Conduct performance reviews

Adapted from the Microsoft Small Business Kit by Joanna L. Krotz, John Pierce, and Ben Ryan

Most larger companies set aside a special week or month for the dreaded yearly ritual of employee performance appraisals. Smaller companies tend to schedule performance reviews on the anniversary of an employee's date of hire, but the review invariably slides for several weeks before it actually occurs.

At a typical performance review, the manager might not even remember how Sam saved the day six months ago when the big-fish client was about to walk. What's top on the manager's mind is how Sam waltzed in late three days during the past few weeks. So, most of the review time is devoted to coaching Sam on the virtues of punctuality.

Sam's manager might spend most of the performance review meeting saying things such as "We really need you here for the entire day." Then with 15 minutes left, it's time to catalog and critique Sam's skills, training, 12 months of contributions, job satisfaction, teamwork, communications ability, project management, and career growth prospects. The manager punctuates the closing of the meeting with "Keep up the good work."

Managers and employees tend to postpone performance reviews, during which both parties often become tense and defensive. However, eventually everyone is reviewed on their job performance. Why? Performance appraisals are useful for:

  • Justifying compensation decisions
  • Justifying promotions or terminations
  • Documenting personnel actions that might otherwise provoke legal claims

Fortunately, there are ways to ease and improve the often-cumbersome process of performance reviews.

Reviewing the review

The purpose of a performance appraisal is to measure an employee's job performance against previously defined standards or benchmarks that you or a manager clearly outlined.

As the appraiser setting up performance appraisals, you should strive to meet the following goals:

  • Providing productive feedback to employees so that they can improve performance
  • Providing information so that employees better understand how their contributions and goals support the company's direction
  • Helping employees grow and develop skills

Make the review a continuing dialog

You can minimize some of the tension during a performance review by scheduling more frequent, casual conversations; one-to-one coffee hours; or lunches. At such meetings, you can discuss the employee's goals, job pressures, strategy, and achievements during the past review cycle. If you follow these guidelines, the annual review meeting is likely to be a continuing dialog rather than a surprise announcement. To be effective, feedback for employee performance ought to be provided frequently, objectively, and with the least amount of disruption and cost.

To help address time constraints and emotional issues in performance appraisals, many businesses increasingly combine one-to-one meetings with the use of electronic formats. For example, you can provide tools for continuous employee evaluations and feedback, and then you can store the evaluations and feedback so that they can be instantly accessed for compensation decisions.

If you are looking for examples, Microsoft Office Online and Work Essentials provide a number of templates (most are Microsoft Office Word 2003 documents) related to employee management — from performance review forms to an employee status report.

Choose a review format

You can choose from several performance appraisal formats, depending on which most closely matches your needs. A traditional review format and a 360-degree review format are among two of the choices.

The traditional review

The traditional review format consists of a scheduled meeting between a supervisor and an employee to talk about job performance and job satisfaction. Usually, it's set up a few weeks in advance so that both parties have time to prepare. As the performance appraiser, you need to consider several things:

  • This is a dialog     Don't commandeer the meeting and catalog everything you want changed or improved. You should be listening to your employees as well as reviewing them.
  • Assume the best     Think positively about your employees' intentions — most people try to do their best.
  • Don't discuss wage increases and job performance in the same meeting     The topics should be separate so that you can evaluate each of them objectively.

The 360-degree performance review

Increasingly, companies are moving away from the annual subjective performance review and moving toward continuous appraisals that evaluate the employee's performance from all perspectives of the company, not just from the supervisor's perspective. With this kind of appraisal, "full circle" performance evaluations of the employee are gathered from supervisors, subordinates, peers, and sometimes even customers or clients. These reviews are known as "360-degree performance reviews." The compiled comments are strictly anonymous, and the reviews occur either on a regular basis or following special projects or tasks.

Software programs that automate the employee review process, allowing every part of the review to be electronically input and tracked, leverage the 360-degree review concept. Numerous solution providers and application service providers offer convenient interactive applications with easy-to-use survey forms for full-circle performance reviews. Results can be archived, and companies can personalize the process and limit access. Nevertheless, when using electronic formats, you should still schedule one-to-one meetings with your employees to discuss the review results.

As a company grows, 360-degree review surveys help employees see interdependencies. Employees can then resolve any friction or misunderstandings. The sales team, for instance, might get feedback that IT staff members think that the salespeople are too hesitant in approaching the IT experts — information that would be helpful to know sooner rather than later.

Performance reviews are valuable processes

No matter which format you choose, the traditional annual review or the 360-degree review, remember that employee performance appraisals should be open and interactive. And keep in mind that regular one-to-one meetings that review expectations and performance help build skills and loyalty.

With job performance clearly and objectively tracked, you'll be able to make informed and cost-saving decisions about staff training, compensation, promotions, or growth. And, over time, you'll likely improve staff performance.

About the authors     Adapted from the Microsoft Small Business Kit by Joanna L. Krotz, John Pierce, and Ben Ryan. Visit Microsoft Learning to learn more about this book and its authors.

Applies to:
Word 2003