfully reinforce good performance and help course correct where necessary.

Below are seven components of an effective performance review for your organization to consider. 

1. Reviews Should Be Frequent

Ineffective performance reviews happen rarely or sporadically, leaving employees surprised when suboptimal performance is called out months after an event occurred. Effective performance reviews happen frequently and build upon each other.

In an effective review, excellent performance is reinforced and feedback is given to correct suboptimal performance. Employees then have a chance to correct their mistakes and discuss progress by the next review.

Frequent performance reviews help employees feel more comfortable discussing goals, receiving feedback, and talking about performance. 

2. Reviews Should Be Objective and Performance-Oriented

Effective performance reviews should leave little room for interpretation and should be based on specific criteria, rather than opinions or feelings.

To ensure objective reviews, an organization may develop performance review rubrics that can be consistently used across the company. These rubrics should grade employee performance and competencies, not personalities.

3. Reviews Should Incorporate Goals

Performance reviews take place to help employees drive positive change. Goals are the best way to ensure that change actually takes place. 

Ideally, direct reports and managers will work together after a performance review takes place to set achievable goals that will guide an employee’s development. These goals should then be discussed and followed-up on during check-ins and subsequent reviews. 

Performance reviews and goal setting come together to create a system where performance is discussed, next steps are agreed on, and progress is reviewed.

4. Reviews Should Be Transparent

Performance reviews shouldn’t hold any surprises for employees. Managers can improve transparency by sharing rubrics and evaluation questions ahead of performance reviews. This helps employees understand ahead of time where their manager believes their strengths and weaknesses lie and gives them time to prepare for a discussion. 

Transparency also builds trust between a manager and employee. When performance reviews are transparent, employees know how their manager views their performance and clearly understand where expectations lie. 

5. Reviews Should Be Conversational

Every performance review should be a two-way conversation. Reviews are not inquisitions—they are opportunities to look back on past performance and position an employee for optimal future performance. This is best achieved by striking a conversational tone.

Managers should begin performance reviews by asking the employee how they think their performance has been or to highlight their wins and their shortcomings. Once the review is underway, managers can add in their findings. 

6. Reviews Should Take a Holistic Approach to Feedback

Most reviews are made up of two parts: self-evaluations and manager evaluations. Depending on your organization, this may be the best way to evaluate an employee. But many organizations are supplementing these two components with peer feedback. 

Combining feedback from multiple peers and stakeholders (also known as 360 reviews) allows managers, employees, and organizations to get a holistic view of how an employee’s performance impacts the company. This holistic view helps managers and HR make more objective decisions about scoring and compensation, leading to improved employee morale.

7. Reviews Should End With a Clear Understanding of the Future

An effective performance review should end with a good plan of action for future performance. 

Coming out of a review, employees should understand their strengths, weaknesses, and what’s expected of them in the future.

In turn, managers should provide employees with actionable ways that performance can be improved, as well as an appropriate timeline for improvement.

Tips for an Effective Performance Review

As HR manages the entire performance review process, it’s critical to train managers on how to complete performance reviews effectively.

Ideally, you should hold training sessions with managers throughout the year to provide clarity on what is expected of them during performance review cycles.

Here are some tips that you should communicate to managers that will help make their performance reviews as effective as possible.

Set Expectations Early

We believe that an effective performance review is a continual process, not a one-day meeting.

Managers and employees should meet at the beginning of the year to set goals and expectations. Expectations should be crystal clear.

Then, when quarterly or end-of-year performance reviews come around, the conversations should reflect the effort and feedback that was given over a period of time.

Use Performance Notes as a Guide

Managers should not leave a performance review to the mercy of their memory. 

Instead, managers need to take notes throughout the performance cycle on their direct report’s performance—both positive and negative.

This will ensure that an employee’s strengths and weaknesses are accurately and fairly incorporated into the review.

Give Specific Feedback

Specific feedback ensures that the review is objective. 

Instead of saying, “You don’t check your work before you send it in,” a manager could say, “When you turned in that PowerPoint on spending in our department, there were some incorrect figures and a few spelling mistakes. It is important that you check your work in the future.”

This allows direct reports to better internalize feedback and sets them up to make necessary changes in order to improve performance.

Managers should be sure to call out specific wins. When employees see their performance being recognized, they understand that their hard work directly benefits the company. This encourages positive future performance.

Encourage a Discussion 

Reviews should be a discussion, not an interrogation. 

Ideally, the employee should lead the conversation, or at least direct the conversation around their own strengths and weaknesses. 

This can be accomplished by a manager asking open-ended questions to get the employee to arrive at conclusions on their own.

Managers shouldn’t be silent during a review. They should affirm conclusions that seem accurate and push back on conclusions that don’t seem correct.

By the end of the discussion, both parties should feel that their views have been heard and acknowledged.

Effective performance reviews are critical for identifying and rewarding top talent, recalibrating employee performance, and guiding company strategy.

With some foresight and proactive planning, HR can create an effective performance review process that emphasizes frequent meetings, stresses objectivity, and incorporates holistic feedback.

What to do next.

Here are three ways you can continue your journey to a more modern and effective performance management strategy:

  1. See PerformYard In Action. Find time with one of our product experts to get a live look at what it's like to use modern performance management software. Every call starts with a 5 minute discussion of your approach and then immediately dives into a live product demonstration that's based on your organization's process. Or start by watching a 2-minute video overview.
  2. Learn more about modern performance management. Start with our Guide to Building a Modern Performance Management System, or visit our blog to see the latest ideas from our team.
  3. If you know other HR Pros who would appreciate this article, share it with them through email, LinkedIn or Twitter.