The Manager's Guide To Performance Reviews Human Resources Hero

The Manager’s Guide To Performance Reviews

Performance Reviews

Performance reviews can be challenging in even the best organizations. It’s a highly personal and often threatening process for both managers and employees. Yet, effective performance management is an essential tool for maximizing your company’s talent. And a key component of performance management is the actual performance reviews. Let’s get started by outlining what performance reviews are and why you should do them. 

What Is a Performance Review?

The purpose of performance reviews is to align individual employee goals with departmental and company goals. Performance reviews provide feedback and set clear expectations of what is expected of an employee. A well-structured performance review process will link what an employee is doing on a day-to-day basis with its strategy and document the employee’s performance to justify any compensation decisions.

Companies vary as to how frequently they offer formal performance reviews, but the key point is that performance management is an ongoing process. Feedback shouldn’t just happen at the formal review time. 

The performance review is part of the overall performance management process. One definition of performance reviews is the process of reviewing how well employees perform their duties during a specified period of time.

Performance reviews serve to give employees positive performance feedback and recognition for accomplishments during the review period. They also serve to provide a discussion of needed areas of improvement. And they’re a venue to discuss career development and future goals. 

Finally, the performance review will be generally used to justify whether the employee receives a compensation increase.

The Performance Management Cycle

The first step in the Performance Management Cycle is performance planning. In this stage, the employee and supervisor collaborate to develop a performance plan that details the coming review period’s goals and objectives. 

At this time, the supervisor and employee should also align expectations about the employee’s career aspirations. Not all employees have the same career goals, so you don’t want to make any assumptions. 

Throughout the review period, there will be ongoing informal coaching or even formal coaching sessions aimed at continuous improvement. 

The manager will then assess the employee’s performance based on the employee’s completion of their goals and objective job-related criteria. The employee should understand these criteria in advance.

For example, many companies use performance competencies in addition to a rating on specific job goals.

Performance Reviews Job Goals

Finally, the performance review will be created based on assessing how well the employee completed their performance goals and an evaluation of performance in core competency areas.

You’ll also discuss developmental goals and plans for the next review period. Please note that throughout the entire cycle, there is both performance feedback and support from the manager. These are critical to ensuring that employee understands what is expected of them whether or not they’re meeting their goals.

Structuring Reviews

Now that you know what performance reviews are and their role in a performance management system, let’s talk about structuring the evaluation. 

Creating a Performance Review Policy

We recommend that you start by creating a performance review policy. This will help you outline what you expect to get out of the evaluation process, as well as what your employee should expect to get out of it. 

Typically, employers will rely on their company culture for how to write this policy. Some companies include a commentary on being a supportive and positive culture, so they’ll want to ensure that their employees are aware of how they’re doing.

Other companies focus on the importance of continuous feedback to improve their performance of the job and improve their professional goals. 

Next, we recommend that you document some of the details about your performance reviews. When the evaluations happen, you will expect the employees to sign the documents and state that employees will receive feedback throughout the year. Finally, you’ll want to include this new policy in your employee handbook.


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Creating Trust & Open Communication

One of the keys to providing a constructive performance review is establishing trust and open communication with your employees. An easy way to build trust is to consistently spend time with your employees and hear what they have to say. In other words, check-in and get their input about how things are doing. When you have this meeting with your employee, make sure that you would truly listen. This isn’t about performance feedback, coaching, or about you. And while it probably sounds a bit cliché, managers do lead by example, and you build trust by having your behavior match your words. 

Being transparent about decision making will also provide that trust that you’re looking for. Employees certainly won’t always like all the decisions you make, but when leaders explain why decisions are made and are open to the questions, it helps build this trust. 

Encouraging dialogue among your team and soliciting feedback also helps employees feel empowered and trusting of their leader. Another way you can build an environment of trust is to recognize that all employees have their quirks and have differences and allowing everyone to be themselves in the workplace. 

Regularly acknowledging employees for their work well done is also important, but this has to be authentic. If this is inauthentic, it won’t help build this trust, and it can only have the opposite effect. A final recommendation is to create an environment of trust that encourages your team members to connect in-person and allow breaks when people have been working a lot.

