Many merchants know the importance of delivering feedback but are less certain how to structure employee reviews to keep employees from leaving. How often should you host an employee review meeting? Who should be in the room for an employee review? What are the best ways to track employee performance? This guide will cover everything you need to know to keep your best workers engaged and productive.
Why do good employees leave?
There are myriad reasons why employees leave a job. Some people resign to stay at home with children or to move cities with a partner. Excluding these extenuating circumstances, there are a few common reasons why great employees leave an organization.
There are multiple surveys and research reports that all come to the same conclusion: Lack of feedback is directly linked to employee turnover. Employee reviews provide an opportunity for career development, recognition, and mentorship. Even informal reviews are critical to increasing engagement and productivity. When your team doesn’t feel recognized for their hard work or receives a piece of negative feedback at the wrong moment, morale can deteriorate rapidly.
Employee reviews are especially important to millennials and Gen Zers. Millennials want to be coached at work, according to the experts at Harvard Business Review. Their research found that millennials want feedback 50% more often than other employees. Employee reviews are one way to deliver that coaching in a way that feels productive for your managers and your younger workers.
[Read more: Employee Retention: How to Keep Your Best Employees Happy]
How to track employee performance
Tracking employee performance takes a two-pronged approach. First, how are they performing as part of your business team? Second, how are they performing against their individual goals?
If an employee is slacking off, there needs to be some metric against which to compare their performance. The job description is a good place to start, as the responsibilities listed with the role will be well-documented. Put in place specific, measurable benchmarks that align with the position. For instance, a salesperson should have a certain number of calls, closed deals, or new leads to report each month.
Then make sure you take the employee’s personal career goals into account. Does this salesperson want to become a manager in six months? What opportunities can you provide to help them develop leadership skills? What has this person done in addition to their assignments to work toward this goal?
Some companies find it helpful to use employee review tracking software to keep track of each individual’s professional development. Read about some of the more popular performance tracking tools in Business.com’s “14 Tools to Measure Employee Performance.”
[Read more: How Do I Know It’s Time to Fire Someone?]
What makes a good performance review?
The best performance reviews are specific, frequent, and tailored to the individual employee.
A formal performance review must be tied to your employee's goal-setting process with a manager or individually. Involve your employees in setting individual goals that link to company results. Help your team write goals that are action-oriented, measurable, and easily trackable.
Goals should also be specific to each employee. A recent study by Gallup found that 71% of American employees believed their evaluations weren’t fair. This perception comes from the fact that employees are often evaluated in relation to one another and not in relation to their own past performance. Each employee should receive a career development plan based on their specific skills, goals, and job description.
“By emphasizing how their performance has changed over time instead of how it fares against other people’s performance, organizations can offer what the employees want—individualized treatment—and thus achieve the goal of offering fair evaluations, which are much more likely to be embraced rather than met with scorn,” wrote HBR.
Lastly, the best performance review is a regular one. There’s nothing more demoralizing than reaching a year-end performance review only to learn that you were making the same simple mistake over and over again. How often should you offer performance reviews? Most millennials prefer to check in monthly. For many small businesses, this isn’t realistic; try to host a review at least once a quarter.
How to run an effective performance review meeting
Many merchants feel uncomfortable delivering feedback, even when it’s positive. Here’s what the experts recommend to get the most benefit from a performance review meeting.
Prepare in advance
Part of the awkwardness of formal performance review meetings comes from the stress of not knowing what to expect. Tell your employees ahead of time what you’ll be discussing, and solicit feedback from key stakeholders who work with the individual. Give your employees a copy of their appraisal before the meeting starts to help alleviate any surprises.
Don’t walk into the employee review empty-handed. Compose your thoughts and fill out any employee review forms prior to your meeting. You can use the completed form as an outline to keep your meeting on track and to ensure you don’t miss any key points. This is especially necessary if you are managing multiple employees.
Schedule one-on-ones with each employee
If you have a large team, this can seem like a daunting task—and you may be tempted to move through each review quickly in order to get everyone’s done. However, you’ll want to leave ample time not only to discuss your feedback but also to address any questions or concerns that might arise. The amount of time required will depend on how often you have employee reviews or one-on-one meetings, but 30 minutes per review should be enough time to cover all your information.
