Why annual performance reviews are crucial
By Daniel Abramson, HRSource
Now that the new year is here, it’s time to evaluate your employees and determine whether salary increases and bonuses are in order, based on merit and performance.
Let’s face it — people want to know where they stand, and performance evaluations offer that feedback and transparency. Annual reviews help employees understand how their contributions are regarded within the organization, and they make it easier for the company to effectively recognize and reward the “A” players.
Here are some other reasons for conducting employee reviews:
- Shows you are listening and care
- Identifies areas for improvement
- Identifies gaps in soft and/or technical skills
- Boosts employee engagement and morale
- Helps make fair compensation decisions
- Helps assess future management talent and “bench strength”
- Improves productivity of the business and employee
- May help reduce turnover
- Helps foster communication and two-way dialog
Types of Performance Reviews
There are several employee performance reviews you can use in your business. Here are the three most common:
Self-Assessment: This is when employees rate themselves against a predetermined set of standards. Their manager rates them against the same criteria and uses both documents as a point of discussion. This is the most common type of performance review.
360-degree Reviews: This type of review includes candid feedback from others, such as managers, co-workers or direct reports, who share their comments anonymously. Also known as 360 evaluations, multi-directional feedback or peer feedback, 360-degree reviews spotlight the employee’s competencies and can suggest areas for growth and development.
Management by Objectives (MBO): MBO employee performance reviews use SMART goals (i.e., specific, measurable, attainable, relevant and time-based) to provide employees with clear evaluation criteria. Managers and employees must agree on specific goals and should set a realistic end date. Without a time limit, one’s goals could drag on, muddy the success metrics and suffer from procrastination. Deadlines provide a sense of urgency so that tasks are completed.
Managers needn’t choose just one type of review. Many companies use two or more review types to create hybrid models. Each can be combined or adapted to fit your specific evaluation needs. Remember, focus on the good stuff too, not just the negative. Catch people doing things right!
To download a sample evaluation form that you can use or modify, click here.
Here are some other evaluation criteria to consider:
Time Management: The ability to use one’s time effectively or productively
Attention to Detail: Thoroughness in accomplishing a task (important!)
Continuous Learning: Consistently improving existing knowledge and skill sets
Core Values: The root beliefs and values that a company and employee operate from
Customer Focus: Puts customers’ needs first and delivers on promises
What’s Next?
End your employee performance reviews with clear steps employees can take to progress. Every staff member should leave these meetings with a clear understanding of where they stand and what actions they need to take to improve and/or advance. Transparency is essential for a productive workplace and employees want to know how they rate.
Salary Benchmarks
Need help with salary benchmark info? One of the largest and most comprehensive sources of free salary data is the U.S. Bureau of Labor Statistics at BLS.com. The BLS has salary survey data for many different positions in various industries, as well as for specific geographic locations. You can also check Salary.com and Payscale.com.
Employee Recognition
Finally, make sure to thank employees for their contributions (and not just once a year). Workplace recognition is one of the top factors that encourage employees to stay, while a lack of appreciation could motivate them to look elsewhere. It’s important to end performance reviews on a high note, so make sure to let your employee know during the session how much they mean to you and to the rest of your team by thanking them for their contributions.
Again, let’s catch people doing things right. A simple “Thank you” can go a long way, and a performance review can be the perfect opportunity to let your employees know just how much you care.
Daniel Abramson is managing lead of HRSource, a comprehensive collection of customized employment tools and turnkey HR solutions exclusive to BrandSource members. Contact Daniel at (540) 535-8484 or Daniel.Abramson@BrandSource.com.
