Performance reviews: what are the trends and challenges?

Feedback and assessments are critical in any business that aims to increase productivity, improve efficient and effective work processes, and develop in areas that may need improvement.

While most employees might not exactly look forward to receiving feedback as part of performance reviews, an honest conversation with management can help them work more efficiently and produce higher quality work.

For employers and business owners, performance reviews enable management to address all gaps in performance, establish goal-setting conversations and KPIs (key performance indicators), and create a company culture that fosters healthy manager-employee relationships.

In this HRD guide to performance reviews, we’ll break down what performance reviews are and analyze some trends and challenges. We’ll also look at handling performance reviews within the digital workplace model.

We’ll share some tips and tricks in doing performance reviews. If you’re looking to automate your performance review process, we’ll tell you what to look for in human resource information system (HRIS) platform.

What is a performance review?

Performance reviews go by many names: performance appraisals, performance evaluations, employee evaluations. They all have the same goals:

• to assess and evaluate an employee’s work performance
• identify the strengths and weaknesses of their employees
• offer feedback and criticism on the work performed
• set goals and metrics for future performance

These reviews are done periodically – monthly, quarterly, or annually. They also document the contributions an employee and/or team has done in that period.

Why performance reviews are important

Performance reviews give managers and employees the opportunity to align individual performance with the organization’s short- and long-term goals.

These reviews can also drive higher employee engagement. They can shape passion and interest for work, drive loyalty for the organization, and decrease employee turnover and attrition rates.

Performance reviews allow managers to highlight key achievements done by each employee throughout the assessment period. These reviews are also a venue for employees to discuss any concerns they might have. This conversation allows managers to discuss and resolve issues that might affect an employee’s work and well-being. It’s an opportunity for employees to ask questions and give constructive feedback on work process improvements.

If you're surprised by the feedback you get at a performance review, your boss has failed.

Good managers don't wait for formal meetings to help you grow. They make it a daily priority.

The sooner you get feedback, the sooner you can break bad habits and learn better ones.

— Adam Grant (@AdamMGrant) May 2, 2022

What are the 5 key elements of performance reviews?

For any performance review and management solution to be effective, five key elements should be present:

1. Planning: Setting performance goals for the organization/business, the team, and the employee is integral in performance reviews. Individuals see how their goals fit into the bigger-picture objectives of the organization, increasing employee engagement. Performance standards should be measurable, understandable, verifiable, equitable, flexible, and achievable for both the employee and the management
2. Monitoring: Work tasks should be monitored regularly. Consistently measuring and monitoring employee performance and providing appropriate feedback allows the business to effectively reach the goals that were set up as planned. Monitoring also involves communication between employees and management as to what can be adjusted in terms of unrealistic goals or shifting priorities.
3. Developing: While planning and monitoring directly involve management, developmental goals are largely employee focused. Performance reviews should evaluate and address the needs of the employee on acquiring skills they need to do their work, improve work processes, develop job-related skills and competencies, or introduce tools that can help address gaps in performance.
4. Rating: While evaluating performance can be subjective, measuring performance through set metrics and KPIs can help organizations rate employee performance over a select period. Assigning a summary rating based on comparing performance against preset standards could also be beneficial in making decisions on pay increases, bonuses, or promotions. In worst-case scenarios, these ratings can help determine which employees to retain in cases of redundancies.
5. Rewarding: Recognizing and rewarding employees for good performance is essentially the main purpose of performance reviews. Acknowledging the contributions made by an employee or a team helps boost employee morale.

What are the 3 types of performance reviews?

While performance reviews can be done in numerous ways, there are, in general, three types:

1. Voices needed: assessments may be done by a singular person (self-assessment reviews), by team members (peer reviews), by team (team performance review), by managers (upward feedback), and by the whole organization (360 performance review).
2. Frequency/cadence: performance may be done according to the period required. It allows managers to determine if changes and adjustments need to be made. Under this type, performance reviews can be done monthly, quarterly, mid-yearly, or annually.
3. Focus or topic: performance can be measured according to the conversations and concerns that the business needs to address. As such, performance reviews can be done depending on individual development (professional development assessments), behavior (employee engagement review), compensation and benefits (compensation check-ins), and goal setting (goal setting, KPI evaluation).

Tips: What makes a good performance review?

Regardless of industry or business size, a good and effective performance review assesses the following factors:

• Communication
• Collaboration and teamwork
• Problem-solving
• Quality and accuracy of work
• Attendance, punctuality, reliability
• Meeting deadlines and accomplishing goals
• Competencies and skill sets
• Contribution and value to the business
• Suggestions, performance plans, and areas of growth

Tips: How to write a performance review

For managers who want to write an effective performance review, these are some tips:

1. Aside from formal appraisals, provide regular, informal feedback for employees beyond evaluation periods.
2. During performance reviews, be clear, tactful, honest, and transparent about employee performance. Revisit expectations that were set.
3. Conduct face-to-face reviews or one-on-one meetings through video chat instead of written reviews.
4. When discussing areas for improvement, use relevant examples and anecdotes.
5. End the performance review with a sense of optimism by sharing achievable goals and a concrete performance plan for the employee.

