Learn how to design effective performance reviews and what to include in employee evaluations in order to motivate your workforce.
Giving employees feedback can go a long way toward improving how they perform in their roles. According to a January 2022 report by Gallup, when employees strongly agree they received “meaningful feedback” in the past week, they’re nearly 400% more likely to rank as highly engaged at work compared to all other employees.
Contrastingly, a lack of feedback can lead to disengagement. People who don’t receive meaningful feedback regularly are more likely to be actively disconnected or checked out at work.
One of the most common times to provide employee feedback is during an annual review. Annual reviews have decreased in prevalence in recent years, in favor of more frequent, more informal feedback. The Society for Human Resource Management reports only 54% of workers received annual reviews in 2019, a decrease from 82% in 2016, and our own research on employee assessments found that 70% of companies around the globe are actively moving away from traditional performance reviews.
Performance reviews can still be effective when they provide employees with clear expectations and relevant goals. Your company’s managers can use these performance review tips to deliver meaningful feedback that motivates your workers.
What is an annual review?
An annual review is a once-a-year meeting between an employee and their manager where the topic of discussion is the employee’s work performance since the last review. An employee assessment may also include:
- An employee raise
- A title promotion
- Corrective actions to improve performance
Why organizations should consider performance alignment
30% of workers would like to receive job and performance feedback weekly.
While employees want to receive regular feedback, if the only feedback they get is once a year, their performance can deteriorate. Gallup research finds traditional performance reviews diminish performance 1/3 of the time, and only 14% of employees strongly agree performance reviews motivate them to improve the quality of their work.
One potential reason annual reviews fail is due to the large span of time between them. Our research on performance reviews has found that 30% of workers would like to receive job and performance feedback weekly. More frequent feedback both meets worker needs, as well as gives your business the opportunity to help turn issues around more quickly.
If you’re going to use formal annual reviews, it’s helpful to document what’s discussed so you can measure employee performance over time. Both the manager and the employee should have access to the reviews as a reference and to have a clear record of any action items to address.
Organizations should also consider ditching the annual performance evaluation for a performance alignment model — which embraces frequent and less formal conversations. This allows individual work to sync with company objectives, and also sets teams up to change expectations and align with one another in response to their business’ needs.
What to include in employee assessments
Employee performance reviews should directly reflect the worker’s job responsibilities and how those relate to your company’s overarching business goals and values. Early on, you should communicate to your employees:
- When they can expect a formal employee assessment
- What you’ll be evaluating specifically
- What factors and figures will influence the evaluation
When you’re determining goals to evaluate the employee on, make sure they’re SMART:
Ask your employees what their professional goals are and how those align with their roles. This conversation may alert you to new objectives to consider including in a performance review, so employees can see how they’re progressing in their careers and where they can improve.
You may choose to use a performance review template that you can share with the employee. Before the review, you can have the employee do a self-assessment. When the employee and manager connect to discuss the review, they can discuss similarities and differences in how they view the performance.
Employee performance reviews should directly reflect the worker’s job responsibilities and how those relate to your company’s overarching business goals and values.
What criteria should be used to evaluate employees?
When you’re writing an employee assessment, look at the employee’s SMART goals and the individual’s progress in achieving those goals. The assessment can include:
- Areas of success
- Areas to improve upon
- Specific achievements and performance gaps
Some businesses use a numerical or letter grade ranking system to rate employees on performance so that they can clearly measure their progress over time. Managers can also use specific examples from the performance period to explain why an employee received a certain ranking. The more specific the feedback, the better an employee will be able to connect the performance with the evaluation.
Depending upon the role or industry, you may create specific review templates for each type of position. Regardless of the type of work or job title, there are some common areas to consider including in an employee review.
1. Work quality
Work quality covers an employee’s performance on a daily basis, including both task accomplishment and soft skills performance in areas like communication and teamwork. Managers should think about what areas and skills impact work production or business results, such as problem-solving or customer feedback, and include quality measurements for all.
2. Goal achievement
This covers quantitative progress the employee has made towards their goals. Done right, a manager can provide context to the hard numbers to help the employee understand what impacted their progress.
You can measure an employee’s productivity by comparing their results to both industry averages and peer performance. Factor in quality with productivity, since low-quality production negates any benefits of performing quickly.
Employee engagement is a broad term that relates to an employee’s commitment to and passion for their job and their employer. You may want to include this on an employee assessment because it may reflect things like initiative, motivation, and leadership.
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Tie an employee assessment back to the job description
Effective employee assessments start with effective job descriptions. When onboarding, make sure employees know:
- What’s expected of them
- What measurements are used to evaluate their performance
Share employee assessment templates with workers early on so they know what targets they’re trying to achieve. Empower managers to provide employees with frequent feedback, so that team members are on the same page come formal assessment time.
Along with sharing feedback, give workers tools to help them improve their performance. Clearly explain when subsequent check-ins will take place and how managers will evaluate future work so employees can stay on track.
Employee assessments should be two-way conversations. Employees should feel comfortable bringing up barriers to success or providing suggestions as to how the employer can better support them. in return, the company can help to clarify how the team member’s daily work can impact the bottom line.