How to Conduct Performance Reviews that Set Employees Up for Success

Workplaces and employees are changing.

Performance reviews are no longer a dreaded event for employees. Instead, Gen Z and Millennials want more feedback at work. 

As a result, the traditional systems, which: 

❌ Evaluate performance in a yearly cycle.

❌ Do not keep a continuous feedback loop. 

❌ Have check-ins only as an annual task on the checklist, will no longer be relevant. 

In fact, 81% of HR leaders are already considering changing the performance management system, according to pwc (more insights from their study below).

Have you reviewed your performance management system yet? 

If not, here is your cheat sheet.

We bring you an in-depth guide on how to conduct a performance review in line with changing workforce expectations.

🕵️‍♀️ Why put so much thought into performance reviews? 

1. Align employees' expectations with managers (and company goals)

With a performance review system, managers and employees have a dedicated task to discuss goals. 

Firstly, it brings them on the same page.

Secondly, managers also review if employee plans align with organizational goals.

For example, in Cisco's performance management process, managers get a checklist to review employees' goals.

One of the critical questions in the checklist is: Are the goals relevant to the business? 

So a performance review system ensures that employees are growing along with the business. 

2. Boost employee engagement

Designated goals and future-focused feedback give employees a clear direction to move forward, boosting engagement. 

Case in point: Gallup identified 12 drivers of employee engagement:

1.  I know what is expected of me at work.
2. I have the materials and equipment I need to do my job right.
3. At work, I have the opportunity to do what I do best every day.
4. In the last seven days, I have received recognition or praise for doing good work.
5. My supervisor, or someone at work, seems to care about me as a person.
6. There is someone at work who encourages my development.
7. At work, my opinions seem to count.
8. The mission or purpose of my company makes me feel that my job is important.
9. My associates or fellow employees are committed to doing quality work.
10. I have a best friend at work.
11.  In the last six months, someone at work has talked to me about my progress.
12. This last year, I have had opportunities at work to learn and grow.

💡 You can directly address 6 out of these 12 drivers in your performance review system. 

3. Solve employee problems 

Well-balanced performance reviews offer a chance for two-way communication where employees also get a platform to raise their grievances. This way, managers can find out their issues and assist with solutions.

Top companies like Adobe encourage periodic check-ins between employees and managers for performance management. As a result, employees have support from managers offering constructive feedback and addressing their queries. 

🔗 Find out how to combine continuous feedback with performance reviews.

4. Aid employee growth 

Frequent feedback creates a continuous cycle of growth. Therefore, managers need not limit themselves to giving feedback on current performance. 

They also guide employees in areas to improve and how to grow further. 

Let's take Zappos as an example. 50% of the performance evaluation at Zappos focuses on current employee contributions. The remaining 50% of the conversation centers on employee strengths and opportunities for professional growth.

5. Increase employee retention

Performance review reminds employees that their work is appreciated and tells what they can work on to move up the ladder. This constant feedback loop increases employee engagement and job satisfaction and reduces turnover.  

✍️ What to do before your next performance review

1. Revisit your vision for performance management 

Pwc's Future of Performance Management, Rewards & Recognition report shows the current normal of the performance review system and what the future will look like. Here is a quick summary. 

The current normal is:

• Having static objectives reviewed annually.
• Not a fan of feedback. 
• Having check-ins as a checklist item and not for conversations.
• Focusing on the goals fulfilled, not the value created.

But the future and new normal of performance management is expected to:

• Have shorter review cycles. 
• Keep goal-setting agile.
• Enable employees to reach sustainable productivity.
• Upskill managers to engage in meaningful dialogue.
• Accelerate employee growth.

Performance reviews tied to annual salary appraisals and filled with generic feedback are things of the past. 

As the report states, performance management is now more of an opportunity to coach employees and invest in their career growth (which helps the company in the long run).

What does this mean for you?

It means the first step is to revisit your vision for performance management to be up to speed with changing employee landscape.  

2. Explain your new vision to employees

The next step is to bring all employees on board with the idea. Then, explain to them the changing vision.

A few good questions to answer are:

• What can they expect from performance reviews, and how do they relate to the business goals?
• How frequent will the reviews be? 
• Will check-in meetings complement or replace the formal performance reviews?
• What will be the role of managers in employee development?
• What tools will the company implement to conduct these processes?
• What type of goals should they set: performance, upskilling, team-bound?

🎯 Discover how to empower your workforce with performance vs. development goals.

