Performance Review – Which Method is Right for Your Enterprise?

As a manager, you might think that going through the performance review process is a daunting task. However, it plays an integral role in strengthening the relationship between managers and employees.

According to statistics assembled by Achievers, 75% of employees reported feeling satisfied with their job when they were recognised monthly. The percentage jumped to 85% when employees were recognised weekly. Moreover, 53% stated that they expect their managers to publicly praise them and to show respect for their knowledge and experience.

That is why regularly reviewing your employees’ performance is essential for motivating them and reducing turnover. Based on the results and feedback, both the managers and the employees will be able to identify their weaknesses; thus, resolutions can be provided in a timely and accurate manner.

The different ways of doing a performance review

Performance review, or performance appraisal, is the process of evaluating an employee’s performance on a predetermined basis. The purpose of the review is to give employees recognition and motivation by rewarding them financially, promoting them, or providing training.

There are many different performance review methods; each has its own pros and cons. Depending on your company’s policies, procedures and objectives, you should choose the appropriate method. And it should be done in the most unbiased judgments possible.

1. Self-evaluation

For this method, the employees will self-evaluate their performance against predetermined criteria. And the results will be used afterwards in a more in-depth discussion between line managers and their subordinates.

One issue managers should take into account when using this method is that employees may rate their performance either too high or too low, focusing mainly on their accomplishments and, as a result, disregarding their weaknesses. There are also differences between what employees thought they deserved and their manager’s account. Discrepancies in perspectives are unavoidable.

This method is best when used in conjunction with another appraisal method. Furthermore, more objective information is crucial for guiding employees, enabling them to see the bigger picture of how their performance fits with the organisation’s overall vision.

2. Behavioural checklist

In simple terms, a behavioural checklist is a form that outlines the behaviours and competencies related to the job that employees are expected to follow.

This method is considered less hostile than other methods because evaluators or managers merely describe employees rather than compare their behaviours with those of others.

The method is also useful for employee development. The downside is that the method requires extensive investment in terms of money and time to construct the instrument.

3. 360-degree feedback

360-degree feedback provides managers with a comprehensive view of an employee’s performance through an intensive assessment and peer and non-supervisor feedback. Because of its 360-degree perspective, the method can also be used to review an employee’s character and leadership skills.

When undergoing the 360-degree feedback, beware of personal feelings interfering with the result. Try enforcing anonymous feedback, which allows staff to give more honest responses without being held responsible for critical comments.

4. Management by objectives

Each member will work with their line manager to set individual performance objectives to be accomplished within a set timeline. For this appraisal method to be effective, your organisation needs a clear definition of its values, culture, and success.

The objectives, though customisable, still have their downsides. If the deadline for the objectives is too far away, the employees might already have shifted their focus to something else. Therefore, it is critical to set specific, realistic goals and a short timeline. If possible, managers should go through the evaluation process monthly to timely resolve any issues.

5. Rating scale

A rating scale is probably one of the most commonly used performance review methods, evaluating the employee based on a set of criteria – behaviours, competencies, completed projects, KPIs, etc. The rating scale values usually range from 1 to 10 or 1 to 5.

However, there is evidence that managers were unsure how to properly score their employees; as a result, they tend to rate them in the middle. This could mislead the reading of the final results. Unless the rating scale method is supported by other evidence-based documentation, findings from this review may negatively affect the manager’s view of an individual.

All of the above performance review methods, though, have their own disadvantages, but can still be useful if used correctly. Both managers and employees must understand that the purpose of the review process is to elicit honest, constructive feedback that helps employees continuously grow and thrive.

As a manager, prior to establishing a good performance review method, you must clearly define:

How does your organisation define “success”?
What’s your company’s culture, core values, goals, etc?
Do you have well-defined metrics to base your feedback on?
Can you guarantee no personal feelings or opinions are involved in the process?

A performance review requires you to invest a lot of time and effort in carefully and accurately evaluating a staff member. Therefore, take your time to make your own decision, choose the method you are most comfortable with, and remember, transparency is key.

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