Performance review – How to do it right?

1. The True Purpose of Performance Reviews

Performance reviews are designed to assess an employee’s job performance and overall contribution to the organization. 

However, more often than not, they are used as a way to highlight weaknesses and judge and criticize an employee’s conduct. We’ll get into the why of this a little later in the article, but for now, let’s highlight what they should be used for.

1.1 Setting Clear Expectations and Objectives

A performance review should be based on a framework that clearly sets out the expectations of the job role along with a path to achieving them. 

Key performance indicators (KPIs) are typically used for this purpose. A KPI consists of a measurable value or “performance metric” that is used to measure an employee’s effectiveness in each area of their role. 

For example, in a customer support role, KPIs might include response times, customer satisfaction scores, and number of tickets resolved. 

Overall, these KPIs should all adhere to SMART objectives: 

• Specific: The KPIs must be tailored to the employee’s job role and responsibilities; it shouldn’t be generic and vague.
• Measurable: Quantifiable and based on solid and reliable data.
• Achievable: KPIs must be realistically achievable and within the employee's control.
• Relevant: Each KPI should align with both the organization’s goals and the employee’s role.
• Time-bound: KPIs are measured within specific timeframes relevant to the goal or task (daily, weekly, monthly, annually, etc.). 

Another popular method is to set objectives and key results (OKRs). These are used to set clear yet ambitious goals that are aligned with business goals while regularly measuring progress. 

OKRs may seem very similar to KPIs, however, they are quite different. 

OKRs focus on setting ambitious, outcome-driven goals, while KPIs measure the performance of ongoing processes or specific metrics. 

In many cases, it is useful to use a blend of OKRs and KPIs for performance metrics.

1.2 Providing Structured Feedback

This is an area where performance reviews often trip up. Based on the data generated from the KPIs, managers should provide structured feedback that fosters continuous improvement and professional growth. 

This structured feedback is not supposed to be used as an opportunity to berate an employee for underperformance. Rather, it’s the time to dig into the “why” and then present solutions.

1.3 Identifying Training and Development Needs

By pinpointing areas for improvement, managers can then examine various training methods available to support their workers. When training needs are recognized, managers can create development plans that enable employees to develop their skills to the desired level. 

For example, an employee who struggles with time management may need to receive training on the subject and support on how to structure their workday better.

1.4 Enhancing Employee Engagement and Motivation

Performance reviews should also recognize and reward accomplishments and exceptional work so top workers are encouraged to keep up the momentum. This is the best way to ensure that your workforce remains motivated and engaged.  

Importantly, continuous recognition for hard work signals that you appreciate your workforce. If employees consistently feel undervalued, then you can pretty much guarantee that you will receive a resignation letter on your desk in the near future.

1.5 Aligning Individual Performance with Organizational Goals

Linking individual performance to the broader goals of the organization ensures that everyone is working towards a common purpose.  

While this is obviously crucial for the success of your business, it also fosters a collaborative work culture.  When employees work together like this something great happens. It often sparks new ideas and innovative thoughts, which helps propel your business forward.

2. Key Components of Effective Performance Reviews

So, what should a performance review actually include? Some things we’ve already mentioned, but to get a holistic assessment of your employee’s performance, you should include the following: 

• Objective setting and alignment: Remember those SMART objectives? This is where they come into play. These should align with the goals of your organization and the job role in question.
• KPIs: These will provide the quantifiable data to support the review process. KPIs should be regularly reviewed to ensure they continue to align with the objectives— especially since job roles tend to evolve.
• Comprehensive evaluation criteria: Performance reviews aren’t just about the quality of the required work. They should also include conduct, teamwork, communication skills, problem-solving abilities, and additional skills.
• Regular feedback and check-ins: Annual reviews are not enough. You should be regularly checking in with your staff to ensure they are on track, address issues, and reward great work on a continuous basis.
• Employee self-assessment and reflection: Encouraging employees to reflect on their performance increases accountability and promotes a sense of ownership. Self-assessment provides valuable personal insights that can be discussed during the review.
• Managerial evaluation and feedback: The manager’s evaluation is a critical component of the review. It’s their job to provide detailed feedback, highlight achievements, and identify the training needs.
• 360-degree feedback: Feedback should also be gathered from multiple sources, including peers, subordinates, supervisors, and other departments. This is essential because it provides a fully-rounded view of the employee’s performance.
• Development plan and goal setting: To foster growth, a performance review needs to include a developmental plan. Where does the employee want to be in six months from now? In a year? What about the long term? Set goals to address the skill gaps and prepare each employee for their progression path. 

