Performance reviews 101: Why are they important and where do you start?

The words ‘performance review’ may conjure up thoughts of awkward once-a-year conversations that lead to nowhere. If so, you’re not alone. Research has found that performance reviews are, on average, more despised than power companies, internet service providers and health insurance companies.

That said, research also shows that organisations with employees who are satisfied with their company’s approach to performance management are 1.3 times more likely to meet their financial targets. This suggests the need for a performance review evolution, not elimination.

This guide will help you structure performance reviews so that they’re actually valuable to you and your employees.

The value of performance reviews

1. Strengthens the trust (and therefore the relationship) between you and your team, making you a more effective leader

2. Are a great opportunity to recognise, encourage and motivate, cultivating company loyalty and increasing employee engagement

3. Builds a culture of accountability where everyone feels confident providing and receiving feedback

4. Fosters a sense of innovation and empowers your people to push themselves, building a high-performance culture

Everyone wants to succeed and to know how they’re performing. Knowing where they stand is fundamental to feeling a sense of purpose and self-motivation.

Ultimately, employees will perceive reviews as one of the many tools that help them succeed, in turn helping the business succeed and directly translating to your bottom line.

When should you have performance conversations?

Performance happens 365 days per year, so feedback should too. Many of the issues associated with performance reviews are because these feedback conversations are only happening once or twice a year, when you ‘have’ to do it.

For performance reviews to have lasting impact, you should be having regular feedback and career conversations. Sharing feedback when you see it and having bite-sized performance conversations means that you take the pressure off the review conversations. It’s not a huge event, just another conversation. It also means you should both be on the same page which makes the conversation a lot more approachable.

While different businesses will have different performance review structures, a traditional approach could look like this:  

The kick-off, mid-year and year-end conversations are more formal in nature whilst the one-to-one check-ins provide a key opportunity to keep on top of expectations, celebrate wins and provide in-time feedback. The magic lies within these 121 check-ins. Schedule them no further apart than fortnightly. Most should be WIP’s with every second-fourth meeting dedicated to career/development conversations.

What to do before a performance review

As the saying goes, proper prior planning prevents piss poor performance! Because, make no mistake, review conversations are a performance marker for managers too. You must model the preparation and thoughtfulness you hope to see from your employees.

Schedule a meeting that includes a note on why you’re having the conversation, what to expect in the meeting and instructions on how they should prepare (e.g. preparing their self-review and gaining 360 feedback).

How to prepare

1. Gather performance examples you can verify

   Be specific and remember to consider the entire review period

2. Understand their goals and the actions needed to achieve them

   What goals were set and how are they going with them?

3. Identify strengths and development areas

   Keep it balanced and avoid a “shopping list”. Focus on key items only

4. Develop performance enhancing ideas

   How can you help them fill skill gaps and build on strengths? Think outside the box

5. Expect questions and clarifications

   Anticipate queries, reviews are a two-way gig

Trust takes a long time to build and can be lost through one disappointing conversation. The worst thing you can do is enter the meeting rushed and frazzled, with no memory of what their goals are and with no examples to feed back. Owning this process, and the message you communicate will reinforce your credibility and result in higher employee confidence in you as a manager.

What to do during a performance review

Nailing the preparation but failing the execution can undo all the great work you’ve put in and undermine your influence, so ensure you’ve thought about the flow of the conversation.

Open the conversation with an acknowledgment of the work they’ve put into their self-review and an overview of what is going to happen in the conversation.

It’s expected that you will have read their self-review prior to the meeting, so running through what they’ve already written has limited value. Instead, have a series of questions prepared that facilitates a deeper conversation. Questions could include:

• What projects or pieces of work have you enjoyed? Why?;
• What pieces of work or parts of your role have you found most challenging?;
• What are your proudest achievements?;
• I noticed you mentioned X, talk to me more about that; and
• I know you’re wanting to develop X, how has the work you’ve completed to date facilitated that?

Thank them for their insights and shift the conversation towards your feedback. Share what you think their key achievements are and the behaviours you’ve been impressed by. Include the ‘why’ as well as the wider impact their achievements/impacts have had. Share any reinforcement feedback you’ve received from others.

Once the above is completed, it’s now onto the part that most people hate: sharing your constructive feedback. Establish expectations by stating the number of pieces of feedback you have to share. Keep it brief, include specific examples and weave any relevant comments from their self-review into your message. Invite the employee to share their thoughts and talk through each piece of feedback before moving on to the next.

Finally, wrap up the conversation by running through what will happen next. Depending on your companies’ process, this could include an update of each persons review comments, a timeline of when they can receive confirmation of any performance ratings or when your next feedback conversation will take place.

What to do after a performance review

Arguably, the hard work is done; however, you’re not quite finished. The following will help you round out the review experience and set you and our people up for success as you move forward:

• Block out 30 minutes after the meeting to complete the required next steps. This could include updating your notes, scheduling follow up meetings or actioning anything you’ve committed to in the meeting (e.g. facilitating development opportunities).
• If anything unexpected comes up in the conversation, reach out to relevant stakeholders to investigate before going back to your team member with answers or updated thoughts.
• Share any performance ratings when your company gives you the green light.

Building performance reviews into the bigger picture

The best companies leverage performance reviews as part of the bigger picture around feedback and recognition, and ultimately how it impacts overall company success.

At the end of the day, employees who understand the purpose and value of performance reviews will buy in, approach them positively and see them as growth opportunities.

Next steps:

1. Clearly communicate the benefits of performance reviews to your team, and not just at review time. Make the connection throughout the year to reinforce the message.

2. Follow through on your word and facilitate action so that your team can see that performance reviews lead to real change.

3. Make feedback, performance and career conversations a consistent priority, not something that’s done a few times a year.