Performance reviews (aka performance appraisal, or employee evaluation) is a process to evaluate the employee's job performance during some period. It's an integral part of the company's continuous feedback process that helps people feel valued, engaged, empowered, and encouraged to grow, as well as fairly evaluated and compensated.
We collected the top 7 common mistakes organizations make when conducting performance reviews. So that you know and avoid them when setting up the performance review process in your organization.
Many teams have only annual review cadence (especially the ones with old-fashioned management approaches). In the modern fast-changing world, it's simply not enough. Memory tends to fade, and we might not remember a lot of valuable insights in a year. Plus, we tend to have the recency bias and recall only the latest events. Furthermore, bad habits have time to form during the year when not corrected promptly. Postponing the review is terrible both for the person and for the organization.
The obvious solution is to make the review process more often - twice per year or once per season.
Besides, it should be complemented with frequent, ongoing feedback conversations. A good practice is to have regular 1:1 meetings and encourage peer-to-peer feedback on-the-spot. Check out the article "The power of feedback" to learn more on how to set up the feedback process in your team.
Pro tip: progressive organizations build an environment of trust and encourage direct peer-to-peer feedback. That way, managers or HRs don't function as a filter or initiator, and employees get valuable, actionable feedback regularly.
When the review process is linked with the performance appraisal, participants are more likely to hide the issues and highlight only the excellent achievements. They might also treat reviews only as the necessary bureaucracy to get the promotion. And not as a source of valuable information to grow and perform better in the team. And thus, employees miss valuable feedback.
You need to set up separate processes that would clearly communicate the goals: which review is focused on growth (usually 360 degree reviews), and which — on performance and compensation evaluation. By separating the conversation, you create a safe space for your team members to be honest, to innovate, take wise risks, and thus bring business value for the company.
We, humans, tend to avoid tough conversations and critical feedback. Especially when it is connected with some personality traits, like being too aggressive, or too soft. As a result, not all team members receive the feedback and review they deserve, thus miss opportunities to grow and improve.
Create a safe space for your team to share honest critical feedback. It's easier said than done, and for sure doesn't happen overnight after a single event. Check out this article on HBR on how to create psychological safety in the workplace.
Pro tip: "Care personally, challenge directly", as Kim Scott noted in her book "Radical Candor."
Often teams focus on weaknesses rather than strengths when giving feedback or evaluating performance. A popular concept about growth is that it should be fixing mistakes and overcoming weaknesses.
It's equally (if not more) essential to multiply and maximize the strengths of your team members. It can bring even more value for the organization if you leverage your team member's strengths. When conducting reviews, ask participants to identify both strengths and weaknesses.
Pro tip: Make sure that you understand the strong sides of your team and maximize them.
Different teams have different cadences of work. Engineering teams might work on the bi-weekly sprint basis and quarterly product planning, enterprise sales - on the monthly sprints and half-year evaluations. The process that suits one team does not necessarily suit another one.
The key to effective performance reviews is to design the process that works best for your employees, not the one that is most convenient for HRs or top-management.
Work closely with your team and team leads to understand their needs. And build the review process that would help them achieve their goals and integrate into their workflow.
Since reviews are often focused on personal growth, there's no required follow-up about the results and the subsequent actions. Especially taking into account that most employees are busy anyway, and often just forget to implement the suggestions from the review. Thus the whole process brings little or no value for the team. That's why 82% of report performance reviews were not worth the time (according to Deloitte).
The solution is to assign a responsible person (HR, direct manager, or Learning and Development specialist) to follow-up on the review results and steps taken to improve. The team needs to remember that the impact of the reviews lies outside of the process, and it's their responsibility to take the next steps.
Pro tip: A great way to integrate the follow-up on the review results into ongoing conversations such as 1:1s. A regular cadence of 1:1s makes sure team members don't forget about the feedback items.
Many teams tend to start with Google spreadsheets or even paper-based forms to track performance reviews. Such a process is hard to implement, requires a lot of HR's time, looks unfriendly, and time-consuming for teams and managers. All this time and effort could have been spent on bringing the business value for the company.
Specialized performance review software can help automate the process. So that all the participants spend less time on the admin work, and more on achieving the business goal and growing the company. Professional software can automatically send nudging reminders, help to build the questionnaire with tips and templates, and make it easier to track progress. It also helps to calibrate the reviews, analyze, and share the results.
Pro tip: User-friendly software would also boost the completion rate of the reviews and can save up to half the time for admins to run the review.
Performance management is an ever-changing process. Progressive organizations make the review process effective following these best practices:
The review process can have a profound impact on team performance. It can be a complicated process that needs time to master. But it is worth the time eventually, both for your people and the organization.
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