3. Develop coaching skills

There is one major point throughout the discussion of changing expectations and the new normal of performance reviews so far: Managers are now expected to engage routinely in meaningful dialogue and support employees. It has its advantages. 

A recent Gallup study shows that employees who received meaningful feedback in the past week are almost four times more likely to be engaged than other employees.

It means your role now shifts from traditional leader to manager-as-a-coach. It's time to brush up on your coaching skills so you can guide employees in the right direction, empower them to find solutions, and give timely feedback. 

✅ 7-Step action plan to conduct your next performance reviews

1. Define the review cycle

A performance review cycle is the 3-step process of: 

• planning goals;
• monitoring progress;
• and evaluating employee performance at the end. 

Goals are different for different businesses and roles. 

Mostly, it's a mix of project, personal, and team collaboration. 

As the first step, define how frequently you want to conduct these review cycles: Twice a year, quarterly, or even more often. 

The big question which arises is: Which frequency will be the best? 

And the answer is: It's subjective. 

Many factors play a role in deciding a performance review period. A few major ones are:

• Is your organization fast-growing with changing priorities? How far can employees plan goals: one year, six months, or three months?
• Do you have a feedback culture at work? Will employees feel that 6-months reviews are too far, or do they get regular feedback without waiting for a formal review?
• What is the overhead of tasks involved in every review cycle? 

Consider all these factors and find which duration works best for your organization.

2. Ask employees to set goals

The next step is to discuss goals with employees. There are two common ways to play around it:

1. Take a strength-based performance appraisal route and define strength-based goals so employees play on their strong points.
2. Choose a competency-based performance appraisal path and specify competencies to excel in every role. Next, finalize employee goals to improve or polish these competencies.

💡 We suggest taking the competency-based performance appraisal route. To help you get started, we created a free competency-based review template for you. 

3. Monitor the progress and support employees

Once you set goals, don't leave employees figuring things out on their own. Instead, schedule regular one-on-one meetings to: 

• Offer support if employees are stuck anywhere.
• Help them identify solutions.
• Enable employees to identify their strengths.
• Provide constructive feedback.
• Review if they are moving in the right direction.

Another significant advantage of frequent one-on-one meetings is that it allows course correction sooner rather than later. 

Amy Spurling, CEO and Founder at Compt, says they discuss performance issues early in these meetings. They don't wait to suddenly put someone in a performance improvement plan (PIP) program and then reveal their unexpected performance. 

Tip: Regularly take notes in the one-on-one meetings so you have input to return to when the review cycle ends. 

4. Initiate review towards the end of the cycle

You can initiate self-assessment and reviews as the performance review cycle inches to the end line. Shaunak Amin, Co-founder, and CEO of SwagMagic, suggests implementing 360-degree feedback for employees to get a deeper insight into their performance. 

360-degree feedback is a review method where employees do not limit themselves to getting feedback from managers only. Instead, they also request feedback from peers, direct reports, and sometimes even customers. Employees also do self-assessments as part of 360 feedback.

➡️ Wondering how to create these 360-degree review forms? Check out our detailed guide on creating performance appraisal forms and our complimentary resource with 59 best performance review questions for inspiration.  

Once the review forms are out, they will also come to you as a manager. That's where the notes you collected in one-on-one meetings will help. It will ensure you review the entire cycle, not just achievements (or escalations) from your recent memory.

5. Block time for the performance review meeting

After all the stakeholders complete the review, it's time to release the results to employees by conducting a performance review meeting. It is different from your regular one-on-one. This meeting is more of a reflection of the entire review cycle.

In this meeting, you can

• Discuss the goals set at the beginning of the cycle and how did the employee fare on those
• Reflect on any significant discussions/issues 
• Acknowledge key accomplishments 
• Highlight areas for improvement
• Give concrete suggestions for future
• Plan goals for the next performance review cycle

Tip: Choose your words carefully. Low performance can be sensitive, and poorly delivered feedback can harm employee motivation and performance. The last thing you want is to send your people on a downward spiral. 

➡️ Check out 45 performance feedback examples for all employee performance levels, from not meeting expectations to high performers.

6. Measure effectiveness

Instead of throwing darts in the dark, you can shortlist Key Performance Indicators(KPIs) to determine if your performance management system is bringing a positive change. A few common KPIs to measure are revenue, conversion rate, profitability, project on-time completion rate, and productivity.

➡️ Looking for a more specific list? Get an elaborate list of 45 employee performance metrics covering multiple role-specific performance metrics.

