Before you start marching employees into the corner office to conduct time-consuming and sometimes contentious employee performance reviews, you should conduct another review -- figuring out exactly what your goal is in establishing an employee review process for the business.
In many ways, performance reviews begin with the employer's mindset. Is your intent to do this annually or continuously? Do you view performance reviews as an obligation or a chance to spur employees to greater performance? Are performance reviews scheduled only after you have problems with an employee or someone asks for a raise, or are they penciled in on your calendar every month or every year?
"If you view this as merely an annual process, you'll put everything off until the last moment," says Will Helmlinger, a former human resources executive for Saber Software EDS, and HP who now owns a consulting business, Your Hire Authority, based in Portland, Oregon. "However, when you think of performance reviews as an integral part of your business, you think of reviews on a more regular basis. Verbal reviews should begin early shortly after the hire date and should continue frequently until you memorialize your thoughts into your written document."
The following guide details why you should institute an employee review process, how to develop a successful review process, and how to avoid pitfalls in conducting employee reviews.
Instituting an Employee Review Process: Benefits of an Employee Review Process
Not every employer and employee has to think of performance reviews with the same dread as an appointment with the dentist. It doesn't have to be confrontational. It doesn't have to be unpleasant. It doesn't have to be viewed as merely a way to avoid any potential litigation from dissatisfied or dismissed employees.
There are actually business benefits to be gained from instituting a program of evaluating employees on a regular basis. The performance review process is an opportunity for supervisors and staff members to take time out from the daily business grind to discuss longer-range issues and plans. This is beneficial for the business because it allows leaders to spell out their expectations from employees, establish goals, and hear feedback from the rank and file. This opens up communication between employees and managers. At the same time, managers can use performance reviews to help further business goals -- for example, by motivating employees to try to increase productivity or sales.
Traditionally, many companies have employed employee reviews to reinforce good work performance while, at the same time, seeking to better the work of under performers. The underlying basis also provides a foundation for documenting measures on which to base pay increases, promotions, or punitive actions -- such as documenting grounds for dismissal.
But, in order to realize benefits, it's important for employers to get in the right mindset and understand their goals for the employee review process. The most common use of the performance review process is to document past performance. However, an emerging trend is an employee development review. The employee development review looks to the future. These reviews typically include information about past performance but have a heavier emphasis on career development, specific job and personal goals, and areas of personal growth.
"Some HR administrators view the process as a way to make sure we have ourselves covered in the case of litigation," Helmlinger says. "My objective when I do a review is to state what a person has accomplished against a set of objectives and then make it a forward-looking process. What is it that we need to accomplish from a company standpoint? What are your own personal objectives? And incorporate a career-development component -- what do you want to do next?"
Business leaders also need to determine what type of review process to implement. There are different types of employee reviews, including the following:
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Instituting an Employee Review Process: Develop a Successful Employee Review Process
Once you decide to establish an employee review process there are several decisions you need to make along the way to make it a successful endeavor. You'll have to decide who will be subject to reviews. Helmlinger recommends that reviews be conducted at all levels within your organization. "This sends a clear message that performance reviews are important and favoritism doesn't exist in your company," he says.
Second, you need to decide whether to use a performance review format from an off-the-shelf software program, from a Web-based application provider, or a customized format solely for your organization. This decision may depend on the size of your business and your resources. Software packages and Web-hosted applications offer templates for various employee reviews and can help step you through the process. But if you have an office with only a handful of employees, you may just want to find a sample template and customize it for your business.
It's important to establish and communicate to both managers and employees the performance rating criteria and expectations at the outset of the performance year -- the rules of engagement, so to speak. "That's the most important thing you can do at the beginning of the performance cycle so that you are able to objectively measure an employee's performance," says Paul Rowson, managing director at World at Work, a global human resources association that focuses on compensation, benefits, work-life, and integrated total rewards. "You can't give people moving targets to aim for. You can't move the cheese."
