How Do You Set Up A Performance Review Process?

As a founder, reviewing employee performance might not be your first priority. But employee management is a reality when you run a business, even if you don’t have a big team. That’s why founders should lean on preparation and process. With the right structure in place, conducting performance reviews for your employees can be simple and impactful.

Encouraging development and providing thoughtful, consistent feedback can help your team reach their professional goals — which can help your business reach its own goals as well. If you’re ready to create a structured performance review process that enables you and your team to succeed, read on.

Understanding Performance Reviews

Employee performance reviews are a key factor in effective employee management. If you’re not familiar, performance reviews (also known as performance appraisals or employee assessments) are periodic evaluations of an employee's work performance. 

The Purpose of Performance Reviews

The reason performance reviews are conducted is to provide performance feedback to employees. This can help employees grow in their roles, fully recognize their achievements, and improve their overall job satisfaction.

When done right, performance reviews can also improve communication between employees and management, which contributes to a positive workplace culture. All in all, performance reviews can be a win-win for everyone involved.

The Challenges of Performance Reviews

Despite their importance, performance reviews can be a challenge. Not only is creating a performance review process a tall order, but reviews can also be uncomfortable for employees and managers alike. Common issues include a lack of clarity around evaluation criteria, infrequent feedback that doesn't align with real-time performance, and a one-size-fits-all approach that fails to consider individual employee needs and contributions.

There's a reason some folks may be apprehensive when it comes to reviews, but you also have the power to ease their minds and diffuse any tension. How? By creating a performance review process for your company.

Setting Up an Effective Performance Review Process

If you’ve never set up a performance review process, it’s natural to feel uncertain. But if you approach it systematically, you can help ensure your performance review process is fair, efficient, and beneficial for both managers and employees. Here's a step-by-step guide on how to set up an effective performance review process.

1. Define the Objectives

First, clearly define what you want to achieve with your performance reviews. Do you want to develop employee skills? Improve productivity? What about fostering professional growth or increasing engagement? Make sure to sit down and determine exactly what it is you want out of these performance reviews — and what you want your employees to get out of them, too.

2. Determine Frequency

Once you know the objectives of your performance reviews, you need to decide how often the reviews will take place. Annual reviews are pretty common, yes, but many organizations are moving towards more frequent, informal check-ins. Weekly or bi-weekly check-ins can provide an opportunity to give more real-time feedback and better support employee development as it’s happening.

3. Establish Clear Criteria

You’ve got your objectives and your frequency — now it’s time to develop clear criteria for evaluating performance. This can include things like meeting specific goals, demonstrating particular behaviors, or contributing to team success. Whatever you decide on, make sure these criteria are communicated transparently, and are understood by all employees.

4. Tool Selection

Next, you’ll want to choose any tools or software you’ll use to facilitate the review process. These days, there are plenty of performance management systems available that can help track goals, collect feedback, and store assessment records. If you choose to use software like this, consider options that provide as much access and interaction for employees as possible.

5. Train Managers 

After you’ve created the structure for your performance review process, training is the final step. It’s crucial that you ensure both managers and employees are trained on the review process. This includes specifics like how to give and receive feedback effectively. This sort of training and education can help reduce anxiety around reviews and promote more meaningful conversations.

Best Practices for Performance Reviews

Now that we’ve gone over what performance reviews are and how to create one for your company, let’s look at some best practices. After all, best practices can only help maximize the effectiveness of your reviews.

Prepare Thoroughly

Ben Franklin said it best: “By failing to prepare, you're preparing to fail." Both managers and employees should prepare for a performance review. It’s not just on the manager or the employee — both parties should come to the table with relevant data, ready to reflect on performance and set goals for the discussion.

Make it a Two-Way Conversation

Performance reviews aren’t just an opportunity for managers to take the stage — they should be interactive. It’s important for managers to encourage employees to share their thoughts on their performance, along with their career aspirations and any support they need from management.

Focus on Development

Good managers should be looking for opportunities to help their employees further develop their skills. A performance review can be a great opportunity to create a development plan. By working with the employee, you can outline steps that’ll help them improve their performance and achieve their career goals.

Be Specific with Feedback

Giving feedback can be tough for anyone. But sometimes it’s necessary. The key is to ensure your feedback is specific. Vague feedback can be confusing and unhelpful. But when you provide specific examples of both strengths and areas for improvement, it gives the other person something to focus on while also reminding them they’re a valuable team member.

Follow Up

Possibly the biggest part — and one of the most common missed steps — is the follow-up. After weekly, bi-weekly, quarterly, or annual check-ins, managers should make a point to follow up with their employees. Performance reviews shouldn’t stop after the annual review. Make sure you revisit the discussion points from their latest review after they’ve had the chance to make some progress so you can offer support and adjust goals as necessary.

Examples of Performance Review Processes

Not everyone has to structure their performance review process the same way. There are plenty of approaches you can take and ways to make it your own. That said, sometimes it helps to see how a performance review process might work in practice. Let's consider a few hypothetical examples.

• Annual reviews with quarterly check-ins: One company might conduct formal annual performance reviews where employees are assessed against their goals for the year. To complement this, they might have quarterly check-ins to discuss progress, address challenges, and adjust objectives as needed.

• Continuous feedback model: Another company might adopt a continuous feedback model where managers provide regular, informal feedback after projects are completed or during one-on-one meetings. This approach keeps the conversation about performance ongoing and can reduce the pressure of formal review meetings.

• 360-degree feedback: Another company might use a 360-degree feedback process where employees receive performance feedback from their manager, peers, and sometimes even clients. This approach provides a well-rounded view of the employee's performance.

It's important to note that there’s no one-size-fits-all solution to performance reviews. The best performance review process for your company depends on your specific goals, culture, and the needs of your employee. Some companies choose to use all of these approaches together to create a very comprehensive performance review process. At the end of the day, though, it’s up to you to choose what will work best for your business. 

How Justworks Can Help

Are you ready to implement a performance review process at your company? If you’re looking for a helping hand in balancing operations with employee management, Justworks has your back. Not only can Justworks PEO help you streamline payroll, benefits admin, and compliance, but we can also connect you with experienced HR Consultants who’ve seen a performance review or two (or three, or four). Get started with Justworks today!