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Performance reviews: a complete guide

18 min read
If you’re planning to implement performance reviews for the first time, want to overhaul your company’s approach or just need a reference guide, here’s everything you need to know. Plus, we’ve included some performance review sample questions you can start using today.


What is a performance review?

A performance review is a formal regulated feedback mechanism in which managers and other key stakeholders assess an employee’s work performance. The purpose is to identify their strengths and weaknesses, offer constructive feedback for skill development in the future, and assist with goal setting.

Whichever methodology you choose for performance reviews, a well-planned and executed performance review boosts employee engagement and sets the tone for creating a culture of feedback and continual development at your organization.

Who runs a performance review?

It’s usually the person’s line manager, as they know most about the employee’s role and their current work. In some cases, a team leader or a more senior leader may lead the review or someone from human resources.

Why are performance reviews important?

As well as long-term positive outcomes, performance reviews offer an immediate lift – not only for businesses, but for employees who want to evaluate their strengths and weaknesses and progress their careers. Here are some of the benefits performance reviews can offer:

1. Aligning personal roles to business goals
A performance review is a chance to make sure everyone understands the organization’s vision and goals and how their work fits into the bigger picture. Individual performance drives organizational performance.

2. A clear understanding of job roles
Performance management empowers individuals to think about their role within the organization and clarify any areas where they have questions. When employees and supervisors can clearly understand and own their specific job duties, any ambiguities in the workplace are eliminated. Each person is accountable for their own work and responsibilities.

3. Regular feedback about performance
Regular feedback contributes to better all-round communication in the workplace. Performance reviews help to identify an individual’s strengths and weaknesses, and most importantly, give employees a better understanding of the expectations that they are being held to.

Performance management can be a motivational tool, encouraging employees not only to feel more satisfied in their work, but to go beyond what’s expected.

4. Career development
The performance review presents the opportunity to plan for and set objectives to further develop an employee’s career. Performance management will also help them gain any additional training or mentoring which can act as a basis for HR’s development of future succession plans.

5. Rewards for good performance
Performance management offers a variety of rewards that show gratitude for a job well done, such as time off and bonuses. The prospect of a better than ‘exceeds expectations’ performance appraisal – one where it is recognized that you’ve gone above and beyond – is an incentive to perform well and may open the door to career advancements in the future.

What’s the best approach for performance reviews?

With so many approach­es, tools and tech­niques involved, no two per­for­mance man­age­ment sys­tems will look the same. Some have grading systems. Others have question and response formats, while others are expected to be free-form.

Just like your com­pa­ny cul­ture, your per­for­mance man­age­ment sys­tem will be unique and spe­cif­ic to your val­ues, your goals and your pur­pose.

How­ev­er, every good per­for­mance review process seeks to improve how the overall organization performs while sup­port­ing the per­for­mance, development, pro­duc­tiv­i­ty and well-­be­ing of its employees.

Despite this common goal, data suggests that traditional approaches to performance management can be demotivating, uninspiring, and make people want to give up rather than work harder and progress.

In fact, traditional performance management (PM) is universally disliked by both managers and employees. It is seen as having little value, and has failed to meet its intended goal of improving performance. According to research reported in the Journal of Industrial and Organizational Psychology:

  • Among managers, 95% are dissatisfied with their PM systems.
  • Among employees, 59% feel PM reviews are not worth the time invested, while 56% said they do not receive feedback on what to improve.
  • Almost 90% of human resources (HR) heads report that their PM systems do not yield accurate information.

It’s time to make the case for change and redesign performance management. Instead of annual performance management processes, a better performance management system incorporates continuous feedback.

So rather than focusing on past performance in the last year, a better performance management system incorporates continuous feedback. Research from Josh Bersin estimates that about 75% of multinational companies are moving toward this model.

What should a performance review look like?

Performance reviews based on a continuous feedback philosophy are more likely to be future-focused and geared towards promoting development. Rather than rating employees against a one-size-fits-all standard based on their past performance, continuous performance management treats each employee as an individual whose potential can be maximized.

Traditional Model Continuous Feedback
Focus is on past performance Focus is on developing performance for the future
Top-down goals/metrics Shared/aligned goals
Manager ratings only Multi-rater feedback (Peers/Customers/Direct Reports/Manager)
Tracked once a year Frequent check-ins, quarterly feedback
Process mainly led by HR Process is mainly led by managers/leaders

However, adopting continuous feedback doesn’t mean removing measurement and metrics from your performance review process altogether – just using them in a different way. Metrics and measurements can provide valuable clarity and focus for employees and managers, acting as a framework for planning and prioritizing future efforts.

