All about Performance Review for HRs and Managers
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How to evaluate your employees’ success within an organization?

How do you know who should be promoted next?

Traditional approaches to employee evaluation had been causing headaches to managers and employees.

If you want to cultivate employee success, then you should take a step up and branch beyond the traditional annual review. 

Enter Performance Review.

What is Performance Review?

Performance review is a formal way of providing regulated feedback to employees. In this, managers and other key stakeholders assess employees’ performance.

The objective is to identify each employee’s strengths and weaknesses.

With performance reviews, you can offer your employees constructive feedback for skill development in the future and assist them in setting their goals for the next quarter.

More often than not, these reviews form a strong foundation for individual career and organizational records.

Mostly, organizations prefer an annual or six-month performance review though many organizations prefer monthly or quarterly reviews.

These performance reviews are helpful to have uniformity for pay raises, salary hikes, and promotional structures.

Most of the time, employees are evaluated on their performance, their ability to work under pressure, skill acquisition, motivation to perform, and adaptability to a specific working style.

With performance reviews, organizations form a foundation to leverage talent, understand opportunities, and gather intelligence for making strong connections with their employees.

Performance reviews play a central role in empowering employees by helping them reach their full potential.

Managers and other key stakeholders perform employee analysis based on factors such as daily activities, roles, targets, plan, and overall value in the organization.

Objectives of Performance Review

Performance reviews vary from organization to organization. While some organizations prefer grading systems with alphabets or numerals, others prefer ranking-based review systems.

Performance review measures are used strategically to provide the organizations with several benefits and provide a satisfactory pay raise to the existing employees.

Each organization conducts performance reviews with different objectives. Here are a few of them –

  • Have a standard employee review system
  • Performance review lets the organizations achieve short-term and long-term targets
  • It helps to assess the value of existing employee potential.
  • Have a standardized appraisal structure in an organization
  • To increase employees’ performance
  • Reward employees with a promotion or salary increase
  • Provide feedback to employees so that they know in which area should they improve
  • Know the strengths and weaknesses of employees
  • Develop positive superior-subordinate relationships, and reduce grievances
  • Facilitates research in personnel management
  • Lets the organization test the effectiveness of their recruitment, selection, placement, and training programs.

Who Runs Performance Review?

It is usually the person’s line manager in most organizations since they know the most about the employee’s role and their work.

In other cases, a team leader or even a more senior leader or someone from HR may lead the review.

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Importance of Performance Reviews

Keeping the long-term benefits aside, performance reviews offer immediate benefits too – not only to the business but also to their employees.

Benefits of performance reviews –

  • Aligning Personal Roles to Business Goals

Performance reviews provide a chance to ensure that every employee understands the company’s vision and mission.

It lets the employees understand how their work fits into the bigger picture. Individual performance has an impact on organizational performance.

  • Clearer Understanding of Job Roles

With performance management, you can empower employees to think about their role within the organization.

It helps them to clarify any areas where they might have any queries or doubts.

When employees and their managers understand their job roles and know their specific duties, you leave no room for any ambiguities.

Each person is accountable for work and responsibilities.

  • Regular Feedback about Performance

When there’s regular feedback about employees’ performance, it contributes to all-round communication.

Performance reviews help the employees to know their strengths and weaknesses. It also gives them a better understanding of the expectations that their managers have from them.

Performance review is a great motivational tool to encourage employees to work harder and go above and beyond to reach their goals.

  • Career Development

Performance review provides the employee with an opportunity to plan and set their objectives.

They can take up any additional training or mentoring if they need it. It also acts as a basis for HR’s development and succession planning.

  • Rewards for Excellent Performance

Performance reviews offer many awards which show appreciation for a job well done.

The prospect of better performance and gaining additional benefits is an incentive to go above and beyond to get recognized in the organization for the hard work done.

It opens many doors to career opportunities for employees in the future.

Types of Performance Reviews

There are many ways to collect information about employee performance reviews or appraisals. These ways vary from organization to organization. 

Here are types of performance appraisal that are mainly used in the organization to help you understand the performance appraisal system – 

  • General Performance Appraisal

Under this method, employees and their supervisors interact with each other to discuss individual performance and their contributions to the organization.

Employees must be able to justify their work and help the supervisors in their evaluation.

  • 360-degree review

In this method, employees are offered the opportunity to give feedback to their superiors, colleagues, and self for evaluation from all perspectives.

