Best Annual Performance Review Practices

Unnecessarily intimidating year-end performance reviews are upon us, but with a heavier focus on constructing the future than dwelling on the past, HR departments can guide employees and managers through mutually beneficial performance reviews.  

The annual performance review is an opportunity, not a penalty 

As we weave through fall and into the later stages of many Q4s, managers and their employees are preparing winter break plans from snowy slopes to sandy coastlines. Before that, there are still end-of-year KPIs, final client touchpoints, and then the dreaded end-of-year performance review. The annual highlight breakdown between a manager and their employee should not be as dreadful as it is perceived, and instead should represent an opportunity for growth. The term is almost a misnomer in itself; yes, employees and managers are being reviewed on a year’s worth of performance, but all those metrics add up to planning a 2023 benchmark. A properly executed year-end review allows managers and direct reports to transparently understand where each succeeded and fell short over a year of work. When handled improperly, these sessions could lead to mass migration; a recent Adobe study found that 47% of millennials looked on the job market after receiving their performance reviews.   

“To avoid catastrophic losses from poorly planned review sessions, understand why business went a certain way and empathize with employees having trouble. These proficiencies and deficiencies shared between manager and employee should spark enthusiasm and ideation toward improvement plans moving forward,” Says Evan Violette, CSS PSG Managing Director. 

These plans should create expectations, educate employees and managers about behaviors and systems, refine career paths, and overview HR-related topics like time off, raises, and more. Here are some helpful year-end review guidelines. 

Plan, plan, plan! 

Being able to effectively plan for the coming year mid-review is impossible without planning for the actual review itself. Employees should collate a file of accomplishments, goals met, and responsibilities undertaken throughout the year. This gives employees a solid portfolio of work to come prepared with to prove their worth and win that promotion. Even more so, managers should let employees know they need to prepare for these meetings; a TriNet study found that 62% of millennials feel “blindsided” by performance reviews 

The same TriNet study found that 59% of millennials feel like their manager is unprepared to give feedback during their review. Managers need to come prepared with similar documentation on their direct reports to compare feedback they received from other coworkers regarding their direct reports. Getting third-party feedback on their own direct hire is known as 360-degree feedback and is crucial to getting a full understanding of how employees operate.    

Reinforce positive accolades 

Always start positively. Kicking things off negatively torpedoes a year-end review from the start, so as a manager it is wise to give ample praise for accomplishments to set a positive tone. Identifying proficiencies your employee exhibited over the past year reinforces those behaviors further and ensures that they will continue. Psychologically, it improves employee engagement in conversation more than beginning with negative feedback. Managers can ride this wave of attentiveness for the rest of the meeting to outline the best plan moving forward.  

Address deficiencies  

Carry that positive energy you built overviewing achievements and accolades into addressing an employee’s deficiencies. This is the phase of the review that gives it its negative connotation, and is exactly the part where a savvy manager can swing overly critical notes to constructive ones. In fact, Harvard Business Review found that positive and negative feedback are equally important to employees.  

Define KPIs that were not met and projects that were not completed to understand the roots of the cause whether that be overwork or an organizational shuffle. The odds are that the reason for incompletion or lag in a certain area is not 100% the employee’s fault.  

If there are numerous grievances, limit your critiques as a manager to one or two areas at a time so you do not overwhelm an employee with negative feedback.  

Make performance reviews agile  

Business rarely goes according to plan over the predetermined path for the year. Managers should be transparent, flexible, and understanding when addressing goals that were not met as well as KPIs that were completed thoroughly. Share the dynamics of business over the past year together with your direct report to build an understanding of why certain initiatives went the way they did with empirical business evidence. This mutual acceptance of changed circumstances will ready you and your employee to pivot projects when a business need appears, fades, or changes courses altogether given past evidence.  

Be specific and establish transparency   

Here is where you can connect on a deeper level with your direct report or your manager. Expressing vulnerability by revealing your managing challenges allows employees to glimpse into the conflict of management and vice-versa. Managers should be the ones to initiate this phase of the review, as it will level the two interlocutors and encourage both to give genuine feedback on difficulties. When managers and employees are transparent about vulnerabilities, and specific enough to communicate instances and causes, that specificity can then be extended in planning out the next year of goals and career milestones.  

With specific goals in mind crafted from successes and missteps in the previous year, managers and employees can leave these annual reviews with an attainable, agreed-upon set of goals moving forward.  

Agree that goals moving forward may change due to market fluctuations, business developments, or other dynamic factors within and outside your organization.  

Book monthly or quarterly micro performance reviews to build smaller wins  

A clever way of lessening the mental burden of a “year-end review” is to book monthly or quarterly reviews with your manager. Spreading more performance reviews throughout your fiscal year allows the two of you to celebrate small wins, tweak processes as you go, and equips the both of you with mounting evidence from meeting to meeting with palpable examples of performance improvement. A Gallup survey found that regular feedback sessions make employees nearly three times more engaged in their work. Frequent dialogue clears ambiguity for all parties involved and defines requirements while maintaining peace of mind.  

Partner with the experts at CSS PSG to kick off your 2023 hiring  

Promoting an employee to a more prestigious position is the best possible outcome of a year-end review, and that leaves you with the great problem of growth. Filling the role of an exceptional direct report will not be easy, but with the help of CSS PSG, consider that open role as good as filled. Specializing in human resources, accounting and finance, office support, and call center support, CSS PSG has been a staffing industry leader for almost 20 years with stellar client reviews. Connect with CSS PSG today to meet your accelerating fall application and hiring needs!  

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