Performance Reviews Can Make or Break Company Culture. Here’s How to Get Them Right.
The performance review process is not often taken positively by employees — and that makes sense. The process is notorious for being biased and fraught with hurt egos. According to a study by Gallup, just one in five employees agreed that their company’s performance practices motivated them.
Performance reviews, developmental chats, and feedback sessions can be so much more than steely, awkward conversations. If done well, they can be golden opportunities for employees to grow in their careers beyond their jobs, managers to develop as leaders, and CEOs to identify top performers.
In this blog post, we demystify
Why companies should have performance reviews
What performance reviews should include
How to give constructive feedback
An example of a good performance review [+ a free template]
Why have performance reviews?
The truth is we all yearn for feedback and development. This desire isn't just about personal growth – it’s rooted in our brain's craving for progress and certainty at work.
For more on this, explore our CAMPS Model on employee “brain cravings.”
Here’s where we stand: performance reviews are still essential. The very thing that discourages companies from implementing performance reviews – the tough job of ensuring constructive feedback (more on that later) – is still necessary for employees to grow, managers to develop as leaders, and CEOs to identify top-performing talent.
Performance reviews or no performance reviews, we recommend focusing on clear feedback systems and development conversations. Our Manager CORE 1 program is a starter for such efforts.
The result? A potent culture of feedback, where all team members actively provide and eagerly seek effective feedback.
A feedback culture establishes two crucial benefits:
1. Conversational capacity: When feedback is normalized, people fear it less and are more receptive. For example, if you only receive feedback twice a year, it holds a lot of weight and can feel scary. However, if you receive it every week, it feels less daunting, making you more open and confident to continue the conversation toward action. We call this building conversational capacity.
2. Development: If employees know how to give and receive feedback, every conversation can become a development conversation. Ideally, a performance review is a review of feedback already received, not news you hear for the first time. The last thing you want is for people to store up feedback to share during a performance review because, at that point, it's less relevant, receivable, and helpful.
How do companies use performance reviews?
There are several reasons companies use performance reviews. We see four mentioned frequently by our clients:
Developmental: To provide managers and direct reports with a predictable format for discussing their development. Development conversations answer the questions: How am I learning and growing in my role? Where am I headed in my career?
Corrective: To aggregate performance feedback all in one place, making it easy to access and prevent unpleasant surprises for employees. Performance feedback answers the question: Am I meeting expectations for my role?
Predictive: To gather insights about themes and learning development needs.
Analytical: To determine compensation and promotion.
What should performance reviews include?
Effective performance reviews balance self-assessment and external evaluations. Follow these performance review tips to reduce bias, increase usefulness, and improve clarity in your written performance reviews.
1) Design your questions to solicit specific and actionable information. For every piece of feedback, prompt reviewers to reference examples (observable behaviors) and the impact. Most tools allow you to adjust the instructions or the question format accordingly.
2) Link to the stated goals, competencies, and expectations outlined for the role. The reviewer should have access to these, either directly in the review itself or in a linked resource. Not only does this reduce bias by removing subjective comparisons, but it also provides guidelines around what will be the most helpful feedback to provide.
3) Include lag measures as well as lead measures.
Lag measures = outcomes. What did you accomplish? (e.g., for sales: new business won)
Lead measures = behaviors that should lead to those outcomes. How did you accomplish that? (e.g., for sales: number of calls made, negotiation skills)
It’s important to measure both because lag measures depend on factors outside one’s control.
What is an example of a performance review? [Free Template]
We created a Performance Review Template incorporating elements we have seen work well, with an eye toward simplicity and reducing bias. It’s an example of what your performance review could look like.
Access it here.
How to give constructive feedback
We can’t overemphasize the importance of constructive feedback — the steadily beating (not panicky) heart of the performance review process.
Our Playing Cards(™) method offers an easy-to-remember framework for distinguishing between good and bad feedback.
Bad feedback is represented by clubs and hearts. Good feedback is represented by spades (helpful tools for digging ourselves out) and diamonds (bright, strong gems). The difference between the two is specificity: good feedback is specific, and bad feedback is vague. Here are some examples:
CLUB: Blurry critique
You came across as rude.
HEART: Blurry praise
You crushed that sales call.
SPADE: Specific critique
I noticed you rolled your eyes in the meeting. I mention it because I didn’t feel comfortable sharing my perspective.
DIAMOND: Specific praise
I liked how you asked about the client’s concerns. It helped us come up with an idea that met her needs.
Powering Up Performance Reviews
As we navigate an evolving workplace, we need to rethink the traditional methods of performance reviews. By investing in clear, consistent, and constructive feedback methods, organizations can unlock the true potential of their employees, leading to increased productivity, job satisfaction, and, ultimately, organizational success.
LifeLabs is committed to empowering organizations with tools and methods to harness the power of performance reviews. We can help you transform your review process into an instrument of constructive change.
Because, when done right, performance reviews can become the compass that guides individuals and organizations toward their best futures.
Let's reimagine performance reviews and build a thriving, feedback-rich culture together. Speak to a consultant today!