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Instituting an Employee Review Process: How to Set Employee Objectives
Rowson recommends that you develop employee goals and objectives at the beginning of the performance cycle by using the SMART formula:
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Instituting an Employee Review Process: How to Conduct Employee Reviews
Instead of only communicating with your employees once a year during an annual review, you should provide employees with regular feedback throughout the performance year so that they know where they stand. "There should be no surprises at the end of the year," Rowson says.
Reviews are commonly conducted approximately 60-90 days after hire, and at regular intervals thereafter. Companies normally schedule reviews around an employee's anniversary date, or conduct reviews for all employees during a designated time of the year. They can also be held more frequently, such as once a month, if it helps the business better achieve goals. Reviews typically summarize performance of tasks and duties and include areas of improvement or strength. Sometimes they will encompass goals for a future period.
Here are some tips from Helmlinger on making the review process a success.
1. Be prepared. Pull your notes and thoughts together as you review the actual performance review form. Set aside enough quiet time to reflect on each area that will be reviewed. "Take in to account the entire timeframe since the last review; never use just recent events," Helmlinger says. "Avoid including data points that catch an employee off-guard, especially dated instances." Preparation also means you will decide if you will have employees involved in drafting their own review or if you'll write the review without employee involvement. This is a critical decision since the path you take may set the tone on how you conduct the actual meeting. Employee buy-in is critical; choose your path carefully.
2. Conduct a performance review meeting. Once you have prepared for your meeting, you must set the tone for the meeting itself. Conducting an effective review with an employee requires you to do the following:
3. Follow up. Not all performance reviews are designed for a single session. You may have to re-draft the document because of the changes you've negotiated with the employee. Perhaps you have asked the employee to provide you with their evaluation without you sharing yours with them. Whatever the reason, a follow up is your ally for employee buy-in. Following up might also encompass future meetings with the employee to discuss any progress reports that may be required as part of your process. Following up demonstrates that you are committed to the employee's contributions and development.
4. Get employee feedback. Effective performance reviews involve employee feedback. Your document should always include a place for employee comments. Employees should be allowed to provide written feedback about their review. Give them the opportunity to agree or disagree with their evaluation, and let them do it in writing.
5. Set up a commitment for the next cycle. The results of the review should dictate the timeframe for the next review. If there are performance issues or specific goals that must be met, pick an appropriate intermediate time period in which to reconvene. It's a natural part of a follow up.
6. Discuss goals and career development. Employee buy-in to the performance review cycle can hinge on this step. "Most employees dread the thought of discussing historical information, yet get excited when you talk about their career development," Helmlinger says. Make this step a joint venture with your employee. Have them lay out their goals and objectives for the next three to nine months. Be sure their plans are in alignment with your organizational objectives. Then follow up with them. Without follow up, the process becomes a meaningless exercise that could negatively impact employee job satisfaction and turnover.
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Instituting an Employee Review Process: Pitfalls to Avoid in Conducting Employee Reviews
Too often, employee reviews get a bad rap because they're used for pettiness or as a vehicle for a manager's favoritism. Here are some of the tendencies to avoid when rating employees during a review process:
Any type of favoritism can undermine all the good will you seek to bring to your business when instituting an employee review process.
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Instituting an Employee Review Process: Additional Resources
Implementing an Effective Performance Review System
The Society of Human Resources Management has some advice for instituting a successful review program.
Performance Review Software:
Authoria Performance helps organizations turn employee appraisal into a tool for building a stronger workforce that can deliver greater business results.
Halogen Software's eAppraisal offers a powerful, easy-to-use, and affordable Web-based solution for employee reviews.
Insala's iPerformance offers a timesaving collection of tools that integrates the complete evaluation process to include job profiling, competency management, assessment, reviews, and development plan creation.
World at Work
This global human resources association focuses on compensation, benefits, work-life, and integrated total rewards to help organizations attract, motivate, and retain a talented workforce.