Performance reviews have come under fire recently and for good reason. Traditional reviews often shift focus away from team performance to individual, with some even offering monetary compensation based on how well members outperform the rest of their team. Others focus on ranking people into the top and bottom 2%, with everyone else falling in the middle, unappreciated. For many, until performance reviews occur, they have no idea where they stand in the organization.
This has resulted in the performance reviews being branded as toxic, unnecessary, and harmful. However, if conducted well, they offer practical feedback, guidance on personal development, and ways to improve processes, employee relationships, and value output. To achieve this, companies need to switch away from yearly production-focused reviews towards ongoing, inclusive, and two-way conversations about work and what’s needed to perform more efficiently.
1. Make it inclusive
A good performance review is multi-faceted, goal-oriented, and built around improvement. That means making them as inclusive as possible. This can include creating processes that support how and when a person is working, for example:
- Take hours worked into consideration or evaluate everyone on the same level
- Assess people based on mental and physical health as well as performance
- Encourage behaviors like teamwork, inclusivity, agility, etc.
- Collect feedback from multiple sources
- Incorporate self-check-ins and ratings of how projects went
- Use goal-oriented data based on improvement, training, and personal development
It’s impossible to avoid bias completely in performance reviews. However, you can work to ensure they’re considerate of the different ways people work.
2. Make it ongoing
A single touchpoint throughout the year tells you very little about employee performance. They rely on managers and key individuals who are likely biased. Using recurring feedback can help you collect clearer data and map high and low periods for employees. This can also tell you if a downturn is due to temporary or consistently low performance.
For example, many teams use sprint check-ins. Here, people fill out a simple five-point questionnaire for every sprint and then discuss overall results as part of the retrospective. These questions can include:
- How was the sprint?
- Did you meet your goals?
- What went well?
- What went poorly?
- How are you overall?
In addition, you can follow that up with quarterly check-ins that feature a 360 assessment. People can answer questions about their own performance and that of their team. These regular touchpoints, when combined with leadership input about goals and progress, can make a huge difference in how people perceive performance reviews and how they’re conducted.
3. Focus on practical application
A good performance review should pinpoint where people have room to improve and offer personal development opportunities. This emphasis on improvement rather than finding fault or placing blame makes people less afraid of performance reviews. After all, coaching or learning new skills is a sign of investment in employees, not a precursor to losing their job due to low performance. That can greatly boost morale, which improves the effect of the review overall as employees are more open to receiving critiques.
4. Use OKRs, not hours worked
The core of a performance review is what was achieved and how. It should use OKRs or SMART goals as a baseline rather than hours worked or “productivity.” Individual performance often doesn’t track well with the latter method. If one or two people operate in a support function, such as offering insight or creating solutions, it’s difficult to measure their actual output in terms of contribution to the product.
5. Gather feedback from colleagues
Although people inevitably provide biased feedback about their colleagues (many feel obligated to be nice), 360-feedback tools can give you better insight into how people actually contribute to their team. Leadership needs to be aware of that when gathering this important input from colleagues. Plus, if you match team feedback to personal and management feedback, you obtain a fuller picture of performance, team fit, etc.
6. Make it a two-way discussion
Feedback should never be only one way. Make sure you create room for each employee to offer feedback on management, processes, and what could go better within their team. This didactic conversation makes improvement the focus on both sides.
It also allows you to act on the feedback you receive (e.g., if you receive feedback that processes are too strict for the work being done, you could look into updating them). As an organizational leader, you need to be able to accept critiques for yourself; after all, no one’s perfect.
7. Understand what you’re assessing and why
Collecting data is useless if you have no plan of what to do with it. Before conducting reviews, assess what data you need, why, and how you’ll use it. Many performance programs use basic blocks to help you ask questions, view performance, and map performance to output. This requires you to determine what you value and why so that data will make sense in your organization. For example, if you use an Agile work methodology built around outcome roadmaps instead of goals, you need to track whether people are achieving the outcomes, not how many tasks are completed.
8. Synchronize reviews with employee and team goals
Employees often have personal development goals, and teams maintain objectives they strive to accomplish. Synchronizing those allows you to assess how people perform not only at work but also in learning and development. That’s especially important for employees who move into developmental tracks and therefore have significant attention or time shifted away from their normal work.
Wrapping up — Conduct better performance reviews for better results
Good performance management is about transparency, helping people succeed, and providing opportunities for improvement. Sometimes that requires buy-in and mindset shifts from both managers and employers. People often equate performance reviews to weeding out the lowest performers in an organization, so you need to show them they’re actually focused on lifting everyone up. Beginning with a soft start and gradually implementing a full performance review might be necessary to convince employees, depending on your existing company culture and performance reviews. Whether you implement 360 assessments or your own internal system, be sure to emphasize improvement at each leg of the performance review.