How to Conduct Effective Performance Reviews: A Guide for HR Managers

Performance reviews are a key part of the employee lifecycle. It’s an opportunity for managers and team members to sit down and chat through workplace goals, areas of improvement, and learn what they’re doing well. Whether your employee wants to progress in the business, is looking to upskill, or simply wants to understand how they're performing, a well-conducted performance review can provide clarity and direction.

Read on to learn exactly how you should conduct a performance review, including why they’re important, key steps, and some top tips for creating an engaging atmosphere. 

What Is a Performance Review? 

A performance review is a formal meeting where managers review performance. Performance reviews are based on an employee’s behaviour, performance, and achievements over the past year. 

Performance reviews should be a cyclical process. Instigating a performance review at the same time every year means goals are set at the beginning of the process and performance is reviewed regularly. team members should receive a score or performance rating in a final review meeting that reflects their overall performance and contributions throughout the year. 

The score or points a team member receives during their performance review can be linked to salary increases, bonus payments, or other types of reward. 

Why Are Performance Reviews Important?

Performance reviews are a key component of employee development processes. You can expect the following benefits from conducting regular performance reviews: 

Improve team member engagement
Performance reviews can increase employee engagement by highlighting their contributions. This will make team members more likely to perform the same behaviours in the future and contribute to overall business success.

Enhances internal development
Talking to team members about how they can achieve the next step of their career will build brand loyalty and boost internal development. Your team will feel that you’re invested in their career, giving them a drive to enhance their goals and be promoted. Internal development can save your business around £91,000 over the course of 3 years, making the prioritisation of performance reviews a strategic business move.

Improves team member performance
Explaining to team members how they can improve, guiding them through the process, and offering the necessary support will inevitably lead to improved team member performance.

Acts as a paper trail
In cases where a team member’s performance doesn’t improve throughout the year, a robust performance review acts as a paper trail to your conversations. This documentation can be beneficial in cases where you need to performance manage or dismiss an employee, providing evidence of the efforts made to address and rectify performance issues.

Performance Review Structure

If you’re struggling with a structure for your performance review meetings, try following the below guidance. You’ll hit all the major talking points and ensure your team members get a thorough and helpful performance review. 

Set the scene

Think of this as your introduction. Take a minute to explain the purpose of the performance review, what you’re hoping to get out of it, and a loose structure for the meeting. Let your team member know how long it’s likely to last, that this conversation is for their benefit, and it’s a two-way conversation. Encourage them to relax, be honest, and keep an open mind.

Although it’s a small gesture, having this natural, informal chat at the start of the performance meeting builds rapport between you and your team member and establishes a comfortable atmosphere. It sets a positive tone for the discussion, creates a safe space for both parties to share feedback openly, and dispels any anxiety the team member may be feeling about this meeting.

Go through wins

Start by talking about your team member’s triumphs. It’s always good to start on a positive note, highlighting your team member’s accomplishments and successes since their last review. Praise the types of behaviours you like to see and explain how those behaviours contribute to business goals and employee development. 

Be specific in your praise, pointing out particular projects or tasks where your team member performed exceptionally well and the impact of their contributions. This will show your team you’re taking notice of their positive behaviour, rather than just offering blanket or generic praise. 

Discuss areas of improvement

No matter how skilled or talented a team member is, everyone has room for improvement. Highlighting these areas of development in a positive and constructive way can help your team member grow professionally, fill skill gaps, and contribute more effectively to the team.

It’s important to have a balanced approach when it comes to offering feedback. Too soft and your team member may not grasp what you’re asking them to do. Too harsh and you’ll demoralise your team member, making them less inclined to listen to you and less motivated to address the areas of improvement.

Tailor your feedback style to the communication style of the team member. If they’re more direct, don’t be afraid to offer clear, constructive feedback. However, if they’re more sensitive, soften some of your language. This will help them be more receptive to your feedback.

Chat about goals

Goals are tasks you want this person to complete by their next review. For example, going on a specific training course, achieving a sales target, or simply learning more about a system you use. The goals should be centred around the team member’s areas of improvement while considering their personal goals. For example, if they hope to be a manager, can you set some goals around getting involved in management tasks, help them learn about HR processes, or help them grow in confidence. 

All goals set should be SMART goals. This means they are Specific, Measurable, Achievable, Relevant, and within a set Timeframe. Using this structure helps team members understand exactly what they need to achieve and how they can achieve it. For example, asking a sales professional to ‘Increase sales performance’ isn’t a SMART goal. But, ‘Increase total sales figure by 15% in 3 months’ is a SMART goal. It highlights exactly what the team member needs to achieve, it’s relevant to their job role as a sales professional, and it’s in a set time frame. 

Setting SMART goals ensures team members have clear targets to work towards and keeps them focused on business objectives. Don’t be afraid to revisit these goals if team members achieve them early or if they don’t seem to be working out. 

Action plan

The final step of a performance review is to create an action plan. An action plan will help you and your team member determine exactly how they are going to achieve their goals. For example, do they need any extra training to boost their sales figures, support to attend courses, or additional resources to improve their skills? Maybe they need a mentor to guide them through new management tasks or a buddy to keep them accountable and motivated. 

