Performance review season is underway, and with it comes the dread most managers and employees experience. Let’s face it—conducting effective performance reviews remains a challenge. And with the increase in remote and hybrid work, even more so. Managers who are stretched thin find them time-consuming, and employees on the brink of burnout view them as subjective, bureaucratic, and, at times, meaningless. Yet, pay and performance are often tied together, making the performance review conversation important.
Ideally, performance reviews are a tool designed to get the best out of employees. But just the opposite is true, and leaders are noticing. Recent Gallup research revealed that a shocking 2% of CHROs from Fortune 500 companies think their performance review system motivates workers. Employees agree with nearly two-thirds of them saying performance reviews are sometimes or always a waste of time, according to Betterworks’ 2023 State of Performance Enablement report.
Traditional performance reviews are increasingly outdated in the modern workplace. Let’s explore some ways organizations can make them more relevant and productive.
Set clear employee performance expectations
Setting employee expectations helps employees focus their efforts and improve productivity. Yet, many employees don’t have a clear idea of what is required of them. A 2023 Gallup survey shows that only 45% of younger workers clearly know what is expected of them. Performance expectations are also tied to employee engagement, which reached an 11-year low in early 2024, according to Gallup. While there are 12 components of employee engagement, the study suggests that clear expectations could be the most fundamental one.
Here are some tips to set and manage employee expectations:
- Start the conversation early: Be clear in job descriptions and interviews what is expected
- Make expectations measurable: Define clear metrics for your employees
- Keep expectations realistic: Set reasonable expectations to avoid burnout
- Collaborate with team members: Listen to your team and practice inclusive leadership
Require managers to provide real-time feedback
Receiving and acting on performance feedback is one of the most important ways to fuel employee motivation, growth and performance. In fact, Gallup data shows that 80% of employees who have received meaningful feedback in the past week are fully engaged. Yet, most employees receive feedback only once or twice a year. With business moving at breakneck speed, developmental feedback would be more effective if it was also delivered in real-time.
There are specific steps managers can take to deliver real-time feedback:
- Be direct and clear in your communication
- Focus on actions rather than personality
- Allow time for employees to ask questions
- Determine the right time and place to deliver feedback
- Use real-time feedback to inform end-of-year performance reviews
A real-time feedback mechanism provides actionable insights so you can pinpoint issues and address them immediately. Employees, particularly millennials and Gen-Z, also crave recognition for a job well done. When you deliver praise at the moment, it reinforces positive behavior and boosts morale.
Train managers to conduct performance reviews
Many managers are never trained in how to properly deliver feedback to employees. Instead, leaders should be trained on all aspects of the performance review process, including how to plan, document information, and deliver constructive feedback. Managers should also avoid the “recency effect,” a cognitive bias describing when performance is rated based on the most recent achievements. Instead, managers should base their review on an employee’s performance throughout the year. Other biases that can lead to unfair performance evaluations include the following:
- Leniency bias: When managers give inflated ratings to employees who are underperforming
- Gender bias: When managers focus more on women’s personalities than their accomplishments
- Proximity bias: When managers treat on-site employees more favorably
- Affinity bias: When managers favor employees who have similar interests or backgrounds
- Central tendency bias: When managers give everyone an average rating regardless of performance
While performance review training takes time, it has the potential to reduce bias, improve employee development and increase retention rates.
Implement upward performance reviews
A Harris Poll survey reports that over two-thirds of American workers have experienced a toxic boss, and 31% are currently working for one. Unfortunately, toxic bosses lead to high turnover. In the same survey, 66% of employees with toxic bosses vow to quit as soon as it’s financially feasible. For companies that want to cultivate effective managers, one of the best ways is to implement upward performance reviews. Most organizations are designed to deliver feedback from the top down. However, upward reviews allow subordinates the opportunity to evaluate the performance of their direct manager.
Upward feedback is important because it allows subordinates to develop meaningful relationships with their managers. Also, as managers climb the corporate ladder, they are generally less likely to receive constructive feedback.
Some of the other benefits include the following:
- Helps improve team morale
- Allows managers to receive constructive feedback
- Encourages leaders to lead with empathy
- Creates a more positive work environment
- Improves team collaboration and work performance
Ultimately, upward performance reviews give managers the ability to understand how they are perceived so they can become better leaders.
Performance reviews don’t have to be awkward or uncomfortable. To make them more productive, set clear objectives, implement real-time feedback and train managers to deliver and accept constructive criticism. Only then can you improve the process to drive value and generate better outcomes.