Employee Performance Management: Processes, Reviews, and More

Managing employee performance and setting goals can be important ways for employers to monitor and evaluate employees’ work. This process often includes employee performance evaluations, feedback, and goal-setting. A strong performance management process helps set expectations about employee reviews and encourages an open ongoing discussion between managers and employees.

In this article, we’ll define performance management, uncover how to write an effective performance review, outline how your performance management process can be improved if you’re looking to make updates, and demonstrate how your company's employee performance management process can yield a multitude of payoffs — increased employee retention, boosted productivity, and higher worker satisfaction.

What Is Performance Management?

Managing employee performance involves stating goals with clarity and directing employees in a manner that helps them to achieve these goals. In the work environment, employees should understand what is expected of them and how they are contributing to the overall success of the company. Most employees also expect to receive meaningful feedback about their work in an equitable format. To this end, companies should provide managers with the tools and training needed to help their employees set goals, offer them feedback, and deliver a performance review in a professional manner.

What Is an Employee Performance Review?

Employees who do not regularly receive feedback may feel as though they're left adrift in the middle of the ocean. They may assume they're doing a good job, only to be surprised if they realize their manager does not share this sentiment. Communication through performance reviews can help to emphasize an employee's strongest skills while also identifying areas of needed improvement or opportunities for growth. As such, a performance appraisal serves many purposes:

• Highlights an employee's success, growth, and development
• Helps employees identify challenges or obstacles to achieving goals
• Allows workers to express their desires for growth or change
• Provides a setting for a meaningful conversation when administering feedback or recognition
• Encourages employee engagement
• Helps employees to understand how to maximize their productivity at work

What Is the Ideal Frequency for an Effective Employee Review Process?

The trend is moving away from the traditional annual review and toward a more contemporary, ongoing performance management cycle. Rob Sanders, Paychex HR Professional, recommends considering more frequent, quick "touchpoint" performance discussions, rather than annual performance reviews.

This can help avoid issues that may arise when managers fail to consistently track performance benchmarks or achievements of their direct reports over an entire year, which can lead to incomplete employee reviews that are missing key information. The shift is toward a less formal, more positive, and continuous strengths-based performance review process.

A benefit to the continuous style of employee review is that it can help employees feel more invested in how their role may impact the company's success. On a larger scale, it can help your company be more agile. Your business needs information in real time to respond quickly to necessary change. The ongoing performance conversation provides feedback which can be relevant and useful today.

Offering regular employee review feedback about the company's performance and objectives and how they align with an individual's performance and development, can change the focus and create a cohesive and tangible relationship between the employee and the company. The emphasis is on building an agile workforce that can adapt with the ebbs and flows of business, which is crucial for a company to remain competitive, while also fostering employee growth.

How Do You Write an Effective Performance Review?

Before understanding how to give better employee performance reviews, it’s important to know that each company's performance management program should be fully supported by executive management. To achieve the greatest level of success, the program should be implemented at all levels of the company. Sanders offers some examples of information covered in effective performance reviews:

• Ensure the individual goals and objectives developed within the performance management program directly relate to, and impact, larger organizational goals and objectives. According to Sanders, if you are not strategically planning for the overall performance of the organization, it won't be possible to ensure alignment with individual performance.
• Use specific examples to help support both areas of improvement and where an employee excels. Managers can refer back to their notes from more frequent and quick employee performance discussions throughout the year. Highlighting specific examples in this way shows employees that you are taking notice of their work — both the achievements and the opportunities for improvement.
• Have an in-person or “live” conversation to facilitate an effective employee performance evaluation. Performance reviews are simply too important to do over the phone or written in an email. A face-to-face conversation is the best way to relay information, listen, and respond to your employee. When reviewing remote employees, a video call may help to facilitate an interactive discussion and can help reduce miscommunication.
• Use the employee's self-evaluation as the starting point for any additional performance discussions. Gauging how an employee sees their own performance can be a valuable foundation for performance management and can help set the tone for a mutually beneficial process.
• If your rating system uses scaling, consider eliminating the midpoint. Rating an employee as "meets expectations'' is an easy fallback option that eliminates the necessary critical judgment needed to evaluate performance effectively. Rather, consider asking those completing the review to use ratings such as:
  • Occasionally exceeds standards
  • Consistently falls below standards

How Do You Handle Situations When an Employee Needs To Improve Their Performance?

An employee performance review, regardless of its frequency, can be more challenging when improvement is needed. In these situations, here are a few performance review tips for employers to consider as they work through situations where better individual employee performance is warranted.

• Don't wait to act: According to Dorene Crimi Lerner, Paychex HR Professional best practices dictate that employers should take action as soon as they become aware of a behavior or performance issue or when company policies have been violated. Addressing performance issues as they arise can help minimize disruption to the workplace and provide a means of helping direct the employee toward improved performance.
• Define the issues leading to sub-par performance: It's important to understand the difference between behavior issues and performance issues. According to Lerner, chronic lateness and absenteeism can both be examples of behavior issues that progressive discipline can address. Progressive discipline is a series of steps designed to help correct poor behaviors through specific feedback or training. Employers are encouraged to consult with legal counsel or their HR professional in these situations. Performance issues such as missing deadlines or the inability to achieve stated goals sometimes may require more in-depth examination and assistance. Employers may consider:
  • Has the employee been properly trained on their responsibilities?
  • Do they fully understand their job duties?
  • Are they encountering some obstacle that negatively impacts their performance?
• Document a plan for improvement: A plan should be set in place including a series of steps designed to improve an employee's behavior or performance. Specific feedback should be provided to the employee, along with recommendations for additional training.
• Follow up as needed: Hopefully, the employee will come away from the performance review with a clear understanding of what is needed and knowing that the manager is invested in assisting in an improvement plan. Managers should follow up with employees regularly. Setting clear expectations and writing down action items can help guide future performance and serves as important documentation that these conversations took place.

Take Employee Performance Management to the Next Level

When the time comes to review your performance management process, remember your employees are your most valuable and most expensive asset. Start planning now to get the most out of your team and engage them on a deeper level. In addition to performance management software that can integrate seamlessly with other HR functions, you may also want to engage an HR professional to go over a sample employee performance review with your managers, and determine how it can be tailored to your company's needs. In addition, Paychex HR Services can provide assistance to help with all of your business’s challenges.