Tips: How to do performance reviews

Some of the methods used by various top businesses include, but are not limited to:

• Essay evaluations: Assessor writes a brief essay that summarizes the strengths and weaknesses of the employee and provides data and evidence to support the evaluation.
• Self-evaluation: Employee fills out a form that enables them to reflect on their performance over a period and compare that with their manager’s evaluation.
• Checklists: Preparing a questionnaire or survey with quantitative and qualitative assessments of performance, competencies, and skills can drive a measurable assessment of performance.
• Critical incidents: Employers maintain a logbook or daily record of instances of positive and negative performances of their employees.

Tips: How to conduct a performance review

When conducting and preparing for a performance review, follow these tips before starting:

• Prepare notes, information, and data that detail issues, goals, and problem areas that you need to discuss.
• Cite specific examples of how goals were achieved, what areas need improvement, and the difference between current performance vs. previous performance.
• Self-evaluate your performance to list all strengths and weaknesses, skills and competencies, and development goals and career plans.
• List all questions and concerns about previous work performance, work processes, and development plans.
• Clarify and set expectations for the work involved and communicate if these goals are achievable or not based on current and previous performance.

Tips: What should I say in a performance review?

Performance review meetings can be nerve-racking. Are you worried that what you say (or don’t say) can make or break your performance rating? Here are some tips:

• Discuss all your personal achievements, strengths, core competencies and skills – don’t hold back!
• Show initiative by discussing ways to improve performance, suggest a development plan or achievable goalposts, and approach constructive feedback with open mindedness
• Provide feedback and questions on future development plans, tools and equipment used, work processes involved, and future expectations and metrics to be met.
• Share relevant observations on day-to-day tasks, interactions and collaborative efforts, and self-performance.

Here’s a video with more tips on what to say during a performance review:

Appraisals and reviews can be nerve-racking for both employees and managers. HR can help turn performance reviews into an ongoing process of feedback and development, making it less intimidating for everyone.

Performance review: What are the trends and challenges? More companies are ditching performance reviews in favor of other feedback-related methods. The introduction of human resource information system (HRIS), a software that automates HR processes, is changing the way performance reviews are done. The process is made more efficient, centralized, and employee focused. To learn more about the many benefits of HRIS, read our guide on HRIS systems.

What are the modern trends in performance reviews? In 2012, Adobe was one of the first tech companies to drop annual performance reviews in favor of check-ins with its famous “Agile Manifesto”.

Traditional manager appraisals were being replaced by 360 reviews - appraisals were made easier with automation and anonymous feedback featured in modern HR platforms.

How COVID-19 changed performance reviews The pandemic has turned the performance review process on its head. In a study cited by the Washington Post, 30% of companies have made changes to their performance evaluation process because of the pandemic. Another 5% cancelled or put these reviews on hold. In 2021, Basecamp banned 360 performance reviews for being overly positive. Performance reviews were done via regular calibration meetings instead of yearly one-on-one meetings.

What are the modern challenges in performance reviews?

As more businesses transition to cloud-based technologies, a lack of training and support in using platforms that address HR-related concerns have been critical in the digital landscape. This has led to a lack of communication with management and declining performance for employees who might not be as tech-savvy as their peers.

What are the modern methods of performance reviews?

With the trends and challenges of modern performance reviews, newer reviews focus on these methods to evaluate employee performance:

• Regular check-ins instead of traditional annual performance reviews
• Removing bias and discrimination in sharing feedback and criticism
• Identifying poor performers through frequent evaluations and appraisals
• Disassociating payroll and benefit concerns from performance-based evaluations
• Aligning goals and performance indicators more frequently
• Rating and score-based metrics are no longer as important as open and honest conversations
• Performance and quota approach is replaced by a holistic review, including goals and strengths

Can HRIS platforms help you make the performance review process easier?

Different information technologies such as collaborative software, virtual private networks, conference calling and videotelephony, internet accessibility and WiFi, cloud computing, voice over IP (VoIP) and mobile telecommunications have made performance reviews easier.

Software and applications such as Microsoft Teams, Google Meet, Zoom, Webex, and Skype serve as platforms for conducting performance reviews, especially during the pandemic.

Several HRIS platforms and software can support human resource managers and staff in performing their employee performance reviews. Some examples: · Officevibe is an employee engagement software that makes use of analytics and feedback reporting to augment performance evaluation and improve communication between employees and management. · Workvivo is an employee experience platform that automates and enables the communication between management and employees as well as creates more opportunities for feedback and performance evaluation reporting. If you’d like to know which HR tools can work best for your company, visit our HR software reviews page for more options.

What do you think of performance reviews – are they still essential or unnecessary? Do they need an update? Let us know in the comments below.