To be useful and realistic, measurements for progress need to be balanced across all the relevant elements of performance. Appropriate measures might cover a range of aspects like quality, quantity, timeliness, and/or cost-effectiveness of the work.

Expectations placed on employees also need to be credible – the employee can visualize the results and the means of achieving them, and feel confident about getting it right.

To that end, performance expectations must be:

  • based on job function
  • clear and understandable
  • specific
  • reasonable and attainable
  • measurable – observable or verifiable
  • results oriented
  • communicated in a timely fashion
  • geared towards fostering continual improvement in productivity and skill development

How to set the right goals in a performance review

When it comes to employee goals, striking the right balance is everything. Goals can’t be too easy, or employ­ees won’t feel sat­is­fied — most peo­ple enjoy a chal­lenge. They want to be stretched and to devel­op new skills. Equal­ly, how­ev­er, goals that are too chal­leng­ing can be demotivating. Employees will burn out try­ing to accom­plish them, or they won’t try at all, believ­ing them to be impossible.

Effec­tive goals should be set col­lab­o­ra­tive­ly between man­ag­er and employ­ee. They should be SMART (Specific, Measurable, Attainable, Relevant, Time Based) and tracked reg­u­lar­ly. In addition, reg­u­lar meet­ings should be held to dis­cuss goal progress and what can be done to sup­port the employee in meeting the target.

Performance review examples: phrases and questions

Whichever performance review model you’re working within, providing feedback with clear, positive language is the key to keeping the review goal-focused and productive. Writing performance reviews requires managers and other raters to be specific with their feedback, stay constructive, and provide solutions to help the employee grow.

Your criteria will vary depending on the size, scope, and culture of your organization. However, there are a few elements that come up for almost all companies. Here are a few sample areas of focus to get you started with planning your employee evaluation criteria:

Accomplishing goals

  • Sets challenging goals for him/herself
  • Helps others achieve their objectives
  • Prioritizes his/her work based on the needs of the organization and its customers
  • Achieves his/her objectives even when faced with obstacles and challenges

Leadership qualities

  • Takes team members’ ideas and opinions into account when making decisions
  • Helps team members resolve work-related problems
  • Holds team members accountable for achieving their objectives

Communication

  • Actively listens to others
  • Tailors his/her communication to the needs of the audience
  • Communicates clearly and concisely

Teamwork

  • Collaborates effectively with other team members
  • Gives constructive and helpful feedback to others
  • Treats others with respect
  • Values and respects differences among team members

Culture/Values

  • Lives company values every day
  • Acts as a role model
  • Creates a positive work environment

The content of a performance review will vary depending on job role and organization, but it may be valuable to develop some universal questions for managers to ask, such as:

  • What is [Subject’s Name] greatest strength and what can he/she continue to do to grow?
  • What is [Subject’s Name] greatest opportunity and what can he/she do to improve in the area?

To help you in composing your employee evaluation criteria, you can download free performance review templates from Qualtrics.

How to prepare to conduct a performance review

If you’re a manager or team leader tasked with running appraisals for your team, you’re likely to have an established performance review process to guide your approach. However, you can still make the review experience go as smoothly as possible by preparing in advance.

Clear your calendar

If you’re going to be meeting with team members one on one, make sure you won’t be distracted or interrupted by other priorities during the meeting. Try to minimize commitments earlier in the day to reduce the risk of getting waylaid and having to postpone the review or turn up late. This way, employees know that the review is as important to you as it is to them.

Brush up on your employee experience data

Before the meeting, look through your notes from the most recent review with the employee to see what happened last time. What were the main themes of the meeting? Was there anything either of you said you’d follow up on?

Be ready to take feedback as well as give it

Make sure you allow enough time for the employee to share their feedback with you and bring a laptop or notebook to record it so that you can follow up later.

Prepare for curveballs

Although you shouldn’t be telling the employee anything they don’t already know about their performance, it’s very possible that they’ll bring up matters that are news to you. Because they’re private one-to-one exchanges, reviews may be seen as an opportunity to raise issues or share news. While it might not be pertinent to the review itself, be receptive to whatever the employee brings up and table it for a later conversation if required.

Performance review pitfalls to avoid

As you’re planning or reviewing your performance review process, you can save time and expense by being aware of these potential failure points.

1. Losing the link between process and purpose
Make sure the goal of your performance management systems drives the process, and be ready to make changes if required. Understanding how well your organization’s goals line up with the day-to-day work of individuals and teams is key here.

2. Not prioritizing a culture of feedback
If you don’t already have a culture of feedback, invest time and resources on the front end to communicate the true purpose of performance reviews and build trust in the process to develop a feedback-based culture.

