Here's a statement few managers have heard from their employees: "I can't wait for my performance review!"
Instead, many workers find evaluations stressful or downright unpleasant. That's why HR leaders need to help managers understand and follow some performance review best practices. Reviews should be an important employee experience tool, not a cause for higher turnover. As talent shortages continue, cultivating loyal, high-performing employees should be top of mind for company leaders, and unhelpful performance reviews may lead to employee dissatisfaction.
Fifty-five percent of workers felt yearly performance reviews did not boost their work performance, according to a 2019 study by Workhuman, a human capital management software company located in Framingham, Mass. To help keep workers engaged and inspired, managers must conduct evaluations that galvanize employees instead of disheartening them.
Here are five best practices for performance reviews that can help improve the review experience for employees as well as their managers.
1. Focus on continuous performance management
Modern approaches to effective performance management focus on ongoing communication and feedback and reject the once-a-year approach. Continuous performance management is far more effective than simply having yearly reviews.
Eighty-three percent of employees want to receive feedback, whether it's positive or negative, according to a 2021 study by Officevibe, an employee experience software company located in Montreal. But if that feedback is only occurring once a year, that may negatively affect employee experience.
In other words, an employee's performance evaluation should be merely an overview of previous discussion topics -- not an unpleasant bombshell.
"If what is shared in the job performance review is a surprise to the team member, you have not effectively communicated [in the past]," said Kim Crowder, CEO of Kim Crowder Consulting, an HR consultancy located in Carmel, Ind.
2. Focus on work performance
Managers should be aware of how the wrong feedback can create inclusion and bias problems. In particular, they should carefully consider how their performance evaluation comments might be interpreted. Far too many managers evaluate women -- particularly women of color -- on personality issues instead of work performance. This can become an equity issue.
Kim CrowderFounder and CEO of Kim Crowder Consulting
Women are more likely to receive feedback about their personality than men, according to a 2022 study by Textio. An example of this personality-centered feedback is women being more likely to be called "opinionated" than men.
"It's deeply important to make sure the feedback is not focused on personality but on actual work and that it's actionable," Crowder said.
This type of feedback also makes it difficult for an employee to know how to improve. Black women are about nine times more likely to receive "non-actionable" feedback than white men under 40, according to the Textio study.
The problem can reach beyond performance reviews as well. Employees may feel pressured to fit a dominant workplace culture and may not receive the same opportunities at work as co-workers who do.
3. Factor in effort, not just outcomes
Managers should remember that an employee may have worked hard on, for example, a project that didn't come to fruition for reasons outside their control.
For example, if an employee is building a team, the employee shouldn't be judged on how fast the team is hired, said Megan Smith, head of HR for SAP North America. The speed with which the employee built the team doesn't guarantee the best people were chosen and could perhaps even negatively affect the team.
Similarly, a customer service ticket being resolved quickly doesn't always lead to the best outcome for customers, Smith said. Managers should instead examine employee behaviors that can help reduce future customer service tickets.
4. Tailor evaluations to the job
Many companies use the same generic performance review template for every employee, which makes it harder for managers provide specific, actionable feedback.
Companies should evaluate different employees by different criteria based on their job rank, said Victoria Yang, vice president of people operations at Bonusly, an employee recognition and rewards software company located in Boulder, Colo. Managers should evaluate an employee's specific skill set as it relates to their job rather than judging them on generic goals. Doing so facilitates conversations about the employee's future.
5. Be empathetic
During their performance evaluation, employees may feel like they're writing a defense paper to receive a raise, be promoted or simply justify their spot on the payroll.
"The performance review process at most companies triggers the fight or flight brain," Yang said.
By listening to employees -- not just during the performance review, but consistently -- managers can create psychologically safe places where employees feel comfortable sharing feedback.
In addition, performance reviews are often one-sided, with a manager providing a laundry list of the employee's current strengths and weaknesses, but the performance review should be a conversation.
Managers need to ensure they solicit feedback from the employee, Yang said.
Decoupling salary discussions from performance reviews can also reduce some of the stress that accompanies performance reviews.