Goal Setting & Professional Development

Most reviews include a goal-setting discussion about professional. One way to navigate this is to use SMART goals. This acronym stands for specific, measurable, attainable, relevant, and time-bound. SMART goals help ensure that you’ll measure whether the employee has succeeded in meeting your expectations when you go to review the performance in the next cycle. 

For example, if you have an employee who’s having a problem with time management and state they need to change or delegate more of their tasks, this isn’t a SMART goal because you’re not going to be able to measure whether that happened or not. Instead, you could say in the next review period, and they should delegate at least five of their responsibilities to their team members. This gives the time frame in which it will happen. It is also clearly measurable as to whether or not it happened. 

Performance Reviews SMART Goals

Depending on the complexity of employee jobs, some performance plans will also include a place for employees to detail action to work towards performance goals. To continue an example here, an action would be to identify the task to delegate, the team members to delegate them to, and the time frames in which this should happen. 

As you’re having these conversations with your direct reports, you’ll notice that you’ll naturally have an element of coaching in these conversations. That’s exactly what you want to be doing because that says you are taking the approach of finding an employee-led solution. The best way to do this is by asking open-ended questions and letting the employee work with you to come up with an answer.

Try questions like tell me more about that situation, or can you talk more about that. These types of questions really help the employee to find the solutions themselves. And also give you great insight into what they are thinking. While it can be challenging not to give advice, keep practicing, and soon it will feel more natural. 

On the flip side, sometimes the conversation is really a part of your progressive discipline process. Typically, these conversations are a little less focused on coaching, but they want to allow them to participate and contribute to the solution. So once you’ve explained the situation, ask the employee a few of these coaching questions to work on coming up with an approach to the issue together. That way, the employee feels more invested in actually working towards a solution.


It’s common to have an annual performance review cycle, meaning the employee receives a formal written review once a year. There are pros and cons to the annual review process. Remember that there is definitely a trend towards more frequent evaluations, meaning more than once a year. Some workplaces aren’t very stagnant, and the business needs to change very quickly. So more evaluations can provide flexibility to match those changing workplace conditions. 

This also allows you to both recalibrate an employee’s goals as workplace needs require and to discuss mid-year course corrections where needed when performance isn’t meeting expectations. It also ensures that regular performance check-ins occur on a more frequent basis because the process requires them. 

Additionally, more frequent evaluations mean that performance conversations aren’t tied to salary conversations, which can help produce more meaningful data. Ideally, more frequent performance meetings paved the way for ongoing quality conversations with managers and their employees about performance.

That said, many small employers can’t manage a formal performance management process at all. If that’s your organization, you should think about simply implementing an annual review to start. You can get help designing and implementing a performance management process from one of our Human Resources Heros.


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What To Include In a Performance Review

Now let’s talk about the format of your performance evaluation. There’s really no one perfect answer for what a performance review should look like. As a matter of fact, there are many conflicting opinions out there about this. And unfortunately, many studies say both employees and managers aren’t happy with the performance management systems used in the companies in the past. 

A Watson Wyatt survey showed that only 3 out of 10 workers agree that their company’s performance management system improves performance. And a Deloitte survey of nearly 3,000 executives from companies worldwide found that nearly 58% of the respondents didn’t believe the company’s performance management process drove either employee engagement or high performance. 

Dozens of other research projects on performance management conducted over the past decade have found similar conclusions. These studies include HR staff who aren’t happy with their own performance management processes. 

These low marks are that the process often does not have the necessary elements to be successful. For your evaluation process to be successful, you need to include a manager review, an employee self-assessment, and a goal setting for the upcoming period. Sometimes reviews can also contain coworker input, but there’s a lot of caveats to that.

Manager Review

The manager’s portion of the review will often include competency ratings. A performance competency is typically a defined set of behaviors that the company has determined are important. In other words, performance objectives on the work plan could be thought of like the what of the job, while performance competencies are the how of the job. Some competencies may be measured companywide, while others may be measured at the job family level. These are behavioral characteristics that the company has determined impact results. 