Whatever it may be, an action plan will keep your team member motivated and will help you keep tabs on exactly where they’re up to. You’ll be able to have quality conversations about their progress towards their skills during catch-ups, and celebrate their victories along the way.

Make sure your team member has a copy of their action plan to take away with them, and be sure to keep your copy in their employee file for safe keeping. 

Top Tips For Performance Reviews

Do your homework

Prepare what you want to say, your feedback, and team member examples ahead of time. This will help you feel more prepared and help the meeting run smoothly. Plus, it will help you get clear in your head about the exact issues you’re having, how you’re going to deliver the feedback, and specific examples to share with the team member. 

Be honest but kind

Clear is kind. Skirting around the issues or developmental feedback for the sake of politeness won’t help you and it won’t help you team member. Build rapport first, clearly explain how you’d like to see the employee improve, and then explain exactly how you’re going to support them to do this.

It can also help to open up the floor to conversation. Ask the team member how they feel about this feedback. Do they feel it’s justified, or do they have their own perspective? Either way, asking your team member for their side of the story can help you understand their viewpoint and foster a collaborative approach to improvement.

Remember, honesty doesn't have to be harsh. It's about delivering feedback in a constructive and respectful manner. Instead of pointing out flaws, focus on areas of growth and opportunities for development. Offer specific examples and actionable suggestions for improvement. Most of all, show empathy. Share the feedback the way you would want to be told, and always be kind.  

Make reasonable adjustments

Employers have a legal obligation to make adjustments to processes, meetings, and documentation if a team member has a disability. This might mean printing documents on different coloured paper, allowing a notetaker to attend the meeting, or providing additional time for tasks. However, aside from legal obligations, making reasonable adjustments for all employees can greatly improve the effectiveness and inclusivity of performance reviews, enabling team members to get the most out of these meetings.

When inviting colleagues to a performance review, include a short line at the bottom of the letter to highlight that you’re inclusive of all needs. Something like, “Please let me know if you need any support or reasonable adjustments to attend the meeting. You can let me know in person or via email.”

Although it’s a small change, this line will make team members feel more confident coming forward with their needs, and highlights your commitment to creating a diverse and inclusive workforce. 

Check in regularly

Feedback shouldn’t be reserved for formal performance reviews. You should check in regularly with your team member to ensure they’re actively working towards their goals, that they’re clear on what they need to do, and to make sure there are no hiccups in their plan. A quick 5 minute chat over a coffee, a regular 1:1, or even a brief email exchange can go a long way in maintaining open communication and addressing any concerns.

Don’t forget, regular check ins are also an opportunity to celebrate any successes or quick wins. Celebrating your team members’ accomplishments will build trust and make them more likely to come to you with any problems in the future. 

Tailor your feedback style

Tailor your feedback and communication style to suit the needs of the employee. Use more praise and positive reinforcement when a colleague is more sensitive, and be more direct when a team member appreciates this.

Equally, there are multiple different feedback styles you can use to offer coaching. Try these two and see what works for you:

EEC

EEC is an acronym for Example, Explain, and Congratulate or Change. This is better for more direct communicators.

This feedback style explicitly highlights an example of the team member’s behaviour, before explaining why this behaviour was good or bad. If good, congratulate the employee on their good work. If bad, explain to the employee the change you’d like to see in the future.

Although this may seem rigid, in conversation, it’s much more natural. For example:

“Remember that time you completed that big project 3 days ahead of schedule? The clients were so impressed. Great job on that” follows an EEC feedback structure. 

Or, “I know you’ve been struggling with your time keeping recently. You were late twice last week. It’s really important to be on time to work as being late can make us seem unprofessional to clients. I’d really like to see an improvement in your timekeeping moving forward. Can you leave the house a little earlier to make it here on time?”

1:2:1

1:2:1 is a classic feedback style. It’s also called the sugar sandwich or the layered feedback style, and is where you offer one positive comment, followed by two areas for improvement, and then one more positive comment to wrap up. This approach balances constructive criticism with positive reinforcement, making it suitable for more sensitive team members or those who prefer a balanced approach. 

The 1:2:1 method is also really easy to incorporate into casual conversation. Try something like:

“I really like how you handled that workplace conflict the other day. Great job. However, I noticed that you tend to dominate discussions during team meetings, which can sometimes overshadow the contributions of others. It would be great to let other people have a say so we can all learn from each other. Like I say, you’re really confident and doing a great job, I’d just like to see that small change.”

The Bottom Line On Performance Reviews

Performance reviews help managers and team members get clear on their development, ensuring that they have measurable goals to work towards and aligning business and team member expectations. 

Offering developmental feedback is just as important as offering positive feedback. Although it can be tougher to deliver, constructive criticism, when delivered fairly, is a great way to help employees learn and grow. Plus, it’s a great opportunity to check in on your team member’s mental wellbeing and just generally have a chat. 

So, don’t be afraid to offer coaching to your team members. Although it can be tricky finding the balance between supportive and clear, developmental coaching will ultimately benefit them, making them better team members and happier people. 

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