How to

Conducting an effective performance review

Each New Year brings with it a wealth of positivity, and this January is no different. Many are back in the gym on the health kick as they look to get back in shape after a period full of festive overindulging. But let’s not forget what else arrives in January for most – the performance review.

Whether you are a line manager preparing to conduct a performance review for your team members or an employee waiting for their appraisal, it’s a good idea to be aware of what is coming and how to prepare.

What is a performance review?

A performance review is a tool which assesses how an employee has performed in their role, identifying whether they need additional support to meet objectives or are in line for a reward or promotion having already achieved those. They help to inform goal setting and play a key part in an employee’s personal development journey within their organisation.

It’s a chance for line managers to see how employees are performing, set new targets to strive for in the upcoming year and create a personal development plan that allows them to progress.

Criticisms of performance reviews

Performance reviews have drawn criticism in recent years, with some industry leaders suggesting to remove from the process entirely. Typically, line managers and HR teams try and adapt how to conduct them instead of removing them entirely.

Common criticisms have included:

  • Highlighting past performance rather than looking to future development
  • Difficult and time-consuming to document, track and manage
  • Often results in narrow-minded and biased feedback coming from one individual

Despite the criticisms, performance reviews are still a useful tool for many businesses that continue to conduct them each year.

What bias can occur in performance reviews?

As mentioned, biased performance reviews can be detrimental to everyone involved; let’s take a look at some of the main types of bias which can occur.

Recency Bias

One of the most common types of bias which can occur when reviewing is concentrating on what employees have done most recently. Rather than assessing performance over an entire year, line managers fall into the trap of using the most recent work as the entire basis of analysis.

Rater bias

Another type is rater bias, which happens when the person completing the review evaluates employees based on their own skills. For example, a marketing & communications manager with 20 years of experience compares their 21-year-old recent graduate’s organisation skills to their own, instead of the level they would expect at this point in their career.

This can be particularly damaging for the employee being reviewed, as they may feel disheartened by the manager’s feedback. When in reality, they have only just entered the world of work and would not be expected to have mastered skills like this so quickly.

Halo/horns effect bias

You are right in thinking there is a reference to heaven and hell with this bias. The halo effect is when employees are assessed positively based on skills they possess or tasks they complete effectively, which overshadow areas they require improvement. An example would be where a designer consistently produces high-quality work on every project and is therefore deemed as a quality designer, even though they regularly miss deadlines.

In contrast, the horns effect is the complete opposite, where a team member is judged unfavourably due to their need to improve in one specific area. It may be that a recruiter is not particularly good at answering their phone and is deemed poor, despite the fact they hit and exceed budgets every month.

How to avoid bias in performance reviews

It’s natural for us to rely on presumptuous judgement, but we are also not the best at recognising bias towards ourselves too. While performance reviews are aimed at generating an assessment and plan of the employee, line managers can use it as a self-reflection too.

To avoid bias taking over, encourage employees to be aware of their own assumptions – that will set the standard for yourself and start implementing new behaviours to alleviate, meaning you don’t carry bias into their reviews.

Also, try and utilise a number of performance metrics when assessing employee performance. More parameters will reduce the risk of bias coming into play when there are more factors to balance. Be sure to document your findings too, so you can refer back to the set objectives and assess against these rather than falling into the trap of using bias for your assessment.

Benefits of an effective performance review

Conducting an effective performance review can bring a wealth of benefits for everyone involved:

Provides a clear outlook for the future

In the present day, there are an increasing number of professionals who are career-driven, striving to progress up the ranks. If line managers get it right, they have the opportunity to give their people an outlook into what the future looks like as they look to develop in their careers.

Motivates employees

An effective performance review not only those areas employees have excelled in and would benefit from some further support to improve but gives them a roadmap for the future too. Identify what’s in the pipeline for employees and how meeting or going beyond expectations can see them develop, and watch how motivated your people are as a result.

Why? Because they are in control of their own development. If employees know that their hard work and determination can lead to increased salaries, elevated positions and career development opportunities, they will have more reason to do so. It’s the ideal situation for everyone involved.

Create opportunities to improve

Let’s not forget the major purpose of a performance review – to review performance. If line managers provide feedback on where they can improve, employees can be supported with opportunities targeted to develop skills and competencies in those areas. Giving actionable feedback leads to employee development – who doesn’t want that?

Whether you’ve completed the review process or have them coming up in the next few weeks, you will now be aware of how to conduct an effective performance review and the benefits it can lead to when done right. Remember to set some follow-up meetings in your diary to assess progress throughout the year, and you will be on your way to success. Good luck!

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