Performance Review: An Overview and Guide

A performance review is an assessment where managers meet with their employees to identify their strengths and challenges in different areas and discuss the company’s expectations. One of the best ways employees can grow in their careers is through feedback., and performance reviews offer a great opportunity to address expectations. An open discussion about an employee’s performance can lead to a culture of feedback. 

Discover how to conduct successful performance reviews, what the benefits are, and how to prepare.

What is a performance review?

A performance review refers to the formal process of evaluating how employees are doing at work. Its purpose is for employers to recognize the employee’s contributions and discuss areas that need improvement. It is a good opportunity to give and get feedback and discuss ways in which employees can set future goals. 

While performance reviews can be beneficial for both employers and employees, they typically take place once a year, although many companies are opting to review an employee's performance quarterly or even monthly. Some companies conduct probationary reviews, which can take place at the start of an employee’s position to see if the employee is a good fit, at the end of a predetermined amount of time to discuss areas that need improvement, or both. A less structured approach to a review is an informal check-in. These can be similar to traditional reviews but are less rigorously structured.

Benefits of a performance review

As an employer, conducting presents the opportunity to ensure all employees are aware of the company's vision and the expectations of their role in meeting this vision. An employee assessment can help a business succeed by addressing issues, including: 

• Employee productivity: Discuss how well the employee completes their work and how much they can contribute in a certain amount of time.

• Time management: Discuss whether the employee is using their time effectively.

• Teamwork: Review how well the employee collaborates with others to work toward the same goal. 

Performance reviews allow managers to discuss an employee’s strengths and challenges. They also allow you to use the information you learn to see if the employee needs more training and, if so, in which areas. 

Types of performance reviews

Some performance review approaches might work better for your company than others. Each approach has its pros and cons. Whichever method you choose, it’s important to take time to plan the review.

Annual vs. quarterly performance review schedules

This structured technique uses several methods to understand employees’ strengths and weaknesses, identify areas where a training program might be helpful, and discover how to align your employees with your company’s goals.

A quarterly review works similarly but occurs four times a year instead of once. This gives your employees more opportunities for direct feedback. Quarterly reviews are more of a check-in than the comprehensive appraisal you would give in an annual review. 

Self-assessment vs. peer reviews

A self-assessment review gives employees the opportunity to review their own performance, usually over a set amount of time. HR managers can decide to combine this with other assessment methods to obtain the information they need. Self-assessment allows employees a chance to share their input, feel part of the team, voice issues, and discuss plans for career advancement.

This type of review offers colleagues the opportunity to give feedback on an employee’s work performance. Because they work closely with the employee, peer reviews can be a way to gain a more comprehensive review of their performance. Peers complete reviews anonymously so colleagues can feel comfortable being honest in their comments.

Preparing for a performance review 

When conducting a performance review, it’s important that managers come prepared. Look over the employee’s last review and compare it with their current set of goals and accomplishments. Hold the review in a comfortable environment that makes it easy to have a conversation and encourages feedback. 

Other examples to help you prepare include:

• Ask for feedback on your performance technique: Talk to employees about your review process to find out what you are doing that works, what doesn’t work, and any advice on how you can improve. You can use this information to help improve your own performance and better motivate your team.

• Bring relevant materials: Make sure you collect any relevant information about the employee before beginning the review, such as a copy of the employee’s performance expectations, notes from past meetings with the employee, any employee self-evaluation documents, and performance feedback from other sources.

• Allow enough time for the performance review: Schedule the review for an uninterrupted time that is mutually convenient for you and your employee. Prior to the review, provide the employee with a copy of the performance appraisal so they can review it and prepare ahead of time.

Key elements of an effective performance review

A performance review is an opportunity for both the employee and the employer to see how each employee’s contributions lead to organizational growth. An effective performance review includes several key elements:

• Goal assessment: If an employee didn’t reach their goals, find out why. A performance review offers the opportunity to help employees grow without criticism. Offer actionable suggestions to help employees improve in areas they find challenging.

• Strengths and areas for improvement: Recognizing an employee’s accomplishments that go beyond their job description is vital. Discuss any of the employee’s weaknesses, but try to focus more on the positive aspects of their work.

• Feedback and support: One of the most important aspects of a performance review is making sure employees clearly and specifically understand their professional expectations. Be sure to communicate through regular feedback. 

Common challenges with employee reviews

While performance reviews have many benefits, some challenges, including bias and focusing too much on criticism, exist. When assessing an employee’s past performance, it can be an ideal time to discuss accomplishments, ways to improve, and future progress that can help meet the objectives of the company and the employee. At the same time, some of the challenges managers face that can affect performance reviews include:

• Bias in evaluations: This occurs in many ways, but one common type is recency bias, where the employee’s performance is assessed mainly on their most recent work. Some ways to avoid bias are to get feedback from multiple work sources and ensure all materials and questions are objective.

• Vague feedback: When you offer feedback on how to improve an employee’s performance, use actionable language. Offer clear, specific examples to illustrate what they’re doing well and areas in which they can improve.

• Balancing criticism and praise: One technique to help balance feedback during a performance review is known as “The Sandwich Method.” This involves starting with positive feedback, moving on to constructive criticism, and ending with additional positive feedback. Using this technique helps minimize the odds of focusing entirely on shortcomings and areas in need of improvement. 

Following up after a performance review

Have a conversation with your employee where you discuss the future by setting goals and ways to improve moving forward, then follow up. This includes making sure any resources, training, and other support are available. 

Connect with employees with frequent check-ins to review progress and provide opportunities to discuss any challenges that arise. Documenting the outcome of the review can be beneficial, as it provides a written record of the discussion, goals, and plans. This provides a reference for the next review and helps keep employees accountable. 

Tools and software for performance reviews

Software, tools, and platforms can help streamline the performance review process and help you use it more effectively. Choose software that works best for your review protocol, gives an accurate review of the employee’s performance, streamlines the process for the manager, and offers valuable information to employees. 

Some software programs can help with things like assigning goals, collecting and exporting data, and gathering useful statistics. Other programs may offer more advanced options, such as real-time updates on the employee’s progress and the integration of compensation, which can be useful for tracking employees’ paid overtime. 

Discover more about effective performance management on Coursera

A performance review includes more than just rating performance since the previous review. Managers can also use this opportunity to set goals, measure progress, and give feedback. Continue exploring dynamic leadership in the workplace with opportunities for ongoing education from industry leaders. 

For example, you could learn how to motivate staff and explore leadership theories with Macquarie University's Leading: Human Resource Management and Leadership Specialization. You can also learn more about the impact that performance management and professional feedback have on employees and employee relations with the HRCI Human Resource Associate Professional Certificate, a five-course series that can take you from beginner to job-ready.