There’s a lot of debate in the HR world about what performance management process employers should use and how it fits into overall HR strategy. The annual performance review, once the standard, has fallen out of favor with some employers. They’ve opted instead for more frequent feedback about performance, sometimes involving the employee’s peers in addition to their supervisor. Others, to be sure, still prefer the traditional annual performance review.
The right process to pick depends in large part on what you want to accomplish with performance management and what you’re willing to invest in it. Here are some principles to keep in mind when deciding on your policy and performing assessments:
- Performance reviews are often stressful and difficult because the employees don’t know how they’ll be evaluated and they’re worried they’ll be surprised with a bad review. But reviews, however often they’re done, shouldn’t be a surprise. If you give employees regular feedback on their performance and address poor performance when it happens, then the review becomes more of a reminder and summary of what employees are doing well and where they have opportunities to improve.
- Setting clear performance expectations and holding employees accountable to them improves efficiency and productivity. It also improves morale. Conversations with an underperforming employee may be challenging, but allowing poor performance to continue unabated can cause widespread frustration and resentment from coworkers whose work is affected by it. Ignoring poor performance only compounds the problem.
- Employees are more likely to take ownership over their performance goals if they have a role in defining those goals.
- Connecting performance measures to company objectives and values can increase employees' sense of purpose and engagement by drawing a direct correlation between their individual work and performance and your collective success as a company.
- It’s helpful to structure performance evaluation meetings and conversations around the specific expectations set in the job description to ensure that the discussion is directly applicable to that employee's particular job duties.
- Documenting performance evaluations can help you justify pay increases, decreases, or other employment decisions like termination that could be challenged as discriminatory. It’s safest to terminate an employee when you have documentation that justifies the legitimate business reasons for the termination.