How to Create a Truly Effective Performance Review Process

Lori Li
12 min read
Jul 8, 2020

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Let’s admit it: Traditional performance reviews are outdated.

That’s why companies are turning to other methods of reviewing employee performance. 

In fact, PwC found out that as many as 45% of employees prefer face-to-face interactions as opposed to performance reviews when it comes to managers analyzing their progress.

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Everyone Hates Annual Performance Reviews

Can you honestly admit that you enjoy writing these appraisals? 

If you don’t, imagine how your employees feel when they read their review.

Why Managers Hate Annual Reviews

How to Create a Truly Effective Performance Review Process by TINYpulse

For starters, managers don’t want you to label them as the “bad guy” when they dish out negative feedback. Not to mention, they aim to consolidate an entire year into one 30-minute review or an hour-long check-in. 

And don’t even get us started on how time-consuming these once-a-year sitdowns are.

Employers are finally starting to see that traditional performance review methods are becoming ineffective. But employee feedback is so general and scarce that only two out of every three companies actually take action based on it.

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Why Employees Hate Them

Most employees find that the current performance review process doesn't reflect reality. Only 14% of them can say that the process has helped their professional development. 

In large part, they’re right. 

With a six- or 12-month lag between each cycle, they’re untimely and irrelevant. Most of the time, managers tend to focus too much on the negative and don’t provide valuable information.

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There are three core issues with the way current performance reviews are conducted:

1. Lack of relevance: Employees don’t find annual performance reviews to be fair as they don’t reflect the reality of their work.

2. Inadequate questions: The content of a performance evaluation form is in general very vague and general. Employees are simply going to use the same language over and over again and sometimes they don't even know how to complete the form in a way that highlights their best assets.

3. Unhelpful feedback: Workers don’t see the purpose of a performance appraisal when they don’t receive any constructive feedback. The same holds true when they get general advice that won’t help them grow professionally.

So from the looks of it, everyone hates performance reviews; it’s a mutual dislike. Managers struggle with coming up with the content, and employees feel like they’re inaccurate. 

Isn’t it about time this is fixed?

The Five Performance Review Questions to Avoid

Nowadays, managers are turning to 360 reviews in hopes of eliciting more insightful answers from their employees. 

But do they really help when most workers feel these reviews are a waste of time?

What’s killing this so-called tried-and-true practice? 

It’s the questions! 

Here are the five most common questions that are ruining employees' reviews.

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1. What were my key accomplishments?

  • Goal: Find out what this employee did well during the past year.
  • Why it fails: Reviews typically have an annual or semiannual cycle. But many things happen in six months and even more in a year, so it’s difficult to think back that far (or even as far as two months ago, to be fair).

2. What didn’t get done or what should have been done differently?

  • Goal: Find out what the employee can improve on.
  • Why it fails: Since these reviews are typically tied to compensation, employees are going to be hesitant about dishing up their failures. Trust that employees are going to misunderstand this question and not tell the truth about their performance.

3. Think about and review the competencies for your role and our company’s values.

  • Goal: Find out how this employee integrates the organization’s values into their daily activities.
  • Why it fails: It’s complicated. When you phrase questions in a highbrow or ambiguous manner, employees aren’t going to understand what you’re looking for. And when employees aren’t given a clear direction, you’re also not going to receive a clear answer.

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4. What are your strengths? Which ones do you demonstrate regularly?

  • Goal: Find out which areas this employee excels in.
  • Why it fails: It’s vague. The question doesn’t ask specifically how an employee’s strengths contribute to success in their role. Essentially, employees can, again, misunderstand this question and think they can list off anything they’re good at — related to work or not.

5. What are your most recent achievements?

  • Goal: See what an employee has managed to achieve for the company over the past few months.
  • Why it fails: This question implies a recency bias. Many managers tend to make the mistake of focusing only on the most recent events which are easier to remember. This doesn’t allow for a fair performance evaluation that focuses on all achievements. What if the employee’s mother died a month ago and they were crushing it for several months before now?

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The Five Review Methods to Stay Away From

You might not even realize you’re making mistakes when you're doing these appraisals. But you most likely are.

