How to run a performance review in your company

Leaders and HR professionals know that the heart of a successful organization beats to the rhythm of its employees’ development. Yet performance reviews are often seen as mere administrative procedures or, worse, as punitive tools.

That picture not only demotivates the team but also wastes valuable growth potential.

The real question, then, is not just how to run a performance review, but how to turn the process into a catalyst for employees’ personal and professional development and for strengthening the organizational culture.

With that in mind, this article explains how to run a performance review, what the role of HR and other leaders is in the process and how technology, including artificial intelligence, can help.

If you prefer a complete resource, download the free e-book Complete guide to performance reviewsopens in a new tab (in Portuguese).

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How to run a performance review for an employee

To build an effective process and run a correct review of employees’ performance, it is important that leaders and HR professionals follow a structured, detailed step-by-step.

Here is the guide:

Step 1: Set clear, relevant objectives

Before starting any performance review in the company, it is essential to set clear, relevant objectives for each role in the organization. These objectives should be specific, measurable, achievable, relevant and time-bound (SMART).

They should also be aligned with the company’s larger objectives. That ensures that both employees and managers know what is expected and how performance will be measured.

Step 2: Develop evaluation criteria

Moving to the practical part, start by defining evaluation criteria that are fair and objective for all employees. They can include quality of work, technical skill, collaboration and teamwork, initiative, reliability and the ability to meet deadlines.

These criteria should be tailored to each role and clearly communicated to employees well before the review process. With the criteria well defined, the next step is to define the questions.

Step 3: Define the performance review questions

When writing questions for a performance review, it is important to make sure they are clear, objective and aligned with the criteria you want to assess.

Here are some questions that can serve as a starting point:

• To what extent do you maintain a high standard of accuracy in your deliverables? 0 = Never, 5 = Always
• How often do you exceed quality expectations in your tasks? 0 = Never, 5 = Always
• How do you manage multiple tasks to maximize efficiency at work? 0 = Very ineffective, 5 = Very effective
• How often do you seek updates and training on technology developments relevant to your area? 0 = Never, 5 = Always
• How often do you actively collaborate with others to reach common goals? 0 = Never, 5 = Always
• How often do you take initiatives that improve processes or productivity? 0 = Never, 5 = Always
• How would you rate your ability to resolve conflicts through effective communication? 0 = Ineffective, 5 = Very effective

Step 4: Choose the evaluation tools

Decide on the evaluation tools and methods you will use, such as 360-degree reviews, self-assessment, manager review, among others.

Evaluation forms, specialized software and interviews can be used to collect feedback from several sources, giving a more complete view of employees’ performance.

Step 5: Run the performance review

At the center of the process is the review itself. This is where the employee answers the questions prepared earlier.

Usually, HR opens a window (such as one week, for example) for the employee to respond. However, because of people’s routines, employees commonly struggle to respond or even forget they need to do the review.

To deal with that, the ideal is to have software that supports HR with reminders, for example, so people complete the review.

Step 6: Calibration with HR

Calibration aims to ensure that the evaluation criteria are applied consistently by all reviewers, reducing subjectivity and personal bias. This is especially important in large organizations, where several managers assess employee performance.

Managers and, often, HR professionals meet to discuss the reviews. During those meetings, each review is examined to make sure the standards are applied fairly and uniformly.

If discrepancies or inconsistencies are found during calibration, reviews can be adjusted to reflect more accurately employees’ performance against the company’s standards.

Step 7: Feedback session with the employee

The process ends with the feedback session. This is the moment when the employee receives detailed information about their performance during the review period, and it is crucial for the employee’s professional development and for strengthening their relationship with the organization.

Feedback should be given in a private, calm environment, where the employee feels safe to listen to and discuss their performance.

The manager should communicate clearly, focusing on facts and specific examples and avoiding generalized criticism. It is important to balance positive and constructive feedback.

7 tips for running a performance review in your company

To run a review focused on helping the employee improve, you need to use the results to develop strategies, give feedback constantly, talk about points for improvement, choose the right moment, understand the benefits, know the main models and select the criteria.

Here are 7 tips to help you build the process:

1. Use the results to develop management strategies

The performance review and the Individual Development Plan (IDP) are linked and form a continuous cycle of evaluation, feedback and development, essential for employees’ professional growth and for the organization’s success.

Based on the review results, learning and development objectives are defined in the IDP. These objectives are tailored to align the employee’s individual needs with the organization’s strategic goals, which directs professional development.

2. Give feedback constantly

How does the performance review connect with feedback? Constant feedback plays a crucial role in employees’ personal and professional development: it is a continuous improvement tool and prepares people better for reviews.

Regular feedback lets employees quickly adjust their behaviors and work practices. By receiving real-time information on what they are doing well and what they can improve, they get the chance to make immediate changes, which can lead to performance improvements.

A constant flow of feedback also highlights the areas that need improvement and identifies development and training needs. That makes it easier to create individual development plans aligned with the organization’s goals and the employee’s career aspirations.

3. Talk about performance improvement

If the employee’s performance needs adjusting, the focus should always be on solving the problem to get better results.

To do that, avoid hostility and aggressive attitudes. A frank conversation helps much more to adjust an employee’s attitude without undermining their motivation.

Interviews are an interesting format for this contact. They let you follow the employee’s progress more closely, implementing new strategies and reversing measures that prove ineffective.

It is important that the manager takes on the posture of a leader, running the process without authoritarianism, valuing the employee’s positive contribution and respectfully adjusting the points to improve.

