Employee performance evaluations are an important aspect of employee improvement. They provide the time and space for managers and employees to sit down and identify growth opportunities. Additionally, performance reviews can provide managers with insight into how the employee feels in their current position and their career goals.

In this article, you'll learn what employee performance evaluations are and what they should include. Keep reading to learn how to conduct a great performance review.

What Is an Employee Performance Evaluation?

An employee performance evaluation evaluates an employee's work throughout a specified period of time. Employee performance evaluations, or performance reviews, are reviews planned by a supervisor. During the evaluation process, the supervisor and the employee discuss whether set goals were met during the established time period.

Performance evaluations are important for both employees and managers. For employees, it helps ensure they're accomplishing performance goals and contributing to the team. For supervisors, employee performance reviews help create an honest relationship with their employees. All in all, performance reviews allow both employees and supervisors to communicate openly about overall performance.

Although topics of discussions vary depending on industry, most performance reviews address:

  • Career development
  • Set goals
  • Employee engagement challenges
  • Understanding organizational goals and messages from key leadership
  • Recognizing employee's strengths
  • Positive and negative feedback

Why Are Employee Performance Evaluations Important?

Employee performance evaluations provide employees with documentation of past performances. They inform employees of their successes while also offering constructive feedback, helping them with their career development. Additionally, they help make sure employees are recognized for their hard work and given opportunities to advance their careers.

Performance evaluations are also a wonderful opportunity for employees to communicate how they feel. A good performance review should be a conversation between the employee and the supervisor. As a manager, this means asking the employee for feedback and making sure you're listening to what they're saying.

Additionally, performance reviews allow you to recognize what great things your employee has done. Since many companies set quarterly goals for new hires during onboarding, the performance review is a wonderful opportunity to highlight what the employee has worked on.

A performance review also allows you to bring up any shortcomings an employee might have. When giving constructive criticism, though, it's important to be specific about the problem and focus on the situation instead of the individual. Ensuring that the employee understands the context behind the issue can help them recognize the impact their actions have on the business. Being specific about the feedback and offering solutions will make changes easier to adopt for the employee.

Negative feedback can be difficult to deliver, but it can also be helpful in understanding why they're struggling. This is the perfect time and space for bringing up inefficiencies you've noticed and allowing the employee to tell you why they're struggling. Is your employee suddenly having difficulty achieving goals? Maybe they're feeling stressed and having difficulty prioritizing tasks. Do you notice the employee is logging less time than they used to? When you open the door for communication, you might learn of possible life factors impacting their ability to work.

Who Conducts Employee Performance Evaluations?

Employee performance reviews are typically conducted by managers. Generally, this is a two-way conversation between an employee and their manager. It's best when a manager conducts the employee performance evaluation because they can address job-specific details and truly assess the employee's quality of work.

How to Do an Employee Performance Evaluation

Before you prepare to do employee performance evaluations, it's important to keep in mind that they should be future-focused. No one can change the past; if an employee is only hearing what they could have done better, it can become a negative experience.

The following sections will explain how to prepare a performance review and evaluate employees. You'll also learn how to set clear goals for the employee moving forward and how to continue the conversation moving forward.

Prepare the Evaluation Before the Meeting

Evaluations should be objective and conducted on a regular basis. Using a standard evaluation form can help create consistency when delivering an evaluation. It should be specific to the job at hand, focusing on specific tasks that are essential to the position.

Although it might be challenging to limit topics in the review, it can help make the performance evaluation more focused and meaningful. A concise performance review gets to the point, ensuring that the most important topics are discussed.

Evaluate Key Performance Standards

As mentioned, it's important to be objective when conducting an employee performance review. Using standard performance measures and metrics can simplify the evaluation process. Furthermore, these metrics can be helpful for your employee to understand where they stand and why.

Job descriptions can be helpful to use when identifying key performance standards because they outline specific tasks the employee should accomplish in their position. However, a job description alone can't tackle the measurement aspect of the evaluation.