There are multiple surveys and research reports that all come to the same conclusion: Lack of feedback is directly linked to employee turnover.
Deliver feedback with transparency
Giving clear, honest feedback will help employees understand where they are doing well and where they can improve. Frame your feedback in start, stop, and continue terms. What are they doing well that they should continue doing? Is there any behavior or habit you would like them to stop? What part of their career development plan will they start working on next?
However, this doesn’t just apply at review time. The Muse notes that employers should encourage openness and honesty at all times. Doing so will keep everyone on the same page and avoid any shock or surprise come employee review season. Transparency is also beneficial in goal setting. Your workers should know the exact timelines for achieving their new goals, as well as how achievement will be measured.
Ask workers if they have questions or concerns
Rather than having a one-sided conversation, turn the tables around by allowing your employees to share their feedback. This not only demonstrates your willingness to take in their perspective but also shows that you’re invested in their success. A structured way to engage your employees is using a self-evaluation or collaborative evaluation tool with which employees can share their strengths, challenges, and goals.
Provide employees a copy of their evaluation
It’s always best practice to provide employees with a copy of their evaluations. At the very least, give them the most relevant portions of the evaluation. This gives your workers a reference point and will keep them on track as they work towards the goals you’ve set together. This practice also encourages transparency between you and your employees as well as a collaborative review process.
End with solutions
Concentrate as much as possible on what an employee has done well. If someone is under review for underperforming, don’t sugarcoat it: “Performance reviews are your chance to confront poor performers and demand improvement.”
Discussing poor performance or other negative topics can be uncomfortable for both the employee and employer, but it’s a necessary part of the process. Once you’ve discussed the issues, however, dwelling on them can leave your workers feeling upset or unmotivated. Shift the conversation toward the future by coming up with solutions, goals, and actionable steps for improvement. Doing so will end the meeting on a positive note, leaving your employees feeling motivated to grow.
How to set clear goals during performance reviews
Goal-setting should be collaborative and based on the individual’s personal goals as well as the goals of the company. Performance goals should be SMART (specific, measurable, achievable, relevant, and time-bound), with clear benchmarks and timelines to help your employee understand what is expected. Likewise, you should work together to identify the support each individual needs to meet their goals.
“Few things are more discouraging to an employee than to be excited about moving towards certain goals only to not be given the resources to attain them. Set employees up for success by establishing goals that work within the employee's role as well as the organization's budget and objectives,” wrote Paychex.
Each employee’s performance goals should be tied to the key strategic objectives of the company. This link helps employees feel invested in the work they’re doing; it makes their role feel both relevant and important. Look for ways that performance goals can be tied to each person’s professional career goals, too.
How often should performance reviews be conducted?
There’s no one-size-fits-all schedule when it comes to conducting performance reviews. It’s estimated that one-third of companies in the United States have abandoned traditional annual performance reviews in favor of more frequent, informal feedback. However, there needs to be a specific culture in place—one that embraces frequent feedback—for the move away from traditional reviews to work.
Most experts recommend hosting performance reviews at least annually. Many companies opt to have reviews quarterly or semi-annually, meaning twice a year. Ideally, you should aspire to create a working environment where people feel comfortable giving and receiving feedback (and recognition!) at the moment when it can be best absorbed and implemented.
How to deliver constructive feedback that motivates
To create this open and honest environment, you may want to train your team on how to give feedback constructively. “Constructive criticism is constructive because it seeks to help the employee improve, not just to point out flaws or areas of low performance,” wrote Indeed. “Without constructive criticism, some employees would have no idea that they need to improve and would continue to perform below their ability.”
Focus on giving direct observations that don’t stray into the realm of character judgments. State the feedback clearly and directly, using “I” statements that lead with empathy. For instance, “I noticed you missed a deadline” is better than “You never manage your time well.”
“Describe the situation, the observed behavior, and its impact on the team or the project. This method depersonalizes feedback, making it about actions rather than the individual, which can help reduce defensiveness,” wrote Forbes.
Giving feedback as soon as possible is always better than waiting for a performance review. Instead, use the employee reviews for bigger-picture discussions, rather than bringing up a list of grievances from six months prior.
Employee reviews don’t have to be stressful. Prepare accordingly, and your team will be grateful for the coaching.
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