What is a Performance Review and Do You Still Need Them?

Performance reviews have long been a mainstay of corporate culture and people management. But what is a performance review, and is it really the best way to get the most out of employees?

Performance reviews are formal assessments carried out for each employee by their managers, and possibly other leaders in the organization. This generally involves a meeting with said employee to go over their performance, achievements, areas for improvement, and goals.

To be effective, performance reviews also require extensive prep work and evaluation by managers to deliver fair, balanced assessments for each staff member. To minimize the disruption this can cause, traditional reviews often take place annually or biannually.

Reviews versus conversations

You’ll often see processes referred to as performance reviews and performance conversations interchangeably, but there is a difference. So, what is a performance review compared to a conversation?

A performance review is very much a formal process, as we mentioned. They’re scheduled well ahead of time, meaning they aren’t especially organic. A full performance review must also methodically examine different areas of conduct and performance in the allotted time.

What are performance conversations, then? For one thing, they’re more free-form. They can encapsulate formal reviews, but also less formal conversations and ad-hoc feedback. Conversations aren’t confined to a specific time or place, meaning they can be delivered closer to the point of impact.

When run correctly, performance management should look more like a conversation than a formal review where a manager dictates to an employee. And this is reflected in how employees regard reviews, with 80% seeing little benefit to them.

There are also appraisals to consider. But what is a performance appraisal if not another term for reviews? It’s specifically the process of evaluating performance over a previous period of time. A lot of actual appraisal work happens before a review, with the conversation simply contextualizing the appraisal’s findings.

The problem with traditional performance reviews

Given that they’ve long been a default standard for so long, you’d imagine that traditional annual reviews must be fit for the purpose, right? After all, around 60% of organizations still rely on them as their only method of performance management.

And yet, interest in performance review alternatives is undeniably high. That’s because statistical evidence shows just how badly this approach falls short. 95% of managers aren’t satisfied with their company’s performance reviews. Similarly, 77% of HR professionals don’t believe these processes yield accurate representations of how well employees perform.

Only relying on an annual review to assess performance puts undue pressure on both managers and employees. Both end up struggling to recall the past year in full and think of meaningful performance review questions to drive the conversation. If, that is, a manager doesn’t override the employee and control the conversation without their input.

Bear in mind, those are only the reasons to dislike the review conversation itself. Without supporting feedback to bridge the gap between reviews, employees can end up going a long time without meaningful guidance.

Then, when review season rolls around and they do get feedback, it will either disproportionately focus on recent events, or will be so far removed from the inciting incident that employees hardly remember the context. After all, what is a performance evaluation good for if it doesn’t consider the entirety of an employee’s contributions?

The shift towards continuous performance management

8 in 10 employees feel their current performance reviews are “average” at best when it comes to improving their performance. In addition to the other stats we’ve outlined so far, this highlights the extent of dissatisfaction on all levels when it comes to outdated practices.

As well as the stats you’ll find in our ebook, Gallup’s fast feedback research has previously shown that 80% of employees who’d gotten meaningful feedback in the past week were fully engaged. And that’s despite how low global engagement has been for years. In the face of all that, what is an annual review realistically achieving for your workforce?

Now, more organizations are steadily embracing continuous feedback and performance management. Not only does it allow you to give greater support to employees, it also enables the collection of more detailed performance insights. So, what are companies doing to develop a more continuous approach?

Well, it more or less connects back to what we were saying about performance conversations. Once you start viewing all performance management interactions as conversations, it opens you up to exchanging two-way feedback in all sorts of ways. Like less intensive 1:1 meetings, asynchronous tools like employee check-ins, and more communal options like 360 feedback and peer recognition.

How to have an effective performance conversation

Next, let’s go over some best practices for performance conversations. Moving beyond isolated reviews is only the first step. The quality and effectiveness of these conversations hinge on how managers approach them. Remember, what is a performance review if not a conversation to get on the same page?

1. Ask the right questions

Asking the right questions in a performance conversation is essential if you want to reach a common understanding. Although we’ll be focusing on the performance management perspective, this is one of our most important tips for employees as well as managers.

The questions managers ask employees run the risk of being a tick-box exercise. Don’t fall into the trap of asking everyone the same generic stuff in 1:1s and surveys. Questions should be relevant to the performance of the individual. Avoid leading questions and give employees the space to put things in their own words.