After reading this, you may be wondering how often you should conduct these reviews. The truth is that it really depends on the employee in question. 

For example, employees who perform consistently well may only need a bi-monthly check-in, while employees requiring more support may benefit from weekly or monthly check-ins. 

Remember, performance constantly evolves so managers need to assess and adapt the frequency of the reviews to suit the current circumstances.

3. What Does Attendance Evaluation Have to Do With Performance Reviews?

Performance reviews and attendance evaluations are deeply intertwined as they collectively provide a picture of an employee’s reliability and commitment to their role. 

Regular attendance is often a strong indicator of an employee's dedication and work ethic, which directly impacts their overall productivity and performance. Conversely, consistent performance feedback will highlight how attendance patterns can affect productivity and team dynamics.  

When you integrate both these assessments, you can easily identify correlations between absenteeism and drops in performance. Once you have uncovered the issues, you can then implement solutions, set goals, and/or provide support to address them.

3.1 The Importance of Attendance Evaluation

The core purpose of attendance evaluation is to ensure that employees are present and productively contributing to the organization.  It’s also important for identifying patterns and supporting workforce planning. It is not intended as a way to scrutinize an employee's every move and micromanage their working day. 

Here are some key reasons why attendance evaluation should be incorporated into the performance review: 

• Foster accountability: Regular and reliable attendance is a key indicator of an employee’s commitment and work ethic. Typical employee contracts include a commitment to fulfill a certain number of work hours, and employees should be able to account for these.
• Identifying trends: By using attendance data, managers can identify patterns and trends such as frequent lateness or absenteeism. This information is valuable for addressing underlying issues and supporting attendance improvement.
• Addressing absenteeism and lateness: Speaking of underlying issues, attendance is the perfect opportunity to find out why employees are consistently late or absent. Burnout, issues at home, inflexible work scheduling, etc., can all be valid reasons why these problems occur. Once you understand these, you can work with the employee to find solutions.
• Workforce planning and scheduling: Inefficient workforce planning can lead to a drop in productivity and insufficient staff available to meet operational demands. Attendance reviews will help you spot the problems and rearrange schedules and resources accordingly.

3.2 Common Methods for Attendance Evaluation and Improvement

To successfully carry out attendance evaluation, you need the right tools. 

Automated attendance systems such as time-clocking terminals and mobile apps are replacing the traditional manual “pen and paper” methods. This is because they provide far more accurate data and provide a more convenient way for staff to record their time. 

Additionally, geolocating and geofencing technology restricts where employees can clock in or out, helping prevent buddy-punching and time theft. 

Digital timesheets and time-tracking show what tasks employees are working on and when while correctly recording absences such as breaks, paid time off (PTO), and sick leave. 

All of these tools generate workforce time data in real time, giving you a clear picture of each employee’s attendance. Once you can understand this, you can start making improvements. 

Examples of these may include: 

• Introducing more flexible working methods such as remote working or adjustable start and finish times. Promote a fair work/life balance.
• Supporting employees through challenging circumstances that affect their attendance.
• Implementing training and support to upskill struggling employees.
• Managing breaks and absenteeism more efficiently so there are no labor shortages during critical times.
• Identifying over or underloaded employees and distributing workloads more evenly.
• Identifying and removing organizational bottlenecks that slow down productivity.
• Implement incentives and bonuses for good attendance and time management.
• Respecting employment laws around providing sufficient breaks and downtime.

4. Problems With Performance Evaluations and How to Address Them

When evaluations are used as a method of support, they empower employees to be the best version of themselves. But, as we stated at the start of this article, they are all too often perceived as a negative and pointless experience. 

We’ve highlighted some of the most common pitfalls in performance and attendance evaluations and some ways to overcome them.

4.1 Biases

This is a difficult one to overcome because we all have our preferences and biases among staff. Favoritism, cultural differences, and stereotyping are all reasons why we might prefer one staff member over another. 

There are also cognitive biases to consider: 

• Halo Effect: The tendency to let one positive aspect of a person influence the overall perception of them.
• Horns Effect: The opposite of the halo effect: Letting one negative aspect of a person influence the overall evaluation.
• Recency Bias: Focusing on the most recent events or behaviors rather than the entire evaluation period.
• Primacy Bias: Focusing on initial impressions rather than the full evaluation period. 

These biases—whether consciously or unconsciously—can have a profound effect on the outcome of an employee’s evaluation. Therefore, it’s important to try and mitigate them where possible. 

• Invest in leadership training that addresses biases and how to overcome them.
• During performance reviews, use standardized evaluation criteria to ensure consistency among the workforce.
• Gaining 360-degree feedback means you’re not relying on a single source for employee information.