7. Conduct a quick survey at the end of the cycle

Mitch Chailland, President of Canal HR, says, "My top tip for making performance management beneficial to employees and the organization is to not get stuck in one way of doing things. If your team thinks another method would be better, try it out and continuously improve and optimize."

This is a bonus step, but it is still quite helpful. 

Ending the review cycle with a short pulse survey gives you feedback on whether employees find performance management beneficial and collaborative. 

A few questions to check would be:

• Is the cycle length too short or too long?
• Are the questions in 360-degree feedback forms relevant?
• Is the frequency of one-on-one meetings satisfactory?
• Are you getting feedback on time?
• Is there anything you would like to be different in the next review cycle?

It gives you enough input to improve and experiment for the next cycle. 

🏢 3 Companies that revamped their performance review process

Looking for inspiration before updating your performance management process? Here's how 3 top companies brought a change in their system. 

Zappos adopted holacracy

Zappos moved from HR-driven annual performance appraisals to adopting holacracy. Holacracy is a self-management system where there are no leaders. It means employees are divided into self-organizing groups where they receive frequent reviews from peers. Zappos encourages real-time feedback through weekly team huddle meetings. The brand, known for its unique culture, also uses an internal 360 feedback tool for formal check-ins. 

➡️ Check out our in-depth guide on Zappos' performance management system for a detailed explanation of the move. 

Adobe replaced traditional appraisal with frequent check-ins

Adobe let go of the traditional annual review system in 2012. Instead, they introduced a less formal performance management system called 'Check-ins,' which happens at least once a quarter. 

Every check-in has three parts: setting goals, sharing feedback, and exploring opportunities for employee development. 

➡️ Looking for more details on the check-in approach? Find it in our detailed case study on the Adobe performance review mechanism. 

Cisco used technology to say goodbye to annual reviews

Cisco uses an internal platform to bid farewell to annual performance reviews. Three main parts of the system are:

• Employees can add their aspirations, learning areas, and expertise to the portal. So conversations become two-way.
• Managers set goals in one-on-one check-ins and share real-time feedback on the platform.
• Managers can get quick reports using the in-built reporting feature. It helps to review critical factors such as employee satisfaction, progress, and more.

➡️ Learn more about their technological adaptation in our report on performance reviews at Cisco. 

➡️ Reimagine performance reviews with Zavvy

Here is the step-by-step breakdown of how to upgrade your entire performance management system with Zavvy. 

1. Create performance review cycles

You can schedule recurring performance review cycles. 

For example, you set the review cycle to a quarterly recurrence. In that case, a new review cycle will automatically kick off every three months.

2. Assign career paths and levels

You can define career paths for different roles. Every career path can have general competencies that are relevant to the position. Plus, you can add specific competencies (if needed for the project or if employees want to develop those). 

3. Schedule regular one-on-one meetings

Zavvy also assists with scheduling periodic one-on-one meetings so you can keep a tab on employee progress and address their queries.

4. Conduct 360 feedback

Towards the end of the cycle, you can initiate 360 feedback so employees can self-evaluate and also get feedback from peers, supervisors, and direct reports. 

5. Analyze feedback analytics and competency reports

Zavvy offers individual and team competency reports that you can easily configure. The various reports will help you identify your team members' strengths and areas of improvement. Use these to prepare for your final discussions at the end of the cycle.

6. Block time for performance review meetings

While initiating 360 feedback, Zavvy allows you to set a window for performance review discussion. You'll get notifications to arrange meetings in that window.

7. Conduct pulse surveys

Lastly, you can conduct quick surveys to evolve your performance review systems with time. 

➡️ Request a demo now, and one of your experts will help you upgrade your performance management system before the next review cycle begins.

❓ FAQs

How do you conduct a good performance review?

Five tips for conducting effective performance reviews are:

1. Discuss goals in advance.

2. Have mutually beneficial goals for both employee and company success.

3. Conduct frequent one-on-one meetings to assess progress and address queries.

4. Keep the conversations two-way.

5. Give constructive feedback.

What are the 4 stages involved when conducting a performance review?

The main four stages are:

1. Setting goals for a performance review cycle

2. Monitoring progress through one-on-one discussions 

3. Initiating feedback at the end of a performance review cycle

4. Having a performance review meeting to talk through achievements and improvement plans

What are the 5 key elements of a performance review?

The five key elements of performance review are:

1. Clear and agreed-upon goals

2. Mutually beneficial goals for both employee and company success

3. Continuous dialogue to monitor progress and support employees

4. Constructive feedback

5. Two-way conversations