Employee Performance Review: How To Conduct It & Examples

An employee performance review is a process where organizations evaluate an employee's job performance, set goals, and provide feedback to improve an employee’s effectiveness. 

Building the right team for your organization takes time, effort, and money. However, some businesses shortchange themselves by not supporting their new hires after onboarding. After all that investment in recruiting talent, failing to develop the people they already have is a missed opportunity. 

It’s not uncommon for companies to treat performance reviews as a yearly formality. They put a lot of effort into the review process and less effort into taking action based on the results. . And with a lack of ongoing coaching and feedback, the cycle repeats.

If you only evaluate employees through annual reviews, improving your team's effectiveness is difficult. Continuous feedback is the key to unlocking insights into your employees’ strengths and weaknesses. With the knowledge gained from regular employee performance reviews, you can create training and development initiatives that uplevel your talent. At the same time, you can make informed decisions about who to invest in and who may not be a good fit. 

In this guide, we’ll look at employee performance reviews: What they are, why they’re important, how to conduct them, and how you can enhance your review process with dedicated performance management tools.

What is an employee performance review?

Evaluation, feedback, and goal setting are the key components of an employee performance review. A review includes interviews, evaluating and comparing employee engagement and past performance against company objectives, assessing achievements, and examining areas that need improvement. This information can be used to create a development plan to address shortcomings and set future goals aligning with corporate objectives.

Reviews should take place as often as possible. Performance management software, like Rippling, can help teams increase review frequency and help HR departments and managers drill down and leverage all the available data, including absenteeism, performance changes, and general feedback. 

The responsibility for conducting employee performance reviews depends on the organization's size. In large companies, HR departments conduct reviews, often involving managers and direct supervisors. In smaller operations, the evaluation may be carried out by the employee’s immediate manager. 

Employers can ensure that employees understand the organization’s goals and individual expectations through employee reviews. The knowledge gleaned from employee evaluations provides a window into your workforce, allowing you to pivot to address problems that might not otherwise be visible and to build on employee successes. Managers and team leaders can leverage this knowledge to motivate team members, increase accountability, and determine appropriate training and career development paths.

For the employee, the constructive feedback of a performance review can improve morale through positive reinforcement and, at the same time, help them focus on areas that need improvement.

Types of employee reviews

There are several types of employee performance reviews that organizations can conduct. These reviews might be stand-alone or combined to give employers better insights into individual employees and the workforce. 

Self-assessment 

Self-assessments are an employee-driven review process. The employee evaluates their job performance, accomplishments, and the areas where they see room for improvement. It usually involves filling out a form or writing a report for a formal performance appraisal with their supervisor or manager. 

Manager performance reviews

A manager-conducted employee review is a structured evaluation process where managers assess the employee’s performance, provide feedback, and discuss goals and future development opportunities. The employee’s performance is evaluated against predefined criteria and objectives. A written employee evaluation follows the review and becomes part of the employee’s HR file. 

360-degree review

A 360-degree review is a comprehensive employee evaluation that pulls in feedback from multiple sources, including managers, peers, subordinates, and, in some cases, customers and clients. This type of review offers a broader performance evaluation than is usually found in traditional top-down or self assessments. With Rippling, 360-degree feedback can be incorporated into performance review cycles, giving employers a complete understanding of the employee’s strengths and weaknesses and their impact on the organization. The diverse perspectives offered in these reviews help reduce bias and result in a fairer, more constructive employee appraisal. 

Why are performance reviews important?

The importance of performance reviews can’t be understated. They provide a structured method of employee evaluation to identify strengths and weaknesses that impact your organization. By identifying these areas, you can reward excellence and offer employee feedback and a plan to tackle areas that require improvement. 

Some of the many benefits of a good performance management cycle include: 

Providing professional development and career growth opportunities

By identifying strengths and areas that can be improved, managers can better tailor individual solutions to their direct reports. They can discuss career goals, implement a skill development plan, and create a workplace that offers improvement opportunities and career advancement. This creates a positive work environment, boosting morale and motivation to grow, which impacts retention. 

