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Does Your Employee Performance Review Process Need to be Updated?

When it comes to your performance management process, remember: your employees are your most valuable and expensive asset. Discover how to get the most out of your team and engage them with these strategies.
An employee getting a review from a manager

New performance management techniques are changing the way businesses conduct employee performance review meetings and goal setting. More often, companies are adopting a continuous performance management system in place of a more traditional annual performance review. There are some compelling reasons to consider switching up your company's performance management practices and creating an ongoing line of communication with employees.

What is the purpose of an employee performance review?

The purpose of an annual review has generally been to assess employee performance as it relates to the company's strategic goals, and set new individual career goals for the upcoming year. Traditionally, performance reviews have focused on employee expectations of merit increases and bonuses, as well as noting areas for improvement. Now there is a shift in focus to include additional employee input, such as creating a list of performance goals and objectives and discussing how these objectives correspond with company initiatives and performance. Newer performance management processes include ongoing reviews that provide more frequent feedback and employee self-reviews.

What are some recent changes to employee performance reviews?

The trend is moving away from the traditional annual review, and toward a more contemporary ongoing review process. Rob Sanders, Paychex HR consultant, 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 reviews that are missing key information. The shift is toward a less formal, more positive, continuous strengths-based process.

If you do decide to switch things up, it’s best practice to clearly document the new process, ensuring procedures are put into place throughout the company and at all levels of management.

What's the best way to evaluate staff performance?

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 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 mid-point. 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 exceeds standards
    • Occasionally falls below standards
    • Consistently falls below standards

How do managers write performance reviews?

HR managers can also assist in the transition from an annual process to more frequent reviews and provide new managers with training on writing effective performance reviews and how to conduct a performance review meeting. Chris Jankus, Paychex HR consultant, suggests using your current process as a foundation to launch and expand into a more continuous process of performance review throughout the year. Add documented conversations from supervisor/employee meetings on a weekly, monthly, or quarterly basis depending on your company needs. As an example, the sales team may already be accustomed to a 30, 60, or 90-day review; you can extend that same style of review to other areas of the business.

As far as documenting the conversations, do so in a way that suits your culture — just be sure to document the exchange in some way. These more frequent check-in conversations don't necessarily need to include the "meets expectations/needs improvement" scaling.

What industries are adopting a continuous approach?

Continuous performance management can be implemented in both service and manufacturing environments and industries. For the manufacturing industry, it can be a natural fit to adopt by aligning with Six Sigma and ISO compliance that includes a built-in quality check process. This can be extended to include employee performance and goals as well. Supervisors and employees often dislike the annual review process, as it can focus more on the negative (i.e., the problems and what went wrong). The continuous review gives more room to include the positive side in a production environment, allowing quick refocusing on goals and the actions needed to achieve them. The same approach can be applied to service industries as well.

What are the potential obstacles or downsides to more frequent feedback?

If changes are made to the performance management process, your employees will likely want to know, "What's in it for me?" The simple answer is that more frequent discussions can open up additional opportunities for input and personal development, and promote a feeling that their performance directly impacts the company's goals.

Change is not always easy. A continuous review process, which is more conversational, can be especially challenging for managers — and some employees — who may be accustomed to a more formal and less frequent process. Managers should be mindful of employee feedback and use this to adapt the process, as necessary.

How does a continuous performance management review process impact employees?

A benefit to the continuous style of employee performance review is that it can help the employee feel more invested in how their job 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 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 handle situations when an employee needs to improve their performance?

A performance review, regardless of its frequency, is always more challenging when an 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 performance is warranted.

  • Don't wait to take action: According to Dorene Crimi Lerner, HR consultant at Paychex, 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 will 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 can come away from the performance review with a clear understanding of what they need to do and knowing that his manager is invested in assisting them in their 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.

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. You may also want to engage a professional HR consultant to go over a sample performance review with your managers and determine how it can be tailored to your company's needs.

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* This content is for educational purposes only, is not intended to provide specific legal advice, and should not be used as a substitute for the legal advice of a qualified attorney or other professional. The information may not reflect the most current legal developments, may be changed without notice and is not guaranteed to be complete, correct, or up-to-date.

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