Then, the top management makes a strategic decision using all the feedback.

These reviews are the most effective since it is built on the broader foundation of trust.

Employees must leave with clearer, actionable steps for what way they should continue and what areas can be improved for future impact.

  • Self-Assessment

Under this, employees evaluate their performance and their contributions to the organization.

These are then combined with the supervisor’s feedback to evaluate employee’s performance.

This kind of performance review aims to improve shared accountability and alignment between the manager and employee.

The manager learns how to coach better and guide the employee.

It is an important opportunity to let employees evaluate past challenges and success. It also helps the employees to determine future goals and priorities.

  • Project-Based Appraisal

Under this method, employees are offered appraisal with every project completion as per their contributions.

Even though this method is time-consuming, it makes the process of performance review more efficient.

Employees who develop and feel they are getting better with every project motivates them and increases their performance rate.

Individual success is aligned with future performance contributions for the organization.

  • Annual Performance Review

Such a review plays an important role in terms of long forms, forced-rankings, and excessive scores. 

With a modern approach, an annual performance review allows the management and employees to reflect on their previous performance and celebrate their achievements, growth, contributions, and challenges.

Such reviews must always focus on the bigger picture. It helps the employees to know their long-term goals and priorities in the future.

Mid-year performance reviews and quarterly performance reviews are almost similar to the annual performance review; however, these methods allow to make adjustments and corrective actions for the remaining year.

  • Compensation Check-in

Compensation-check in the performance review method sets the expectations of the employees based on performance conversations.

Such reviews are great motivators when approached in a healthy way.

Compensation reviews must – 

  • Create transparency for managers and employees
  • Be held regularly, and not only in the times of salary hike
  • Focus on pay and understanding the meaning of it
  • Address any queries on concerns

 

  • Goal Setting

Setting goals for employees is crucial to create focus, establishing priorities, and driving employee performance.

Goal setting reviews help the employees to track their progress and gain momentum.

While setting goals, make sure to consider the following – 

  • Goals are set at the right level
  • Goals can be measured and must have a meaning to them
  • Goal setting reviews help to create built-in moments and enhance individual transparency, reflection, and evaluation.

  • Peer Review

Managers are never expected to hover over their employees. When teams are strong, peer review also improves.

Peer Review is important due to –

  • Peers provide a unique vantage point to share ideas
  • The value of recognition multiplies manifolds when it comes from peers
  • You can trust your peers; they are your confidants
  • Peers know how to recognize and share feedback

 

  • Upward Feedback

Performance feedback can be discouraging for employees, particularly when they don’t get the opportunity to provide feedback in return.

When managers and employees accept feedback with a positive attitude, upward feedback helps both parties understand each other and improve.

It builds a strong foundation for trust amongst everyone. In such a case, employees feel comfortable discussing what’s going well and what’s not.

Not only is it liberating and engaging to have upper feedback, but also it is crucial for ongoing dialogue about performance. 

 

  • Team Performance Review

Team performance reviews help managers and the key stakeholders to evaluate and coach in the context of a team.

It helps to realize clear pictures and identify strengths, opportunities, goal adjustment, and further potential.

Team Performance Reviews help you –

  • Understand the priorities of the team
  • Set goals that must align with the individual needs and business needs
  • Promote shared ownership and accountability
  • Demonstrate support to improve overall performance
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What Should a Performance Review Look Like?

Most of the time, performance reviews are based on the philosophy of continuous feedback. They are future-oriented and are headed towards promoting development.

It helps no one when managers rate their employees against a one-size-fits-all scale based on their previous performance.

Continuous performance management lets each employee realize their maximum potential.

Conclusion

The traditional performance review systems have proved to demotivating and uninspiring.

Both managers and employees found these systems to have the least value and failed to meet their intended purpose of improving performance.

With the modern approach, there are innumerable approaches, tools, and techniques to track the performance of employees.

Just like your company culture, your performance review management system is unique, pertaining to the organization’s values, goals, and purposes.

Every successful performance review system looks to improve the overall picture of the organization, its performance, development, and well-being of its employees.

Still Not Using ‘PagarBook’ for Employee Management?
Varnika Bajaj

Varnika Bajaj

Content Writer

Varnika is the one who collate the words to form a sentence. A sentence which can engage you, entertain you and some time educate you.

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