Helping to identify and solve issues

Regular performance evaluations and feedback create a dialogue between managers and their teams. This dialogue is instrumental in identifying workplace issues and developing action plans to address areas needing improvement. 

Ensuring employees are aligned with the goals and expectations of the company

By connecting their achievements and ambitions to organizational success, employees can better understand how their performance directly affects the organization’s strategic goals. This creates a culture where employees are motivated to fulfill their individual goals while achieving the company's objectives.

How to perform an employee performance review

Employee performance reviews start with managers offering regular and informal constructive feedback to their team throughout the year. At the same time, the manager creates a summary of the employee’s overall performance, accomplishments, areas for improvement, and so on. In the case of a 360 review, the manager may include feedback from peers, subordinates, and other sources. This is followed by a face-to-face discussion of the above while including the employee’s feedback and future goals. After the meeting, the manager creates a plan to address any issues revealed in the process. 

There are three stages that managers should follow to ensure a successful employee performance review: 

How to prepare for a performance review 

It starts with the employee having been assigned goals and objectives and the manager soliciting feedback during the period leading up to the review. After gathering feedback and the results of assigned goals and other KPIs, the manager compares these with previous performance reviews to see where improvements were made and areas that still need to be addressed. After reviewing this information, a manager may request peer input for the report. Once the report is compiled, it’s ready to be discussed with the employee.

Managers should anticipate any questions the employee might have about its content. Having answers prepared in case the employee pushes back about a negative aspect of the review or has questions about wage increases, promotions, and training and development plans enables managers to feel confident and deliver the review successfully and clearly.

What to say during a performance review

You should start the performance review by reminding the employee of  the reasons for conducting performance reviews and how this will help them grow.

During the review, offer specific examples of the employee’s performance. This should include both areas of strength and areas requiring improvement. Note relevant impact or effects of the employee’s work. Ensure the dialogue is two-way by asking employees to share their perspectives and goals. Make sure to reference past actions and future growth opportunities.

At the end of the review, set clear goals and outline an action plan for the employee to meet them. It’s important to offer resources to help the employee along the way. You can also schedule follow-up meetings at this time. 

What to do after a performance review

If you haven’t done so already, create a clear plan with measurable objectives. Schedule follow-up meetings to track progress and provide regular feedback and support to help the employee achieve the stated goals. 

Best practices for performance reviews

You don’t want your employees to feel that performance reviews are adversarial in nature. It’s important to ensure that the process is seen as a positive experience that encourages employee development while aligning with your company’s goals. 

To get the most out of a performance review, follow these best practices:

• Conduct follow-ups: All the effort you put into your performance reviews will be for naught if you don’t schedule regular follow-ups to ensure that action is taken on the feedback and goals you covered during the evaluation. Regular follow-ups let you track employees’ progress, offer any support they may need, and show them that their development is important year-round, not just once a year.

• Be specific and objective: Being clear and to the point while providing actionable feedback helps the employee improve and grow. For areas that need improvement, specific examples help employees clearly see where they excel and where they need to improve. 

• Set clear goals and next steps: Avoid being vague about what you expect. After the review, set goals for the employee to achieve and explain how the company will support them. 

• Consider implementing performance review software: Performance management software like Rippling changes your review process from a single point in time to an always-on system that helps assign clear goals and enables you to track progress across the employee lifecycle. With tools like performance review templates, automated tasks like milestone reviews, and granular reports, you get everything to develop and retain top talent.

Examples of employee performance review phrases

The main elements of a performance review are areas of improvement, goals, and development plans. Here are some performance review example phrases to consider in each of the three areas: 

Enhance your employee performance review with Rippling

Rippling transforms employee performance reviews from an annual formality to an always-on solution that you can easily customize for individual employee needs. Rippling Performance Management is built on top of a single source of truth for employee data. It seamlessly connects performance management with other Rippling applications, like Recruiting, Benefits, and Payroll. Rippling makes it easy to track performance, set goals, define objectives and key results (OKRs), and identify performance trends.

Easily set up and sustain your performance process to build high-performing teams.

This blog is based on information available to Rippling as of July 12th, 2024.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.