3. Failing to engage your stakeholders
Getting decision-makers and business leaders on board right from the very beginning will improve buy-in, increase participation rates, and set your program up for success.

4. Not building in a support network
Follow-up and feedback need to be built in at the forefront of the project. Set expectations for employees and managers early on so they know who they can go to for advice and support

5. Lack of communication
Communication is the most critical component of implementing a new or improved performance management system. Per­for­mance man­age­ment sys­tems suc­ceed when com­mu­ni­ca­tion about the process is authen­tic and trans­par­ent.

6. Insufficient training and enablement for managers
No per­for­mance man­age­ment sys­tem will be suc­cess­ful if the peo­ple involved don’t invest in the process. If employ­ees sense that their man­agers are apa­thet­ic about the per­for­mance man­age­ment sys­tem, they will mir­ror this atti­tude. Man­agers need to take con­trol and lead by example, and they need support and adequate training to do so.

Alternative ways to collect feedback

For many businesses, performance reviews are the most helpful way to share and collect employee feedback. But thanks to the uptick in experience-led business and a new understanding of the value of employee experience, new methodologies are emerging.

360 feedback

In a 360 review, staff members can receive feedback not only from managers, but from peers and junior staff members. They can also review themselves, resulting in a complete – or 360 degree – view of their strengths and opportunities.

Continual feedback

Some companies prefer to avoid the formal structure of a performance review and instead share feedback on a continual ad hoc basis. This might be a suitable option for very small businesses and new start-ups. However, there is a risk that without a formal checkpoint, staff lack clarity on how they’re progressing and what they need to work on.

Employee pulse reviews

The employee pulse review can be seen as a happy medium between continual feedback and big once a year performance review. It’s a smaller-scale review that’s conducted on a more frequent schedule, such as monthly or quarterly. Pulse feedback is more commonly associated with employee engagement surveys, but it works just as well for sharing feedback in the other direction, since it offers clear measures and is quick and easy to complete.

Should you incorporate 360 feedback in a performance review?

360 feedback is the practice of collecting anonymous ratings and comments on an individual’s job performance and other key behaviors from a wide range of people who have worked with them. These include peers, people below them in the hierarchy, other managers, and often customers, as well as the immediate supervisor. Self-ratings also form part of the mix.

However, there is considerable controversy over whether 360s should be used for evaluation as well as development or reserved just for development.

Some argue that using 360 feedback for evaluation will ruin its proven value for development because raters will be less candid, ratings will be less accurate, political forces will be at play, and recipients will be less accepting of feedback. Numerous other problems can arise if 360s have administrative consequences like implications for pay or promotion.

The primary purpose of 360s has always been employee development, but there is an increasing trend of companies using 360s within performance review systems. Provided they are considered as one source of information within a larger context, judicious use of 360 feedback processes could add considerable value to both employees and the organization at large.

Want to invest in employee development? Download The Essential Guide to Employee Experience Surveys.


This post was originally written June, 2019 and was updated March, 2020.

References:

Bersin Josh. (2018). We wasted ten years talking about performance ratings. The seven things we’ve learned. Josh Bersin Institute: Retrieved March 18th from https://joshbersin.com/2018/11/we-wasted-ten-years-talking-about-performance-ratings-the-seven-things-weve-learned/#_ftn1

Campion, M. C. Campion, E. D., & Campion M. A. (2015)Improvements in Performance Management Through the Use of 360 Feedback. Industrial and Organizational Psychology. Vol 8(1) 85 – 93.

Capelli, P & Tavis, Anna (2016) Assessing Performance: The Performance Management Revolution. Harvard Business Review. Retrieved March 18th from https://hbr.org/2016/10/the-performance-management-revolution

Enderes, K., & Derunts, M. (2018). Seven Top Findings for Enabling Performance in the Flow of Work, Bersin, Deloitte Consulting LLP.

Kathi Enders (2018) Performance Management, Disrupted: Enabling Performance in the Flow of Work. Bersin, Deloitte Consulting LLP.

Pulakos, E. D., Hansen, M. R., Cargill, A. S., Moye, N. (2015). Performance Management can be fixed: An on the job experiential learning approach for complex behavior change. Industrial and Organizational Psychology, Vol 8(1), 51–76.

Rodgers, R., & Hunter, J. E. (1991). Impact of management by objectives on organizational productivity. Journal of Applied Psychology, Vol 76(2), 322–336.

Smith, M. and Bititci, U. (2017), “Interplay between performance measurement and management, employee engagement and performance”, International Journal of Operations & Production Management, Vol 37(9), 1207-1228.