As a business grows, so too does the importance of implementing an effective performance review process.

Thoroughly planning how to conduct performance reviews is crucial. You don’t merely want management to grade employees once a year. The annual review discourages employees and typically doesn’t offer much value to a business.

Instead, performance management should be an ongoing process that involves open communication between the employee and management. You’ll take full advantage of a review if both parties involved have the opportunity to share feedback. Performance management shouldn’t merely serve to evaluate employees; it should also help them develop their skills and grow in their roles.

If you’re a small business owner or HR professional beginning to develop a 360 evaluation or similar review process, it helps to keep certain essential points in mind.

The following tips will help you design a process that yields genuine benefits for everyone.

Set expectations and goals 

Before you even begin to review an employee’s performance, it’s very important that all employees understand what is expected of them. That’s why it’s necessary to establish clear objectives and goals.

Both you and your employee will get more from a performance review if all parties thoroughly understand how their performance will be assessed. Identify measurable metrics you’ll use to determine whether they’ve met your expectations. Let them know what those metrics are, so they can focus on working towards the appropriate goals.

Determine how you will track performance regularly

A key reason businesses are abandoning the annual performance review is simply the fact that it can be very time-consuming. Once a year, managers are tasked with gathering information about an employee’s performance and filling out numerous forms. This is a waste of their time, and it doesn’t give employees sufficient opportunities to grow throughout the year.

You’ll get better results if you design a process that involves regular dialogue all year long. This makes it easier to gather information about employee performance and address issues from the outset. It also provides employees with the resources they need to make improvements when necessary.

That said, although tracking performance should occur throughout the year, the actual process still needs to be organised. That’s why it helps to use HR software and tools designed specifically for this purpose. Such resources allow management to constantly monitor employee growth in a standardised way that employees can understand.

Set objectives for the review process

Again, you already know it’s important to clearly define what objectives you wish an employee to accomplish in their role. However, it’s also necessary to set objectives for the review process itself. Workers want to know what the purpose of a performance review is, whether it’s an annual process or a weekly one.

Will the performance review be used to determine whether an employee is being properly compensated? Will it be used to establish whether a staff member is a good fit for their current role? Maybe you’ll even use the performance review process to solicit feedback from your employees about management’s effectiveness. When you know what you hope to accomplish with a performance review, it becomes much easier to create relevant review forms.

Make adjustments based on employee roles

When businesses grow, the responsibilities of employees throughout the organisation can begin to vary substantially.

Thus, the way in which an employee’s performance is evaluated should be tailored to their specific role. Although you may have to invest some time into adjusting the performance review process for each position, the advantages of doing so are well worth the time spent on this task. Employees are more likely to grow if the way you assess their performance is designed specifically to identify their particular strengths and weaknesses.

Turn performance review into a discussion

Again, the specific nature of the performance review process will vary depending on your goals and needs. Some managers may want to meet with employees on a weekly basis. Others may find a monthly meeting is sufficient.

Either way, when you do meet with an employee, remind them what the goals of the process are, and give them the opportunity to discuss your thoughts. You don’t want to simply tell employees where they’ve succeeded and where they need work. They also deserve the chance to ask questions and share their own feedback.

It’s also important during a performance review to recognise an employee’s achievements. Doing so has been shown to boost engagement. As a result, both employee performance and retention will improve.

An effective performance review process is necessary for the success of any business. That said, not all performance reviews are created equal. Keep these points in mind, and you’ll be more likely to design a process that works for you and your employees.

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