Here are five performance evaluation methods you might be using but need to avoid when doing reviews.

1. Sandwich Approach

A common mistake, this method involves starting off feedback with praise, dishing out the negative news, then sugarcoating it with more praise. 

Something similar to: “We value your work, but you’re not meeting the production level. However, you’re a valuable employee to us.” 

Dishing out the news this way only makes you sound insincere. For better results, just give employees the bad news without the fluff. At the end of the day, feedback during the appraisal process is meant to help your employee improve their performance.

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2. Recency Effect

“What has this person done lately?” 

This is a question that managers ask themselves, and the answer is the result of a recency effect — a psychological theory that involves using recent events to analyze past performance. 

When review cycles have a 12-month lag, it’s easy for managers to focus on what’s fresh. But this brushes aside any positive or negative behavior that has gone unaddressed.

3. Horns and Halo Effect

A Princeton study had participants rate a man in a suit with a Cornell degree versus a man in casual clothing with a nondescript college degree. 

The participants rated the suited man as more competent than his casual counterpart. 

The experiment demonstrated the Horns and Halo Effect. Managers assume that an employee is naturally good or bad at their job based on some subjective measure. 

This can be prevented by basing performance reviews on data instead of opinion. How many sales has this person closed in one month? How many clients have they lost in two months? 

This deters any subjective impression from obstructing the actual review.

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4. "Like Me" Bias

Studies have found that people prefer to associate with others that are like themselves. 

This mentality can stem from something as serious as racial prejudices to disliking how an employee styles their hair. 

In the end, it has the same outcome: Managers believe that people who aren't similar to them can't perform their jobs well.

5. Central Tendency Error

The last performance appraisal method to avoid when managing employee performance is one that involves team evaluation. 

If a manager rates a group of people as average performers, then they're more likely to evaluate individual employees as average as well. 

The flaw in this method is that underperformers are overvalued and overachievers are undervalued. 

A great boss needs to customize each individual review. Individual reviews are critical if you're looking to evaluate an employee's performance.

It's easy to accidentally use one of these methods. You might not even know you're doing it. 

But when you’re conducting reviews, keep in mind that employees can handle negative feedback as long as it's honest and data-driven.

Advice From Industry Leaders

Reviews shouldn’t be so painful. If done right, they can help both companies and employees succeed. 

Curious to find out how? We were too, so we asked managers for tips on how to make these reviews more efficient.

1. Let Employees Lead

Hank Boyer, President & CEO of Boyer Management Group, advises managers to let employees lead the performance discussion. 

To facilitate the discussion, he says, “Issue the completed evaluation to the employee three business days prior to holding the discussion. Few things are less effective than trying to hold a discussion while the employee is reading their evaluation for the first time.”

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2. Nurture Your Employees

Ellie Mirman, VP of Marketing at Toast, says, “Set quarterly goals during performance evaluation around skill development that factors into the discussion to make sure each employee is growing.”

3. Kill the Time Lag

Lisa Mullen, Manager of Corporate Human Resources at Halogen Software, says, “The review process should be a year-round activity. Managers should take the opportunity to discuss and record milestones, accomplishments, successes, and challenges as they occur, when the details are fresh.”

4. Make it a Two-Way Process

Sarah Franklin, co-founder of Blue Tree AI, advises, “An effective performance evaluation includes the employee evaluating me as well. I want to hear from my team what strengths they feel I have and in what areas they need more attention from me. I send out a self-evaluation for my employees ahead of time, which also includes a section on how I can better assist them in their role. When I sit down with my employees, I create a safe space to discuss improvements on both ends.”

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5. Keep it Anonymous

Camille Chulick, the co-founder of Averr Aglow, shared her own tricks to nail anonymous reviews: “Keep it anonymous, but allow employees of lateral, higher, and lower positions to give feedback at various times throughout the year. This can be scheduled or done randomly as they find things to say. Let lower-level employees evaluate those above them. This gives you a much more natural approach to reviewing your employee. The upside to this tactic is that your employees will find more value in the feedback and want to provide as much as they receive.”

