If you want a successful business, you need a high-performing workforce. But do you really know what that high performance looks like?

Whether you’re running a village bakery or a multinational corporation, you'll know that every single employee is has an important part to play.

With some people, you’ll just know they’re doing well. You don’t need a performance evaluation to know they’re smashing it.

But you can only ‘wing it’ like that so far. Going without a formalised appraisal process means you miss out on some great opportunities to create sustainable, high performance teams.

So one of the best ways to get the best out of people is by making a performance review process.

If you’ve never formalised a regular feedback process (which is fairly common in smaller businesses), it’s definitely worth doing. Even if there’s only a few of you, you can really improve everyone’s work performance with this process – and it’s easier than you might think.

Why carry out performance reviews?

An employee performance review is useful for everyone in your business. As a manager, it can help you to evaluate how your team is doing by looking at recent past performance.

It looks at where your employees are in their working life, what they're doing well, and what needs improving.

It also gives you an idea of how best to develop your team members. If you make performance conversations a collaborative process, both you and your worker will be able to create a plan for the future that’ll make them feel valued and that they’ve got something to aim for. This should increase the chance they’ll stick with you for the long run.

A performance appraisal also allows you to see any areas where your team is struggling, and reveal opportunities for improvement within your processes and company culture.

Who’s responsible for leading performance reviews?

Typically, line managers or direct supervisors are responsible for actually conducting a formal performance review, as they have a closer relationship and will have a better overview of the employee’s work.

But human resources can also contribute to the performance management process by offering guidance, policies, training and resources to direct managers. HR might also get involved in the admin side of arranging the process, as well as setting company-wide standards on how they get done (and how often). They could help by making a performance review template so everyone’s following the same steps.

All in all, a great idea. But how do you actually make it happen?

How to develop a great performance review process

With so many different ways your business could be structured, we can’t give you an exact template on setting out your performance reviews.

In short, it should be a repeatable process that all line managers can easily understand. It should define the goals, metrics, and timelines of performance reviews.

Here are some general practices that’ll help you make a success of it.

Define what you want to get out of it

An effective performance review needs to eke out certain information to work properly. So firstly you need to sit down and define the reasoning behind it all.

What do you want to achieve with the review process? What are the key performance areas that need to be evaluated?

Deciding these will help you to determine the things you really care about as an employer; what you want to get from your ‘people strategy’. And it’ll help everyone involved be more motivated to contribute.

Make time for them

Performance reviews have to be done regularly – so make sure you’re scheduling them in. For example, you could arrange annual performance reviews alongside quarterly check-ins to measure progress.

You should become something of a regular when it comes to these one on one check-ins. If you've fostered a good relationship with them as individuals, the issues and ideas that come up in the performance review process shouldn’t be full of unpleasant surprises.

And remember, you should never try and rush a review. Set aside an hour in a private meeting space for each of your team members, providing them with a short list of things for them to think about beforehand. This will give the review some structure and prevent you from lapsing into chatter.

It's also a positive for the worker themselves - being given your full attention for an hour can remind them that they're a valuable part of the team and that you care about their wellbeing, as well as their professional growth.

Keep it goal-orientated

Even if your employee’s job is not generally goal-oriented, try to give them something attainable to work towards. Setting goals gives a solid shape to how their working life might look for the next year and is a great way to get them thinking about potential career progression. If you’ve been having honest conversations and regular one-on-ones, these goals should really make a difference in the long term.

The goals you define together in your review conversation will determine how employee development turns out for everyone. And the clearer you are about what you want from your employee, the better. Be sure to explain why a goal is important for their work and how it will help them progress. That way, they can stay focused on success.

Define how you’ll measure performance

Defining your metrics is essential for an effective performance review process, because it provides a clear and objective framework for evaluating how everyone’s doing.

Without a decent set of KPIs to measure, the evaluation process can become subjective, inconsistent, and unfair. Metrics provide a standard by which everyone can be evaluated and compared, which keeps things fair and consistent across the organisation. Defining measures also helps to align employee goals with your company objectives, providing clarity and direction for your employee's work.

And metrics also provide a means of measuring progress over time, driving the continuous improvement and development you’ll want for your team.

What can you measure? It could involve sales targets, customer satisfaction ratings, project completion rates, attendance and punctuality, quality of work, adherence to deadlines, teamwork and collaboration, and individual development milestones. Performance ratings can work in certain company cultures, but they can risk making things a bit too corporate.

You don’t need to overdo it; just focus on the most relevant areas for your team and business.

Learn how to give good feedback

Giving feedback well is a skill. This is where you combine an objective look at someone’s metrics with an empathetic look at their overall working life.

Any criticism you offer has to be constructive and solutions-based, not personal. If your employee has grievances to air, you can draw conclusions and find solutions together. An employee evaluation like this is the perfect time to work together for a better year ahead.

And keep in mind that feedback should be ongoing and shouldn’t be a surprise at the end of each review period.

Check job descriptions

Are all of your job descriptions up to date? If a team member’s responsibilities have changed since they started their job, or since their last review, you may need to update their job description to reflect what they’re really doing.

Their job roles should match what they were initially hired as, and if they’ve taken on extra or different duties, it’s worth making sure the official description matches that.

Let your team members have their say

There are two main ways that employees need to be allowed to speak.

Firstly, self-assessment. While you’ll be giving constructive feedback on your observations of their work, you can’t just lecture them. Letting them explain their thoughts and actions is a really important part of ‘employee engagement’ – where workers feel committed to and interested in their job.

Giving them the opportunity for self-evaluation – reflecting on their own progress – helps to promote a sense of ownership and accountability for their performance.

Secondly, let them review the review process. You have to find out whether it’s useful to them or not, and what you can do better. A good bit of employee feedback will let you know if the review process:

  • lacks clarity in expectations
  • is too short or too detailed
  • is too formal and lacks open communication
  • contributes meaningfully to their professional development or not
  • is fair or unfair when it comes to life circumstances or other factors

Make sure to ask your employees what they like and dislike about doing this. This can help you to develop your own style of reviewing your team’s performance that works for you.

Of course, you won’t be able to incorporate everybody’s ideas, but it’s a great idea to see if there are common threads that need addressing. If you have an open and honest company culture, it’ll be much easier to discuss potentially difficult subjects.

Review yourself as well

It’s likely that you'll also have a performance review of sorts with your own team leader or manager. However, you should also encourage your team to review your performance as their manager – what you could do better to encourage and support them.

Who knows you better than the people you lead? It might help you to come up with some solutions to problems you weren’t even thinking about at length. And best of all, it shows your team that you're always trying to improve as a manager so that you can help them grow.

With these simple strategies, you should be able to create a performance review process that works for you and your team, so you can get the best from everyone.