Because it's so important to be objective when conducting performance reviews, standard performance measures should be used. The benefit of using standard performance measures is consistency. This allows performance reviews to be more accurate and fair to all employees. Standard measurement methods include:

  • Graphic rating scale: This method is best for production-oriented work, such as the food and beverage industry. This rating scale ranges from 1 to 5.
  • Management by objective: This method begins with employee goals and then the manager lists resources to achieve those goals. Employees and managers frequently meet to discuss the employee's progress and see if they need additional resources to meet their goals.
  • Forced ranking of employees: This measurement method places employees against their peers. Top performers account for nearly 20% of the workforce, average employees make up 70%, and the lowest-achieving employees account for 10%.

Remaining objective and problem-focused instead of harping on an individual's shortcomings is essential to a successful performance review. Yet, it can be difficult to execute when you notice issues with attitude. If an employee has a bad attitude, though, avoid describing the attitude. Instead of focusing on the subjective aspect, be objective and respond to the behavioral aspect.

For example, if a server has a bad attitude when short-staffed, the performance review could address the impact of their behavior: "When short-staffed, this employee doesn't help with the workload. This behavior results in hosts having to deliver food and handle tables. As a result, customers have sat themselves, further compromising the workflow at the restaurant and negatively impacting other team members."

Set Clear Goals

Next, it's important to set clear goals for the employee moving forward. How can anyone be expected to meet specific tasks if they've never been asked to? Setting goals with a clear direction helps increase alignment between an employee and their team.

Let's suppose a supervisor and receptionist have discussed improving efficiencies. The supervisor can highlight the importance of being strategic when working to make fewer mistakes. The goal the supervisor can set is to achieve an average of 90% customer satisfaction over the course of a year.

Establish How Performance Will Be Tracked

You will then need to establish how the performance will be tracked. If you choose to use an evaluation form, share it with the employee. Sharing the performance review format ensures that the employee is not surprised by any aspect of the review. Additionally, it helps the employee understand how they are being evaluated.

Depending on your organization, you may need to include a performance rating. Some businesses require a performance rating that has a five-level rating scale. Performance appraisal ratings may include:

  • Exceptional
  • Exceeded Expectations
  • Fully Achieved Expectations
  • Some Expectations Met
  • Expectations Not Met

One study found that 91% of companies would like to tie performance to pay. Many organizations choose to use the rating scale listed above as a method to determine pay raises.

However, this method is not ideal for every industry. Since every industry has its own needs, experts recommend following a goal-based methodology paired with some metrics. This system doesn't just focus on quantifiable data. Instead, it takes into account other contributions an employee makes. If you choose to take a combined approach to employee evaluations, consider including these metrics:

  • Quality: Employees should deliver quality work. Consider using a percentage of errors produced or product defects to assess work quality.
  • Effectiveness: This evaluates the employee's ability to solve problems. There can be many ways to assess effectiveness, including correctly prioritizing work, meeting deadlines, and consistently reaching goals.
  • Improvement: Assess the employee's ongoing skills development by rating skills prior to a development course and then afterward.

Ask Questions to Understand the Employee's Career Development Goals

As mentioned, employee performance reviews should be a two-way conversation. Typically, you should aim for a review in which you and the employee talk equally. After discussing ways to improve their workflow and highlighting positive aspects of the employee's performance, it's important to keep the conversation motivational.

Asking the employee questions regarding their career development goals and for constructive feedback about their time on your team can help foster communication.

Potential questions could include:

  • What skills do you want to develop this year?
  • Would writing a self-evaluation in the future be helpful?
  • Would you prefer to receive feedback more regularly?
  • How can I be a better manager for you?
  • What direction would you like to develop your career?

Clarify When Periodic Feedback Will Be Given

For some, increasing how often performance reviews occur might be ideal, while for others, it can take convincing. Talk to the employee to understand how often they would like to discuss their job performance. Although finding time can be difficult, more frequent check-ins can be beneficial. Ultimately, it can help managers to lead more effectively and for individual employees to feel heard.

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Notice to the Reader

The content within this article is meant to be used as general guidelines for conducting performance reviews and may not apply to your specific situation. Always consult with a human resource professional to ensure you're conducting employee performance reviews properly.