Great Leadership

6. Positivity Comes First

Jagoda Wieczorek, HR manager at ResumeLab, emphasized the importance of giving the good news before the rest: “When giving feedback to your workers, focus on stressing how much they brought to the table and how they grew. Acknowledge their achievements and empower them to improve. Weaknesses should be addressed as well but don't make them a focal point during a performance review.”

7. Share Clear Intentions

Juliet Adams, the performance management specialist at A Head for Work, highlights the importance of transparency and trust: “Both the manager and employee need to be clear on their intentions. The manager might set an intention before the meeting to really listen to what the employee has to say and use the meeting to maximize their engagement. The employee might set an intention to get their points across and to ask for the help or support they need to be their best.”

How to Find the Right Timing

Feedback is time-sensitive during the appraisal process. 

But surprisingly, 75% of companies do these reviews annually, according to a survey by BLR. And the problem is that so much happens and changes over the course of a year.

But also keep in mind that one type of frequency doesn’t triumph over all. For example, weekly isn’t better than quarterly. 

That said, there are certain frequencies that function better for other objectives.

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Advantages of Crowdsourced Reviews

In order to really gauge how an employee is performing, you need to poke and prod indirect managers, team leads, peers, and even employees from other departments. 

Multiple viewpoints allow you to get a better understanding of an employee’s performance. 

And if those numbers still don’t convince you, consider these advantages of crowdsourced feedback during employee evaluation.

Increased Accuracy

Crowdsourced reviews come from multiple people. As such, you’re getting multiple perspectives. 

When these reviews are meshed together, a bigger, more comprehensive picture of the employee’s performance is put together for evaluation.

Performance Improvement

Employees gain valuable insight into their strengths and weaknesses from their colleagues because they have daily interactions with them. 

And this makes the process of improvement public. Employees must work harder to get better so they don’t let their peers down.

Encourage Recognition

Management can recognize employees for their big accomplishments. But coworkers see the small successes. 

Our data shows that only a third of workers received recognition the last time they went the extra mile at work. Making matters worse, just a quarter feel highly valued. 

Providing recognition for excellent work is one of the best things an organization can do to maintain employee engagement.

Surprising Effects of Employee Recognition

Management only sees part of the process. Luckily, information from peers and other leaders gives them this opportunity. The ability to send requests at any time to get timely feedback plays a key role in building a truly effective performance review process.

TINYpulse Coach empowers employees, managers, and administrators to send requests to anyone from peers to managers, to mentors, and even external clients or business partners to get performance insights for themselves or someone in their circle.

Want to know if your current performance review process is working? Book a free assessment and see how we can help make the process easier and more effective!

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Performance Reviews' Effect on the Bottom Line

How to Create a Truly Effective Performance Review Process by TINYpulseSOURCE:

Did you know having ineffective reviews can actually negatively impact a business’s success? 

Yep: Recurring mistakes, subpar work, and ignoring results can make your company tank.

Think back to how you’ve been approaching employee performance reviews. Consider where you might have gone wrong or what you can start doing differently to help your employees and business succeed.

1. Focus on the Future During Performance Reviews

Talking only about the past is just talking about events no one can go back and change. 

So spin these issues around and give the employees ways to improve in the future. 

Workers want and need reviews that help them develop and grow. Create objectives and goals that employees can work towards to make these reviews more efficient.

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2. Compare to Industry Standards

Most companies compare employees to their peers. 

Do market research on industry standards. Figure out what your competitors are doing, their quality of work, and how they’re accomplishing these tasks. 

Races aren’t won through blind movement. Every person and company needs to be aware of where their competition stands in order to surpass them.

3. Effort Doesn’t Equal Success

Managers can see how hard an employee works. But they don’t want to give the hardworking employee a below-average review for their performance. 

An employee can work exceptionally hard. But what good is that effort when the end result is mediocre?

Employee performance reviews aren’t just indicators of how an employee is doing. They also give managers an insight into the current and future path of the company. 

Rethink how you approach these reviews in order to ensure your company succeeds.


Editor's Note: This post was originally published in March 2015 and has been updated for freshness, accuracy, and comprehensiveness.

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