Employee Performance Review Best Practices

Employee Performance Review Best Practices

Management is a skill. And one of the hardest parts of the job is the year-end performance review. It’s also one of the most important.

A well-executed year-end review process helps foster an effective and motivated workforce. A lackluster employee review process can do the opposite. Luckily, there are a few best practices for conducting employee performance reviews with your team.

Plan your timing for employee reviews

To give yourself and your employees time to prepare for employee annual reviews, set the date well in advance. Many companies do yearly performance reviews in January (to go over the previous year), as people may be out of the office traveling during the holidays.

Ask your employees to write self-evaluations of their performance when you send out the year-end review dates. And if it makes sense for your company, also ask the team to do peer reviews.

But be sure to clearly outline how these peer reviews will be conducted (especially whether or not they’ll be anonymous). Give employees reasonable deadlines for getting in both their self-assessments and peer reviews. You want to make sure they have enough time to reflect and then put their thoughts on paper.

Avoid huge surprises

Employees should already have a pretty good idea about what’s going to be said in their year-end review before they even enter the room. That’s because, ideally, you’ve had regular quarterly check-ins on their goals to benchmark their performance throughout the year. And ideally, those goals would have been SMART (Specific, Measurable, Achievable, Realistic, and Time-Bound), so that both you and your employees have a clear evaluation framework.

That way, if someone is consistently missing their sales targets, for example, they won’t be surprised to hear that you need to put them on a performance improvement plan next year. And if someone’s been knocking it out of the park all year and has been told they’re up for a bonus — they’ll get it.

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Prepare for each performance evaluation

Thinking you’ll just “go with the flow” is not the best performance appraisal strategy. For your employee reviews to be constructive, you have to prepare.

Collect all your notes about your employees’ performance during the given review period — taking into consideration their self-review, their peer reviews, and any data that is relevant. Square, for example, breaks down sales data by employee to get a picture of who’s hitting their marks (and who’s not).

Organize all your thoughts in a document that you can print out and bring to the review. It’s something you can reference throughout the meeting and that the employee can take away to reflect on.

Structure the review meeting

Perhaps stating the obvious here, but you should conduct year-end reviews in a place that’s out of earshot, if you’re conducting a face-to-face review. If you’re doing the review virtually, make sure your videoconferencing tool is secure and only includes your employee on the invite.

When it’s time for the review meetings, be sure you go into each and every one with the clear takeaways you want your employees to leave with. That way, you can keep the conversation focused.

Start by outlining the meeting’s agenda. For example, you could say something like, “Today we’re going to look at five key areas: your past performance, your current performance, your peer reviews, your areas of improvement, and your 2021 goals and objectives.” Then walk them through each, referring back to the evaluation form you prepared to help guide the conversation.

Employee reviews should never be a one-way discussion, so make sure to leave enough breathing room for questions, along with a discussion about how you can support your employees’ growth.

  • What do they think went well and what didn’t?
  • What are some key blockers to their success?
  • Where do they want to focus their development?
  • What numbers do they think are realistic to hit next year?

At the end, make sure that you’re both leaving the meeting on the same page and have set a clear path forward. Employees need to feel like they got something out of the review so they have an actionable plan about what to do next.

Give bonuses or incentives where due

To foster a supportive company culture and avoid losing your best employees to the competition, you need to let your team know that they’re appreciated.

While you may have given both positive and negative feedback during your employee reviews, it’s important to spend time focusing on the positive. Employees are crucial to your business for a number of reasons: effectively managing teams, keeping the office running smoothly, and consistently going above and beyond what’s expected, to name a few.

They can also directly affect your bottom line by being your top salespeople. This is something you can measure through Square, which has a wealth of information on which employees at which locations are bringing in the most sales.

If your company is doing particularly well, you may decide to give all your employees a raise across the board. This is a very effective morale booster, not to mention one that provokes the least conflict.

One drawback, however, is that exceptional employees aren’t recognized for their work, and those who are perhaps underperforming may not be given much incentive to improve. As an alternative to giving the entire company a bonus, you can do other things like offering fun holiday gifts or new perks.