A Beginners Guide on How to Conduct a Performance Review

Team Management

Every employer strives to have the perfect team—who wouldn’t? The problem is, simply recruiting the best of the best doesn’t necessarily mean they’ll be top performers day in and day out. And even if they are a rockstar employee, it doesn’t mean that there’s no room for improvement.

This is where performance reviews come in. Understood in the most basic way, performance reviews are routine evaluations of your team, where each employee's performance is documented and then presented to them. Such reviews can run the gamut from casual chit-chat to highly formal processes. Sounds simple enough, right?

But while performance reviews may sound fairly straightforward, this does not mean they should be taken lightly. Performance reviews offer invaluable insight into how your team is really doing—beyond what you see day-to-day. Not only do performance reviews give you a list of what your team has achieved, but they also help employees better understand what’s expected of them and how they are measuring up. In other words, performance reviews are key to ensuring your dream hires remain top performers.

How to Conduct a Performance Review

The problem is, while most employers would agree that tracking their team’s performance is indeed useful, many fail to actually administer these reviews because they aren’t sure where to begin. Unsurprisingly, if you’ve never gone through the process before, it can be tough to know how to conduct a performance review that will actually give you the kind of information you need. Luckily, there are plenty of tools out there that can automate the process for you.

To help you better understand how to conduct a performance review and actually put the process in place, we’ve put together a beginner’s guide.

(And if you’re already using Knit’s performance management features, this guide and our handy help doc should have everything you need to set up performance reviews for your entire team.)

Start With the Basics

If you don’t know how to conduct a performance review, it may be tempting to just jump right in and start jotting down your feedback for each employee.

Not so fast.

Performance reviews should be a more thoughtful process and require some strategic planning.

To start, you’ll want to decide on the frequency of your reviews. For instance, you may want your reviews to coincide with bonuses, which involves thinking about your budgeting process. On the other hand, you may want to think about the seasonality of your business and schedule reviews during slower periods so that employees have more time to reflect.

While the right performance review schedule varies from business to business, there should always be a yearly timeline in place for conducting the reviews. So whether you plan to conduct quarterly or annual reviews, make sure to plan those dates in advance and clearly communicate the timing of the reviews to your employees—no one likes to be caught off guard.

Set Your Expectations

After nailing down the year-long timeline for your employee reviews, it’s time to set the expectations for your team. While this may seem obvious, employees need to know what you’re actually looking for in order for the review process to be successful.

When laying out your expectations, it’s important to outline why the review is being conducted and the results that you expect from the review. When you set clear expectations about the results and the methods needed to achieve them, you ensure that you and the person you are reviewing are on the same page. Just remember, there’s nothing worse than setting up a year-long review process only to realize no one understood what you wanted them to do.

Think Carefully About Objectives

With the basic expectations for the performance review in place, it’s time to think about performance objectives. Put simply, work objectives refer to the results expected from employees in the coming year, quarter, or term. This probably sounds fairly straightforward, but this is often where employers go wrong.

Setting objectives should not be a top-down decision, but rather a collaborative process between employers and their employees. This means that instead of simply dictating objectives, you should discuss, negotiate, and collectively agree on objectives with your employees. There are four main reasons why this kind of collaborative approach is beneficial:

1. Employees know their jobs best: While employers and managers obviously have some sense of what an employee does, it's the employees themselves who have the best understanding of what are appropriate, meaningful, and realistic objectives.

2. Mutual investment: When employees are involved in the setting of objectives, they will be more likely to see those objectives as fair and be invested in achieving them. In other words, they’ve got some “skin in the game.”

3. Forces employees to plan for results, not just activities: By collaborating on objectives with employees, it forces both employees and employers to think about ways to improve a department or a company’s overall effectiveness and efficiency.

4. Ensures alignment: If employees have a fair say in the setting of their objectives, it ensures alignment from the outset. This means that come next year (or quarter), the employee can’t argue that the objectives were unreasonable.

With this in mind, you’ll need to give your employees guidelines for setting their own objectives. These objectives should express a mutually understood agreement for results that an employee is expected to produce during the performance review period. These objectives should not be separate from the employee’s job, but rather part of it. The easiest way to think about it is to group objectives by different categories:

1. Key Performance Objectives

Example: An employee must bring on a certain number of new customers by the next quarter.

2. Customer-Focused Objectives

Example: An employee must reduce customer complaints by a certain percentage by next year.

3. Financially-Focused Objectives

Example: An employee must grow sales by a certain percentage by next month.

4. Employee Growth Objectives

Example: An employee must have undertaken a certain number of continuing education courses by next year.

While you and your employee may have lofty goals in mind for the year ahead, keep in mind that these goals need to actually be achievable. In other words, there’s no point setting an objective to grow sales by 600% by next quarter if you know that it’s not actually possible.

To ensure that your objectives are both reasonable and achievable, keep the following considerations in mind:

Set short-term objectives with long-term goals in mind.

Identify potential obstacles and issues upfront.

Do not underestimate the resource need.

Build in flexibility and keep the lines of communication open.

Follow Through With Evaluations

After pouring hours into the setting of performance expectations and objectives, you want to make sure that all that work wasn’t for nothing. That’s where the actual evaluations come in. At the end of the evaluation period, employees will be asked about what they did to achieve their objectives and whether they met expectations. This kind of self-evaluation exercise gives employees time to reflect on their performance, evaluate their work, and consider the next steps for their long-term job or career growth. In other words, it helps employees better understand their purpose in the workplace.

In turn, the reviewer will receive a performance review that summarizes the employee's contributions over the entire review period. This is equally as valuable, as it gives the reviewer the information they need to know how their employees are performing. This information can then be used to identify (and tackle) any current problems and make future plans for the employee’s role. With reviews for each team member, this can provide employers with a comprehensive overview of how well their team is performing as a unit, and in turn, how well the company is performing.

At the end of the day, conducting performance reviews is instrumental in fostering long-term growth and keeping your team on track. Whether you use Knit’s performance management features to automate the process or opt for a DIY solution, performance reviews can benefit everyone from the CEO to the interns.

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