These include communication, teamwork, leadership, delivery results, and relationship building. And you might have competencies around the ability to adapt to change if you work in a very rapidly changing environment. Companies can get very specific about how they define these things. And narrowing this down to a small list of critical competencies will help keep the system simple. 

Generally, if using competencies, there will be some rating scale. Rating scales can be numeric, such as a scale from 1-5. Or the ratings can correspond with an adjective such as satisfactory, excellent, or other words such as meets expectations, exceeds expectations, etc. There’s definitely an argument for not using too many ratings. Limiting to smaller numbers, managers tend not to be too sophisticated in their ability to differentiate a performance when there’s a large number of things on your rating scales.

In addition to competency and rating information, the manager review should know how well the employee completed their goals from the last cycle. You’ll want to ensure that specific projects that the employee has completed are captured in the review and that any feedback about them is given. 

Manager Performance Reviews


Ideally, the self-assessment should mirror the manager’s review. I’ve seen where managers may not fully understand the role of self-review, and they might not be actually read or used effectively. 

The self-review aims to make employees think about their own performance and take a critical look at how they did over the review period. The self-review enables the manager to see if employees have an accurate understanding of their own job performance.

The self-review can enable a manager to ensure that no key accomplishments have been left out from the manager’s review. Sometimes managers are so far removed from the employee’s work that they miss accomplishments at review time.

Self-reviews take advantage of the employee’s familiarity with their day-to-day work. They also highlight the parts of the performance that are important to the employee. Employees all over the spectrum of performance will be required to evaluate how they’re doing, not just those at the very high and low levels. 

Self-reviews can draw the manager’s attention to things they might otherwise miss. Self-reviews also enable the performance review process to be more participatory and give the employees a voice on what is documented about their performance. 

Co-Worker Assessment

While they have some advantages, co-worker assessments have fallen out of favor for use in performance ratings. This is because they often lack reliable and valid data, and it’s easy to make mistakes in how they are administered. 

These assessments can provide broader input than just what the direct supervisor sees, which may be particularly useful if the manager works in a different location than the employee. They can also be useful to see how others perceive the employee.

However, one of the problems is that there’s no context for providing these comments. Employees providing input may have no real understanding of that person’s job’s highly skilled technical requirements. In comparison, employee comments could be motivated by office politics.

Another consideration is that often there aren’t enough people in the department for the data to be truly anonymous. That can cause reviewers to be cautious about providing truthful data. And it can also enable employees to determine who said what and attempt to retaliate against people who gave those constructive comments. Also, gathering this data can be very time-consuming.


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The Meeting

Let’s talk briefly about the timing of the evaluation. As discussed, the employee and the manager both have forms to complete, and the process will kick off with the manager receiving an employee’s self-review. In any case, it’s good to have an employee receive their manager’s written assessment before the meeting so that the employee can process any emotions ahead of time and know what to expect. 

To ensure a successful meeting, the manager should be prepared for the meeting. The manager should set up a comfortable environment for the meeting. Depending on the organization’s culture, you might want to consider having a conversation over lunch or at a restaurant. But I’ve also had some employees in those sorts of environments that made them uncomfortable, and I didn’t really see it as a reward. So you’ll need to think about your employees and where they would be the most comfortable.

Commonly, managers approach the conversation with a “feedback sandwich,” which starts with positive information, gives constructive information, and then ends on a positive note, but this can be demotivating to your top performers. It can falsely encourage those who aren’t performing well at all. Instead, ask the employee how they think things are going. This should elicit an honest conversation about what’s going well and what could be done better. Remember, you should be specific with your input and focus on behavior and not the individual.


In conclusion, there are a few key takeaways here for you. You’ll want to make sure that you are evaluating your employees on factors relevant to their jobs and informing them as to what standards are expected of them. Have a really nice, well-documented procedure that helps your employees and your managers know their roles and responsibilities and make sure that everyone is trained on the process to ensure that consistency that we’re always striving for.

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