Summary: Performance Reviews are held at periodic intervals to determine whether an employees is carrying out their work to the expected standard.

Have you ever wondered how you’re doing at work and felt you have no real way of knowing? As an employee, this can be a very confusing and even frustrating situation to be in. Perhaps instead, you’re a new employer with no real system in place to manage your employees’ performance and give them feedback on how they’re doing.

This can be equally frustrating. One widespread solution to these issues is to use performance reviews, and in this quick article, we’re going to explain what these are, the different types possible, and best practices to make them useful for all people involved.

What is a Performance Review?

A performance review is a regular, formal evaluation of how well an employee is doing their job. It is typically given by their direct manager or supervisor, though other stakeholders may be involved in the process as well.

The general purpose of a performance review is to assess strengths and weaknesses, commend areas of above-average performance, highlight areas for improvement, and offer constructive feedback to the employee to help them make improvements in the future. Many review procedures also give space for employees to respond to their appraisals and make plans for the future.

These reviews are also known as performance appraisals or evaluations and are used across companies of all sizes and in all industries. They may not be universal, however, with some organizations opting to use less formal, structured, and scheduled methods to give feedback on employee performance. Some forms of performance review reverse typical appraisal directions and have employees evaluate their supervisors and other superiors.

Features of Performance Reviews

  • Review forms: Most formal assessments are constructed on paper or electronic forms. These forms are filled out by an assessor and may or may not be shared with the employee. Some that are shared include space for the employee to return feedback and an acceptance of or challenge to the assessment they receive. Most forms are standardized within organizations and periodically updated for improvement. These forms are filed for future reference, making electronic forms preferable.
  • Assessment scores: Employees are assessed based on their job competencies, the skills and aptitudes they’re expected to perform their roles well. They may be given numeric scores or non-numeric ratings. Their skills may even be assigned rankings to highlight their relative strengths and weaknesses.
  • Comments: In addition to scores and ratings, performance reviews usually include comments from the assessor that help to explain and expand upon the scores they’ve given. Similar to school report cards, these comments often include messages to employees that can be encouraging or critical, or suggest areas to improve.
  • Goals: Based on the assessments they receive, employees may be encouraged to set improvement goals as part of the evaluation process. These can be set individually or with the help and direction of the assessor, typically to help align the employee’s goals with those of the organization. These goals can also be expanded into complete performance improvement plans.
  • Documentation and data: Some performance reviews include specific documentation of an employee’s activities, particularly their big achievements or significant errors they may have made on the job. This documentation can be used to reinforce the scores and comments provided in their evaluations. Likewise, employee data can also be used to reinforce performance evaluations. Generally, key performance indicators (KPIs) are selected, and employee performance is measured based on them. This quantitative or qualitative data can even be used to automatically produce scores or ratings.
  • Personal feedback: Employees and their evaluators normally find time to sit down and discuss their evaluations in what are often termed “one-on-ones” or face-to-face meetings. Employees may or may not be given their evaluations on paper or electronically prior to these meetings. The meetings are intended to make the evaluations more personal, allow more room for explanations, and give the employee a chance to respond to praise and criticism.

Varieties of Performance Reviews

While most people will be familiar with traditional reviews, modern performance management professionals have modified this format or created all-new ones. There are now many different types of performance reviews based on how they’re performed, how often, and who’s involved, including the following:

Traditional Performance Reviews

According to the Harvard Business Review, modern-day performance reviews stem from the US military’s merit rating system created during WWI to identify poor performers who would be transferred or discharged. By the end of WWII, around 60% of US companies used them, and by the 1960s, that rose to around 90%. 

These typically annual reviews were designed primarily to rate performance and provide employees with scores or rankings. They have been traditionally linked to rewards that can include bonuses, raises, or promotions. For example, an employee receiving a “Good” on their evaluation may automatically gain a $100/month raise, while a “Very Good” may merit a $200/month raise.

Traditional appraisals are generally quite unidirectional, with a supervisor performing the evaluation and telling the employee how they did. The employee may be able to give minimal feedback but generally receives the evaluation rather than participating in it actively.

Frequent Reviews

Many critics of traditional annual performance reviews point to the extremely long time gap between the employee’s performance and when they receive feedback. They suggested that the annual period was too long to be useful in motivating the employee to improve their performance. Instead, it focused on the past and produced either a rebuke or a reward at the end of the year.

Modern reviews strive for a greater frequency but are also constrained by the time and other resources that the review process takes up. Some more-frequent periods include bi-annual, quarterly, monthly, bi-monthly, and even weekly reviews. Generally, the more frequent a review process is, the shorter and less detailed it is as well.

Multi-Evaluator Reviews

Traditional reviews are normally performed by the employee’s direct supervisor with little to no input from other stakeholders. However, this has steadily changed to include more evaluators in order to reduce bias, provide more balanced assessments, and pull the focus back from simply the supervisor-employee relationship.

Peer reviews give the employee’s coworkers more of a voice in the review process. They can provide insight into how the person interacts, communicates, and collaborates within their team.

Self-reviews give employees the chance to evaluate their own performance and then compare their perceptions to those of others. This can help supervisors and others understand employees better, and for employees to gain more realistic views of their own work.

Upward feedback reverses traditional roles and gives subordinates the chance to give feedback to their superiors. Traditional reviews may miss a lot of information on how well a manager is doing, for example, by only looking from above and not letting their employees offer praise or criticism. However, because of power imbalances, upward feedback is often made anonymous. 

360 reviews try to take into account all viewpoints by having an employee reviewed by one or more superiors, their peers, themself, and their subordinates, if they have any. This type of review gives a far more holistic and integrated picture of the employee’s performance. However, with so many evaluators involved in each review, they can be incredibly resource-intensive and difficult to manage.

Team Reviews

Rather than being assessed individually, some employees receive team performance reviews in place of personal reviews. This saves lots of time and resources, but also means that each employee’s individual strengths and weaknesses may be diluted in the review of the whole team. However, they can also encourage teamwork and collaboration, and are often tied to team rewards like bonuses or trips abroad.

Automated Reviews

With the advent of complex employee management systems, many performance metrics can be attributed directly to individuals.

For example, a system can track the number of sales calls, emails, and closures made by each member of a sales team. These systems can easily track data for all team members and provide them with scores or rankings automatically and in real-time. Feedback comes nearly instantaneously from the system rather than any person and can therefore be seen as objective.

However, they focus only on concrete numbers and results rather than the actions, behaviors, and interactions of employees.

Best Practices for Effective Performance Reviews

Proponents of performance reviews say they help employees improve and help to drive data-based hiring and promotion decisions. Their detractors say they don’t necessarily motivate employees to perform better and are highly resource-intensive. To make performance evaluations more effective, the following best practices are highly recommended:

  • Make reviews as frequently as possible with the resources available
  • Set clear objectives and let employees know what they’ll be assessed on
  • Provide opportunities for informal feedback between formal assessments
  • Include multiple evaluators to reduce bias
  • Ensure that feedback is constructive and not solely critical
  • Work to align individual work goals with organization-wide goals

Performance Reviews for Employees

Performance reviews have become very common as a way to evaluate employees and give them feedback. While they can be resource-intensive, effective reviews can help to correct issues, motivate employees to improve, and reward superior performance.

FAQ

Yes, these are essentially two terms for the same activity. However, some organizations may use both words and distinguish them by making one more formal and intensive.

No, criticism is important if an employee has been under-performing or making mistakes. However, this criticism should be backed by a collaborative goal-setting process to help the employee make improvements.