5 tips for effective employee reviews and evaluations

Put yourself in one of your employee’s shoes after you’ve conducted a performance review. How would you rate your handling of the review process, start to finish? Were your employee evaluations truly thorough, helpful, and insightful?

Yes, effective employee evaluations require goal setting and digging into successes and missteps from the past year. But to be a truly high-performing organization, performance reviews need to be about looking forward as well as backward within the context of the overall business strategy. It’s time to update our thinking so people – not just businesses – benefit from the process.

The very best performance evaluations create a holistic experience for your employees that ultimately leads to more productive people and more profitable businesses. It’s about combining coaching, feedback, SMART goals, learning and career development, and compensation. Each one of these talent management elements must come into play to achieve holistic and effective employee evaluations that ultimately impact the business for the better.

Here are five important things to keep in mind as you rethink your framework for more effective performance reviews:

1. Create an always-on, informal process.
   Not everything has to be about using a tool or a system. Impromptu personal conversations can be the wellspring of all sorts of new ideas and deeper insights into the daily challenges and pain points of your people. It’s worth taking the time for lunch with direct reports and simply asking, “How’s it going?” Having an always-on process that mixes the formal with the informal employee evaluations is at the heart of creating a more holistic and effective employee review experience because people are treated like people. Informal conversations also provide a chance to offer coaching and feedback in a lower-stress situation.
2. Remember the key principles of feedback.
   According to behavioral scientists, feedback should be given mostly in the form of praise and should not include constructive criticism. Think in terms of constructive dialogue instead. Criticism points out something that’s wrong, whereas dialogue is about brainstorming and finding solutions. Dialogue opens the door for a productive two-way conversation on even terms. Along these lines, put the positive-negative-positive sandwich in the past, too. People long ago learned to see through it and tend only to focus on the negative.
3. Managers need coaching, too.
   Being a boss doesn’t automatically make someone skilled at conducting performance assessments. Managers must learn how to sync every individual performance goal with larger business goals and help people focus on what is important to the organization. Managers often need help connecting those dots. Managers also might need direction to ensure that goals set out for their people are realistic but also interesting enough for people to want to pursue, lest goals feel like mundane boxes that need ticking.
4. Don’t de-link compensation. 
   If performance reviews aren’t correlated to compensation and retention, people question the purpose of conducting evaluations at all. Decoupling reviews from compensation is a trend that goes back at least 10 years and is based on the notion that reviews create a culture of fear. However, performance management and compensation should be tied together if the aim is to help people develop and achieve individual goals that ladder directly to larger business objectives because employees feel confident that they will be rewarded if their work performance meets or exceeds expectations. Just remember, however, that compensation needn’t always be financial. Other rewards for strong performers can include more paid time off, training opportunities, and awards.
5. Address business-level challenges head-on.
   Financial pressures and belt tightening can put managers – and the entire employee review process – in a tough spot, particularly if cash is short for boosting high performers’ compensation. That makes clear and consistent communication critical. Motivating your employees to buy into the broader purpose of your organization and its vision, strategy, and goals is essential in these moments, and there are ways to achieve this and still preserve an effective performance review process.