7 Steps Toward Creating a Strong Performance Review Process

Do your employees know whether they are doing a good job? It seems like a simple question, but the fact is, providing employees with detailed, useful feedback is hard work. All too often, performance reviews fall by the wayside because other business activities are given a higher priority. Surveys report that 90% of managers strongly dislike giving employees formal performance feedback. Despite the queasiness you may experience, the feedback process is essential to retain good employees, help employees to improve their on-the-job performance, and address poor performers. 

The feedback process works best when it is formalized and standardized. We all shy away from giving negative feedback, and we often get too busy to even give positive feedback. Formalizing the process will hold you accountable to provide your employees valuable performance feedback.  It also documents the feedback creates a history of the employee's job performance. Should you ever need to discipline or fire an employee, this performance documentation will be essential in justifying your actions in any employment-related legal action. 

Providing accurate feedback to your staff gives you the opportunity to develop specific goals and to create a plan for achieving them. By accurately assessing the employees' strengths and their areas of improvement you can work with the individuals to identify improvement efforts.  

Here are some best practices for implementing a performance feedback process: 

Use a Performance Feedback Form
Formalize your feedback process by using a consistent form. It should describe five to ten performance dimensions—or areas to be evaluated—such as attendance, quality of work, attitude, and customer service skills. These dimensions should correspond to the job requirements on the employee's job description. The form should include both a numerical rating scale and a space for comments about the individual's performance. The form should also list the date of the review and have space for you and the employee to sign the form. Keep a signed copy of the form in the employee's personnel file. You can find sample forms by searching Human Resources sites online or in the business section of your local bookstore. 

Have a Feedback Discussion
After you have completed the feedback form, schedule a one-on-one meeting with the employee.  Block out at least 30 minutes where you will have no interruptions. Practice in advance what you are going to say and how you are going to say it. During the meeting, give the employee an opportunity to respond to your feedback. 

Be Specific
Give your employees specific examples of behavior to support your performance

ratings. These examples should be recorded in writing on the form and be described verbally in the feedback discussion. For example, it is better to explain "You make very few errors when you are completing application forms for our clients" than the less-specific "You do quality work."

Give Frequent Feedback
The more frequent the feedback the better. Ideally, you would conduct a formal discussion and complete a feedback form for each employee every six months. Remember also to offer positive and negative feedback to your staff on a daily basis. 

Keep a Performance Diary
How will you remember those specific examples of job performance? Keep a performance diary for each employee. I have a page in my planner with the employee's name at the top. When I observe an instance of positive or negative behavior I make a quick note of the date and the circumstances. Then, when it is time to complete the formal feedback I can cite those specific examples. 

Link Performance to Pay
Set a schedule when salary reviews will occur, such as every January. Link the amount of employees' annual merit base raises to the ratings on the performance feedback form. For example, an average rating equals an average raise. A superior rating equals an above-average raise. A low rating results in no raise. This sets clear expectations for your employees when raises will occur and what level of performance is required to get a raise. 

Avoid Bias
Biases can unconsciously influence your feedback, but being aware of common evaluation biases can help you avoid them. First, there is the “halo effect” where you rate an employee high in all aspects of the job because of one great aspect of their performance. For example, you may have a staff person who is beloved by your clients, but who has problems arriving at work on time and takes too many unplanned sick days. If you give this employee a strong positive review and do not address the attendance issues you have fallen victim to halo bias. The evil cousin of halo bias is the “pitchfork effect,” where you rate an employee poorly on all aspects of performance because of one glaring deficiency. Finally, the “recency effect” occurs when you only consider the aspects of performance that have occurred in the preceding days and weeks and not performance as a whole over the evaluation period. Use of a performance diary will help you avoid making this mistake. 

Establishing a formal performance feedback process in your practice will result in motivated employees who know the right things to do to make your business successful.

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