A Guide to Employee Performance Reviews

Employee performance reviews can be a crucial part of relationship-building, motivation, and performance enhancement within an organization. When done well, a review can influence an employee’s sense of loyalty and desire to succeed. Unfortunately, some organizations do not devote the time and commitment required to get the full value out of the employee review process.

Read the following performance review tips to see if your organization has the tools to assess employee performance fairly, provide constructive feedback, and deliver it in an open and welcoming environment.

What Is a Performance Review?

A typical employee review meeting is a scheduled conversation between a supervisor and an employee that allows for open dialogue about the employee's recent performance, progress toward goals, impact on the organization, and future potential. As a part of this conversation, the supervisor should encourage two-way communication and provide an open forum for the employee to bring any concerns that could be hindering their ability to perform.

Most performance reviews are structured as a guided conversation that starts by reviewing employee goals, looking at recent and current performance, discussing feedback about that performance (both positive and negative), and then using that analysis to set goals for the future. Ideally, anything discussed during an employee performance evaluation will also be delivered to the employee in written format; a written performance review is a tool that can be used to assess progress toward individual goals throughout the year.

The Importance of Performance Reviews

Performance reviews are an important part of building relationships with your employees. By investing time in these personalized discussions, you are demonstrating your commitment to helping your employees succeed and giving employees an opportunity to contribute to a plan that can help them succeed. Organized and structured performance feedback offers the following benefits:

• Career development — Employee performance evaluation discussions can help identify areas of development that can lead to career advancement and employee longevity.
• Regular feedback — If your employees are lacking in a specific area, it's best to identify that sooner rather than later and provide some employee performance improvement suggestions.
• Rewards/compensation for good performance — Appreciation is a key driver of employee motivation and job satisfaction. Rewards and compensation that are aligned with performance show your employees that you value and appreciate them.
• Aligning goals — Performance conversations are a great opportunity to clearly discuss future goals and ensure alignment between job expectations and current performance.

How To Prepare for a Performance Review

Effective job performance reviews require planning and organization, and should not be an impromptu discussion. A lack of planning on your part could send a message that you aren't invested in the conversation or don't believe in the value of a thorough review. Conversely, careful planning and following performance review best practices can help your employee feel like a valued member of the team, and can encourage them to be more committed to engaging in the process.

Use the following performance review tips for managers as a guide to prepare for your employee reviews:

1. Review the employee's job description — A detailed job description can be a great resource for explaining the responsibilities required of your employee. Review this document before every performance conversation to ensure your expectations are aligned with the employee's understanding about their role.
2. Reassess how key performance indicators (KPIs) are measured — The important key performance indicators for your company and how they are measured will undoubtedly change over time. For example, measuring employee performance against gross sales one year and net sales the following year could artificially create a performance decline with the potential to cause frustration or resentment. Be sure you are consistent in your measurements and make adjustments to account for calculation changes when necessary.
3. Review employee goals — If your employees set quarterly or annual goals, they are likely to have more buy-in and motivation toward reaching them. Reviewing the progress toward reaching individual goals can help you and your employee discuss any performance roadblocks or support needed to continue performing at a high level.
4. Gather employee data — While sales figures and other KPIs can provide concrete numbers, there is a lot more data that is useful for creating a well-rounded picture of employee performance. Customer feedback, internal employee questionnaires, training records, and even on-the-job video footage can support your talking points in a constructive performance discussion.
5. Prepare to be objective and fair — Performance reviews should be an objective evaluation, so leave your personal feelings for the employee at the door. Even overly positive performance feedback can diminish the value of an employee review if it creates resentment among other team members and leaves your star employee with nothing to work toward.
6. Make a list of topics to discuss — Preparing a list of topics can keep your discussion on track and the review balanced with both praise and goals for improvement.
7. Schedule time with your employees — Avoid having "spur of the moment" discussions as these can catch your employee off guard. While you may do the majority of the preparation, allowing your employee some time to prepare shows respect for their time and gives them the opportunity to think about any questions or feedback they'd like to bring to the table.

How To Conduct an Employee Performance Review

Although there is no single right way to conduct an employee review, following certain guidelines can help ensure a productive conversation. Before your scheduled session time, be sure to minimize distractions or interruptions, and arrange to meet in a mutually convenient area that affords your employee some amount of privacy for potentially sensitive topics.

Follow these steps on how to give a performance review effectively:

1. Be clear about goals — Start off with a brief review of any previous goals and set the tone by specifically listing your goals for the performance review discussion.
2. Talk about the future — Using future-looking statements can give your employee a sense of belonging and demonstrate that they have a future with your company. It also keeps the focus of your discussion on what can be positively changed in the future, rather than dwelling on any missed goals from the past.
3. Speak about the employee’s strengths and weaknesses — Having an honest conversation about strengths and weaknesses shows that you know and value your employee. Use these strengths and weaknesses to help them set realistic goals, and share how these strengths can help them achieve any new goals for the next performance period.
4. Make a clear plan for improvements — As you identify opportunity areas together, develop an improvement plan. Creating a plan with your employee (instead of for your employee) helps to increase buy-in and commitment. Improvement plans also provide a clear path for helping your employees overcome any weaknesses.
5. Encourage employees to ask questions and give feedback — Work performance reviews should be a two-way discussion. Make sure your employees feel valued and heard by giving them an opportunity to raise concerns or ask questions.
6. Conclude with encouragement and praise — Always end your review discussion on a positive note.

Effective Performance Reviews Lead to Organizational Success

With careful planning and organization, employee reviews can lead to critical discussions that help you and your employees chart a path of success. In turn, their success can bolster organizational success, leading to long-term retention and improved progress toward reaching key initiatives.

Beginning the process of establishing a performance review procedure doesn’t have to be daunting. Paychex offers tools to help, including Paychex Flex® Engage. Check out how this employee engagement, performance, and compensation management software can help.