What is an employee performance review?

A performance evaluation is an official and controlled assessment procedure that falls under the scope of HR strategy. This is where managers, along with other significant parties, evaluate an employee's work performance. The aim is to recognize the employee’s strengths and weaknesses, provide constructive feedback for skill enhancement in the future, and help with goal setting.

No matter which approach you select for performance assessments, a well-planned and executed appraisal increases employee engagement and establishes the foundation for creating a culture of feedback and continuous development in your organization.

Types of performance reviews

Weekly or fortnightly performance evaluation

These reviews typically do not require gathering vast amounts of data or setting a goal. They are mainly to ensure a particular project is on track every week, especially fast-moving and time-sensitive ones.

Monthly performance appraisals

Monthly appraisals are useful for businesses that recently onboarded new hires or those with employees on short-term contracts. They can evaluate actual performance against the job description or goals that were set out. This may help ensure employees are on track and organizational goals are met.

Quarterly performance evaluations

Companies may divide their business years into quarters such as Q1, Q2, Q3, and Q4. Each quarter can have set goals and budgets. Assessing performance on a quarterly basis is efficient as this amount of time is generally sufficient for an employee to achieve their targets and hone their skills. Employee progress reports for the quarter can also be generated using weekly and monthly reviews.

Annual performance review

The traditional annual performance reviews are increasingly being replaced with the types of reviews outlined above. This is because annual reviews tend to become overwhelming with too much information and they may not be a fair evaluation of an employee’s efforts. A year may be a long time for an employee to go without receiving any feedback. That being said, collecting and compiling employee performance reports over the course of the year into one 12-month performance report can be useful to employers.

Why are performance reviews important?

Performance reviews not only offer long-term positive outcomes but also offer immediate benefits in that employees receive an overview of their progress and can evaluate their strengths and weaknesses. Online and remote employee reviews are also becoming increasingly common. Here are specific ways performance reviews are important:

1. Aligning individual employee roles to the organization’s goals
   Performance reviews are a good opportunity to ensure all employees understand the organization’s vision and goals, and how they can contribute to the bigger picture. This is important because one individual’s performance can drive the overall organization’s performance.
2. A clear understanding of job responsibilities
   When employees and their supervisors have a clear understanding of their job roles and duties, they feel empowered to make decisions that can contribute positively to the organization. Each employee can be accountable for their own responsibilities and any ambiguities in the workplace are eliminated.
3. Regular feedback about performance
   Regular feedback encourages open and all-around communication in the workplace. Employees can identify their strengths and weaknesses and can get a better understanding of what is expected of them.
4. Career development
   Performance reviews can also present the opportunity to set objectives to further develop an employee’s career. Any additional training or mentoring needs can be identified and HR can set out succession plans accordingly.
5. Rewards for good performance
   Performance management can offer rewards that go beyond compensation, such as time off, additional benefits, and bonuses. For employees, the prospect of an “exceeds expectations” performance appraisal is an incentive to go above and beyond as they may open doors to career advancements.

How to carry out a performance review

An employee-centric approach to performance evaluations can significantly influence not only the growth of your employees but also the dynamics between managers and their teams. Therefore, it is crucial for managers to devise a solid performance evaluation and also to focus on how they communicate these evaluations. The manner in which a performance review is conveyed is key to conducting a positive, affirming, and successful evaluation process.

1. Set expectations early on
   At the beginning of an employee's tenure with a company, it is important for managers to discuss the details of the review process, including expectations. This information can be included in the employee handbook as well. By communicating expectations early on, managers establish key job functions and competencies of the role so employees can plan how they can best perform. The information provided during performance reviews should be consistent with these expectations, using familiar language and terminology. This approach helps to prevent any possible confusion or surprises for either party.
2. Don’t make it personal
   Try to focus feedback on the actions and behaviour of the individual and not on their character. When composing a performance evaluation, it can be helpful to review the issues at hand and ensure that they pertain specifically to the actions of the employee, rather than their personal attributes. This can aid in regulating the information that will be discussed in the evaluation, ensuring that it is both relevant and appropriate for the purpose of carrying out a performance review.
3. Be specific with your feedback and offer guidance
   The review can be task-oriented, concise, and specific. If managers' comments are general, employees may not understand what they need to improve or how they can make progress. Being indirect in your communication can cause confusion and ambiguity about expectations. This is why managers should try to be clear about what is expected of employees, what they did that contributed to achieving organizational goals, and what they can do to improve areas of weakness. Offering guidance can help employees understand how they can improve their performance.
4. Follow up
   Following up after reviews may be important as it ensures progress is being monitored. Managers and employees can receive a copy of the review, which could be used as a reference for future actions. Reviews can be an ongoing topic of discussion, whether they are scheduled monthly, quarterly, or yearly.

What is a performance review template?