That avoids the costly process of turnover and creates a healthier, more productive environment in the company.

4. Choose the right moment for the review

There needs to be an adequate frequency for monitoring and analyzing the performance of a company’s professionals.

In that context, one-on-one meetings tend to be quite effective in supporting that recurrence, since the performance review is a continuous process.

However, this is not a rule. The review can happen whenever the manager judges that an intervention is needed to improve the performance of an employee or a work group.

So the process can be done weekly, according to the employee’s role and the progress of the company’s processes.

5. Understand the benefits of the performance review

The performance review lets the manager get to know employees more deeply, their potential and their limitations.

That periodic contact brings the parties closer and makes it possible to create improvement strategies, both for the employee’s performance and for the manager’s.

That is why an exclusively bureaucratic approach, based only on filling in forms, is ineffective.

Investing in a high-quality review benefits people management, improves employees’ performance and, as a result, boosts the company’s results.

For the manager

Conducting a performance review well improves the manager’s interface with employees and is an opportunity to improve communication with the team. It is also the starting point for supporting the development of the people they lead, which helps achieve the team’s desired results.

For the employee

The performance review process is a concrete opportunity for professional improvement, because it encourages reflection on one’s own practices and attitudes and promotes self-knowledge.

For the company

The performance review delivers specific indicators that guide reassignments, promotions or dismissals.

A central aspect of the manager’s role is to foster employees’ development. That is why performance management should be guided by this premise: work to establish goals and development plans.

So, even when objective data needs to be gathered, dialogue should run through the whole review process, regardless of the model adopted.

6. Know the main performance review models

To get the most out of performance management, it is essential to understand the resources available to run an effective review that fits the company’s organizational culture. There are some models used in the market today that prove efficient.

Here are the main ones.

1. Competency-based review

This is the most common model today. It aims to measure professionals’ skills, attitudes and knowledge in relation to a given role or task.

2. Objectives-based review

This type of review looks at the employee in a more pragmatic way.

Goals are set in advance between manager and employee and, at the end of the process, the achievement of those objectives is measured in the performance review.

3. Critical incident review

Here, a record is kept of events involving the worker: occasions when they behaved badly, causing trouble, or did well in some work situation.

It is the record of the events considered critical over a one-year period.

4. Cost-based review

This model aims to estimate the cost-benefit ratio of the employee, putting a value on their output against the cost of keeping them in the company.

5. Forced distribution review

Under this criterion, the employee is assigned ratings such as “excellent,” “satisfactory,” “average,” “unsatisfactory” and “very unsatisfactory.”

From there, employees are categorized according to those ratings and can be promoted, kept or dismissed.

By knowing each type of performance review, you can identify which best meets your company’s needs and give more suitable, complete feedback to your employees.

7. Know the criteria the review considers

Now that you know the main models, it is important to understand the aspects the review takes into account before putting it into practice.

Only with the results of these criteria together can you understand each employee’s main strengths and weaknesses and chart the path forward.

The main criteria for a company’s performance review

Evaluation criteria are always a question. Here are the most commonly used:

1. Motivation

It is essential that HR and the team pay attention to what motivates the employee and makes them more engaged in projects.

That way, you can find different solutions for each employee profile, depending on how they get motivated in the work environment.

2. Teamwork

It is important to measure the employee’s ability to work in a team. After all, being very good at your own work when alone is not enough to work in an organization.

That is why you should assess each person’s soft skills:

• Can they handle conflict?
• Do they communicate well with colleagues?
• Do they know how to delegate tasks and prioritize their own?
• Is their profile that of a leader or a follower?

3. Results

Analyzing the results the employee has brought to the company is another aspect of great importance.

So pay attention to meeting deadlines, contributions made inside and outside the area and goal achievement to measure performance.

4. Potential

Finally, potential should be assessed according to the employee’s objectives and skills. What can be done so that this person’s potential is explored and turns into good results?

It is essential to understand that the performance review process also considers qualitative aspects, that is, those that cannot be measured in numbers.

Potential is one of them. It is strongly related to the employee’s motivation and engagement with the company and expresses their capabilities that are not yet developed.

How to run an individual performance review

You can run an individual performance review by tracking the employee’s performance indicators, which quantify the analysis and allow more precise, data-driven insights. Some of the most used by companies are: attendance, productivity, job satisfaction and customer satisfaction indexes.

• Attendance index: assesses the employee’s absenteeism rate, to understand commitment and satisfaction with work. If there are many absences or late arrivals, you need to talk and check for problems.
• Productivity index: calculating individual and collective productivity is essential to check goal achievement and possible adjustments to processes or delivery deadlines. This index also helps identify whether there is a personal or professional problem with the employee causing a drop in productivity.
• Job satisfaction index: performance reviews are also based on the feedback given by the employee about the company, the role and the team. Ask for improvement suggestions and note their opinions.
• Customer satisfaction index: in areas that work directly with customers or suppliers, you can run a satisfaction survey and learn their opinion and feeling about service and the company. If there are many complaints, redefine processes and restructure the team.

How to track the performance review cycle?

A performance review pays off when the cycle is recorded from start to finish: criteria defined, answers collected, scores calibrated and a feedback session with a development plan followed up afterward. Without that trail, the result stays in a spreadsheet and the employee does not evolve.

In Stratwsopens in a new tab, the strategic and performance management platform created by Siteware, HR configures the evaluation form and cycle, runs calibration and tracks each employee’s IDP actions in one place, with deadline signaling.

Visit our website and explore the Performance and Development Management solution in Stratwsopens in a new tab.