2. Focus on regular feedback

The annual nature of traditional performance reviews is arguably their biggest failing as a standalone tool. Whether you’re sitting down with employees in person or checking in with them asynchronously, regular feedback is critical.

Regular guidance helps you improve performance and subtly course-correct over time. This is way more effective than waiting a year and then raking employees over the coals for twelve months of mistakes at a time.

It also offers you real-time insights. Too many managers simply assume their performance management tactics are effective. Using weekly, two-way feedback, you get a real-time flow of data about the state of performance, as well as insights on how your people feel about it.

3. Automate elements of performance management

Automating key functions in performance conversations helps cut the extensive prep work that makes traditional review processes so cumbersome. This is an area where having the right performance management software can make a world of difference.

This can include automating the scheduling of and reminders for performance conversations, like your 1:1s for the week or an upcoming check-in deadline. You can also use AI to automate performance analytics for quicker and more comprehensive insights.

4. Set and review goals frequently

Along with feedback, goal-setting is one of your most critical tools for managing employee performance. Goals give employees direction, ensuring that their work is relevant and beneficial. They also act as milestones that can help keep people motivated over the course of a project or work week.

There are plenty of goal-setting methodologies about, but OKRs and SMART Goals are two of the most popular. Whether you use one or the other, or even a mix of both, it’s essential to make regular use of them.

Update and expand on current goals whenever necessary, so your employees always know what’s expected of them. A regular stream of progress updates also means managers don’t have to breathe down the necks of their teams.

Regularly reviewing goals allows managers to always make informed performance management decisions. Has someone gone above and beyond by reaching all their objectives at blistering speed? Hype them up with recognition.

Conversely, has someone been consistently failing to meet their targets each week? Then it might be time for a 1:1 to discuss performance barriers and possible support measures.

How Perform365 supports performance conversations

What is a performance review without the tools and framework to back it up? We’ve touched on the importance of software solutions for modern performance management, so let’s look at how Zensai’s own Perform365 can enhance your performance conversations.

Weekly employee check-ins

Our employee check-ins are the ultimate two-way feedback tool. Managers choose small, focused question sets for each individual employee, with recommendations from our algorithm, addressing performance and related topics like engagement, support and wellbeing.

Employees submit their answers to these questions, which managers can then respond to directly. This allows for completely asynchronous, ad-hoc performance conversations where employees can gain additional context.

Our check-in questions also include a few handy features, like recognition questions and @mentions, which allow anyone to proactively highlight the helpfulness or exceptional performance of a colleague. There are also pass-ups, which let managers share particularly useful employee insights with their own managers and even senior leaders.

Customizable goal-tracking

Perform365 gives you your choice of Goals and OKRs, as well as the ability to mix and match. That way, you can use SMART Goals to break down individual projects, and OKRs to connect them to overarching objectives.

Consistent goal-tracking provides visibility and accountability, ensuring managers always have the most recent and relevant data when preparing for a performance conversation. It also means employees have increased awareness of their own performance, making it much easier for them to get on the same page as their boss.

Seamless Microsoft integration

Like the rest of our Human Success Platform, Perform365 is built to work alongside various Microsoft 365 apps to ensure you can share data across systems and transfer information from other Microsoft-based goal-tracking tools.

Our most important integration, however, is with Microsoft Teams. Perform365’s Teams integration allows managers and employees to submit or review goal updates without having to leave the app. They’ll also receive relevant alerts and reminders for any upcoming performance conversations they have scheduled.

Holistic performance insights

Perform365’s dashboards give managers and HR the latest data and updates from check-ins, goals and performance conversations in general. You can use performance data in combination with sentiment and engagement data for a truly three-dimensional view of performance across your organization.

With this information, you can pinpoint the exact differences between your highest-performing teams and those lagging behind. The best part is that Perform365’s automation features keep managing this data from turning into extra HR work.

Performance conversations rather than reviews

One last time, what is a performance review? A dinosaur. A relic of a bygone era. You can enable serious improvement by making reviews part of the broader habit of performance conversations.

Conversations are empowering for employees where reviews are stifling. They allow your people to have a say, highlight their achievements, and contextualize or defend their mistakes. Even more importantly, conversations aren’t bound to a specific point in the year. They can happen anywhere, anytime, which is an essential level of flexibility.

It’s possible to vastly improve performance conversations at work if HR and management are willing to put the work in. It’s not even as much work as it sounds, since modern performance review software solutions like Perform365 do so much to streamline things.