A template for performance reviews is a tool that human resource professionals and managers can use to formally document observations of their teams. This tool enables managers to objectively evaluate the performance of their employees against pre-determined metrics. Templates can guide managers through the review process, identify specific points to address, and also provide documentation that can be used to support promotions for top performers. Here are some examples of performance review templates:

1. Simple performance review templates: This includes basic features used during reviews, such as a list of the employee’s qualities and skills and a rating system that ranges from poor to excellent.
2. G.O.O.D performance review template: This stands for goals, obstacles, opportunities, and decisions. These can be used as a guiding source for conversations with your employees when assessing their performance and experience.
3. Quarterly performance review template: This template is generally used to lay out the areas of conversations during quarterly performance reviews. For instance, an employee may highlight their agenda to go over their plans to improve productivity levels.
4. Mid-year performance review template: This template is helpful for identifying areas that need adjustments or change of plans. For example, after evaluating the turnaround time for a certain project, adjustments can be determined that will decrease turnaround time and increase efficiency.

Performance review comments to avoid

To ensure effective performance evaluations, employees and their managers would benefit from being prepared to engage in a joint discussion and self-assessment. It is, however, the responsibility of the manager to conduct a polite and fruitful dialogue. Here are a few examples of what you can steer clear of to maintain a constructive atmosphere during the evaluation process:

• Criticizing without providing examples
  When you want to help an employee improve their work, it is important to provide specific examples and suggestions for improvement. This can be more effective than offering general criticism, which can come across as negative and leave the employee feeling defensive. For example, instead of simply telling an employee that you do not like the quality of their work, try giving them more constructive feedback, like saying “I think your work could be better if you focused on [specific action or responsibility]." This way, you're providing clear guidance on what needs to be improved, while also offering a potential solution.
• Comparison
  Evaluations are not a forum for ranking employees or creating unnecessary competition. When evaluating an employee's performance, try to focus solely on their achievements and performance. Comparing the efforts of one employee with another may make them feel undervalued and demotivated. This can also create an environment where your team is against each other and there is no trust and cohesiveness, which can lead to lower productivity levels.
• Insincere or false praise
  While it’s beneficial to have something positive to mention in every performance review, it is best to avoid giving insincere praise. By doing so, you could give employees a false impression of their performance, leading them to believe they are doing better than they actually are, which can prevent them from improving. For instance, praising an employee for their time-management skills when their work does not meet the agreed-upon objectives can be counterproductive. It may be better to acknowledge their punctuality while also providing constructive feedback on their work timelines to help them meet your expectations on future projects.
• Speculation and making promises you are uncertain of
  Consider avoiding speculation such as getting employees’ hopes up about promotions that may not be possible. This could lead to eventual disappointment and a sense of betrayal. If an employee inquires about potential pay raises, it is best to be transparent and inform them of the actual situation, such as the company's budget being under review, for instance.
• Repetitive comments
  It may be useful to repeat certain things, but if you find yourself giving the same advice in every performance evaluation, it might be helpful to change things up. Perhaps the message isn't being communicated clearly or needs further discussion. If managers and employees keep notes of what is discussed in performance reviews, it may be easier to build upon the advice and goals from each meeting, rather than continually repeating the same information.
• Not giving enough time to the review
  Managers and employees can prioritize performance reviews, to help ensure that their goals are aligned with the company's objectives. Managers can also provide valuable insights for improvement. When evaluations are given importance, they can sometimes benefit the entire company. This is why managers should consider giving ample time to each employee’s review and go over every discussion point in-depth rather than skimming through it.

What is the best approach for performance reviews?

There is no one-size-fits-all approach when it comes to which performance review tool you use. These programs can differ in practices, HR policies, tools, and techniques used. For instance, some programs may involve grading systems, while others may rely on question-and-response formats, and others may be more free-form. Your company culture, values, goals, and purpose will determine the unique nature of your performance management system. However, the common factor is that an employee performance review process aims to enhance the overall organizational performance while supporting the productivity, development, well-being, and performance of its employees.

Frequently asked questions

What are the 5 levels of performance review?

The 5 levels of performance reviews are:

1. Define your goals
2. Communicate effectively
3. Align ratings with performance
4. Alight ratings with people
5. Monitor and adjust

What is an example of a good employee performance review?

A good review involves managers providing balanced feedback that highlights both strengths and areas of improvement. The communication between the manager and employee can be interactive and two-way, meaning employees should have the opportunity to ask questions, share their perspectives, and discuss their career trajectories.

What is an example of a positive performance review?

For instance, phrases about an employee’s quality of work, such as: “your consistency in delivering quality work has contributed significantly to our project’s success” or “your attention to detail is clearly reflected in your work.” 

Are you looking to effectively carry out your employees’ performance reviews? You can benefit from ADP’s Talent Management Solutions by getting help with performance management, learning & development, succession planning, and much more!

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Talk to us about your performance review goals, and we’ll walk you through our talent management solutions — including how companies like yours use them. Call 866-622-8153 or request a demo to get started.

This guide is intended to be used as a starting point in analyzing performance reviews and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services.