What is an Employee Performance Review?
Performance reviews have value for employees and employers alike, highlighting what is and isn’t working, and keeping everyone on the same page.
Employee performance reviews are important for every business, but their effectiveness depends on how they are conducted. They can empower your employees to reach new heights – or they could drive them away from your company.
A great review helps your employees identify growth opportunities and potential areas of improvement without damaging employee-manager relations, but writing a strong review isn’t easy. Managers often don’t receive enough guidance on what an effective and comprehensive review looks like.
Compounding the problem, small businesses frequently struggle with limited resources. For a company with 1,000 employees to conduct accurate and helpful performance reviews, a full-time HR staff of 14 is ideal. Even a company with 100 employees needs a full-time individual who compiles performance data from managers, who should spend an average of three hours on each employee review.
Regardless of industry, most employee reviews include assessment of these skills:
Collaboration and teamwork
Quality and accuracy of work
Attendance, punctuality and reliability
The ability to accomplish goals and meet deadlines
A review should also include any company-specific or position-specific competencies, as well as the employee’s accomplishments and contributions to their role or organization.
After addressing the key areas of assessment, you’ll need to evaluate and weigh each to get a picture of the employee’s overall performance. The way you format and organize this information is up to you as well as your company’s needs. Some organizations use a grading system of A through F, numerical scoring or percentages, or written descriptions (e.g., “most of the time,” “some of the time”). Whichever system you use, make sure that it is objective and easy to understand.
Once you finish the grading process, set up a time to discuss your findings with each employee. It can be helpful to have a written copy of the evaluation to reference and keep your meeting on track. Be sure to deliver transparent feedback, with examples where appropriate, and allot enough time for the employee to ask questions or deliver feedback.
Mastering your language and approach are your first steps. The true cost of performance reviews to your organization is the time managers and HR staff spend gathering and writing the material that serves as the foundation for each review. That’s where performance management software can help.
Depending on your HR requirements, you can incorporate an open API system or outsource the entire process to a third party. Companies like Namely offer an open API platform that allows you to customize the software to fit the size and scope of your HR requirements.
This type of system allows managers and HR staff to set and monitor goals and to create custom reviews. It automatically solicits responses from managers, employees and peers for the review cycle. It also creates a process for an employee-centered review known as a “360 review.” Employees can use the custom-built API platform to self-serve many of their HR needs, which can save your team hours each week.
Another cost-saving system is a professional employer organization (PEO) like Insperity or ADP Workforce Now. Ideal for small and midsize companies looking to reduce their HR expenditures, this option allows you to outsource performance reviews and other HR tasks through a co-employment arrangement – a contractual agreement where the provider assumes responsibility for assigned tasks.
Using the PEO company’s apps, managers and employees have real-time access to payroll, time and benefits. PEOs also provide the full range of professional HR benefits, including compliance with the latest employment regulations.