4.2 Meeting Employee Resistance

Often, the employees themselves bring negative influence to the table. It’s common to meet resistance and a defensive demeanor, especially if the reviews are overly critical or punitive. This causes communication to shut down and can end up in frustration on both sides.  

To overcome this hurdle, try the following: 

• Balance feedback sessions with the positive and the negative.
• Kick off the meeting by asking how the employee is feeling and how they think they are getting on. Often, they will bring up the problems themselves, which makes it much easier to communicate about them.
• For a negative situation, ask the employee how they would feel or what they would do if they were on the other side of it. For example, you could ask an employee who always takes extended breaks how they would feel if they observed someone else doing it.
• Empower the staff members by asking them what they think they can do to resolve the situation and what support they need to overcome the challenges.
• Offer your own ideas for solutions and ask the employee what they think of them.
• Work on an outcome together—that way, you get buy-in from the employee from the offset.

4.3 Unconstructive Feedback

Feedback is only useful if it is constructive. You can’t just say something is “bad” without having solid examples to back it up and offering solutions to overcome it. 

You must also be specific with your feedback. Saying “You always do this” or “You never do that” is generally inaccurate and can make the employee feel hopeless about the situation. 

Here are some examples: 

• “I don’t like your behavior.”
  • Change to: “To have more positive interactions with staff members, it’s important to approach them calmly. If you’re feeling stressed, take a short break before engaging.”
• “The work you produce is sub-standard.”
  • Change to: “There are a couple of specific areas (name them) where your work could be improved. What support do you need to get yourself there?”
• "You’re always late.”
  • Change to: “I’ve observed a consistent pattern of lateness in the past month. Can you share what challenges you’re facing that might be causing this and how we can address them together?”
• “You never help the team”“
  • Change to: “I’ve noticed that there have been instances where additional support from you could have really benefited the team. Can we discuss what might be preventing your participation and how we can improve team collaboration?”

4.4 Making Comparisons

Your employees are in a workplace, not a battle royale, so it’s unfair to pit them against one another by making comparisons. If you do this, you’ll quickly foster resentment among staff, especially if they feel their achievements have been overshadowed by someone else. 

Keep the performance and attendance reviews specific to the employee in question. It’s okay to bring other staff members’ names into the conversation but not on a comparative basis. 

For example, you can say that Employee A’s loud behavior is negatively affecting Employee B and C’s ability to concentrate. 

You musn’t say that compared to Employees B and C, Employee A is disruptive and annoying.

4.5 Making False or Speculative Promises

Payrises, bonuses, and promotions are a hot topic during performance reviews so you mustn’t give employees false hope or speculations about when and how they might happen. 

Saying things like “Keep this up and you’ll be in line for a promotion” when nothing has been previously discussed among management is essentially lying to the employee. 

Similarly, saying something like “The budget is under review, and I’m positive you’ll get a raise” increases expectations, even though you’re only speculating.  

Instead, it would be far more accurate to say the following: 

“Your standard of work is excellent, and it has been recognized. While I can’t make any specific promises regarding a promotion/pay rise, your performance positions you well should one be made available. I encourage you to continue with this standard of work, and I’ll keep you updated on any developments regarding advancement/compensation.”

4.6 Inconsistent Reviews

When you’re busy, it can be easy to put performance reviews further down the list of priorities. We get it—they’re time-consuming, but they are just as important as anything else. 

Without them, productivity can slip, issues can get bigger, and the employee may end up adrift with no clear goals to aim for. 

To counteract this, make sure you’re consistent with your performance and attendance reviews. Having an “open door” policy where employees are welcome to come and chat with you if they have any concerns or feedback to share will also help keep everyone focused on their objectives.

4.7 Administrative Burden

Yes, performance reviews carry a certain amount of paperwork which can amount to a lot if you have a large workforce. 

Using software and automated systems will help alleviate the burden by streamlining the process. Using a digital time-clocking system, HR management software, and keeping all records electronically are all examples of how you can make the administrative process easier. 

Implementing training around the performance review process will also enable managers and employees to understand and prepare efficiently for them. 

Finally, don’t pile the responsibility onto one or two managers. Split the workforce among leadership so each takes a fair share of the task.

When used correctly, performance and attendance reviews can be an incredibly powerful way to accelerate your organization’s success. Employees who feel like they have management’s support and encouragement are more likely to succeed and contribute in a meaningful way. 

The key is to approach these evaluations as opportunities for growth and development rather than mere formalities or punitive measures. Get this part right, and you’ll reap the rewards.