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Conducting Annual Reviews

Start with (SMART) Goals

With clear, effective goals, employees know where they stand – whether they’re meeting expectations or possibly falling behind. Handled properly, goals also help align employees with the business and their coworkers, which boosts engagement.

Include employees in the goal creation process

You should involve your employees in the goal creation process, as it gives them a degree of ownership over their jobs – and, ultimately, their careers. Most employees have an idea of how they’d like their careers to develop, and if they’re assigning goals to themselves that are related to their continued growth, it makes them feel like they’re on the right path and that the company is supporting them. Similarly, employees indicate where their interests and strengths lie when they assign their own goals, which helps you see where to focus your efforts to increase productivity overall.

Your own goals (as a manager or department head) are important, but be careful not to overburden your employees or hold them to impossible standards. Since employees are more familiar with their workload and maximum capacity, their goal measurements may be more accurate than the ones you create. If they come back with a metric that is too low, you can always increase the number to motivate employees to work harder, but at least you’ll have a better idea of what they consider realistic.

Work SMARTer, not harder

Any goals you assign should be SMART. SMART is an acronym for:

Specific: The goal is focused on an area or task, not generalized
Measurable: The goal includes a metric, survey or audit that confirms whether it’s been met
Achievable: The goal increases employee output but is still possible
Relevant: The goal ties into the company plan or objectives
Timebound: The goal has a clear end date

If you’re following the SMART guidelines, your employees should have a clear understanding of what needs to be accomplished during the year.

Additional considerations when creating goals

Keep in mind that assigning stretch goals is a fine balancing act.

You want goals to be aggressive enough to motivate employees and boost their performance. But if goals are too aggressive, employees can get discouraged and disengage.

Set a handful of core goals, but only one or two more far-reaching stretch goals per year.

If you have multiple stretch goals that must be met for the year, consider doling them out to a team rather than a single employee. Meeting stretch goals is easier when you have multiple hands on deck. Group goals also encourage employees to work together, helping to strengthen teams and departments. Plus, workers may learn some new skills in the process.

One final recommendation is to incorporate your company mission statement or core values into employee goals. Tying these values into your employees’ performance can make your workforce feel more connected to the company and their coworkers.

Strategies for Stronger, Results-Driven Performance Reviews

When it comes to managing employee performance, many companies miss the mark. And here’s why:

True performance management means more than conducting reviews with employees once or twice a year.

If you only provide feedback at review time – sitting across a desk and going point by point through a rigid appraisal form – you’re overlooking many valuable opportunities to mentor, support and guide your employees.

Instead, you should:

Provide regular and immediate feedback year-round. To help employees learn from their mistakes and overcome their challenges, you need to share feedback that’s specific and timely. If you’re plugged into what your employees are doing day to day, and have worked to maintain an “open door” policy with them, confronting them with constructive criticism will be easier.
Set the right foundation at the beginning of the year. Create some structure around your expectations for the position and what a positive, productive year should look like. With the employee’s input, take the time to determine a handful of objective, measurable goals. Strive for goals that are challenging, but at the same time attainable.
Keep track of daily performance. A performance log or digital file lets you jot down notes about an employee’s good or bad behavior, as you observe it or hear about it. This information can be a handy reference for weekly or monthly discussions and certainly, a much more reliable resource at review time than your memory!

Acing the actual appraisal

You’re keeping the lines of communication open with your employees and providing thoughtful feedback on a regular basis. Excellent! But like most companies, you also need to complete a written appraisal and conduct a formal, one-on-one review. Here’s how to make the most of it:

Be prepared. This should be obvious, but make sure you’ve thought through what you’re going to say, and how you’re going to say it, before sitting down with the employee. Whether you use a standard performance appraisal form or some other written format for rating key performance factors, you still need to talk through the contents and fill in additional details.
Create the right setting. You’ve put a lot of thought into creating a thorough, effective review. Now put the same amount of planning into the actual “event.” Schedule the meeting in advance, choose a quiet setting free from phone or people interruptions, and set aside enough time for a respectful, unhurried discussion.
Lead with the positive. Performance reviews can be as anxiety-inducing for the employee as they are for the manager or supervisor. Reinforce the employee’s strengths (with specific examples, of course) at the beginning of the review to set a positive tone and help put the employee at ease.
Make it a two-way conversation. An effective performance review is not a one-sided monologue by a manager. Rather, it should be an open exchange that allows employees to voice their concerns and offer new ideas. Creating this dynamic will help employees feel you value their opinions, which goes a long way toward increasing employee engagement and morale.
Focus on what matters to the employee. Job satisfaction plays a huge role in an employee’s attitude and performance. Just as no two employees are exactly alike, there’s no such thing as a “one size fits all” approach to reviews. An effective review should explore the issues that matter most to the employee, whether that means accepting new challenges, working on teams, taking on more responsibility or receiving additional training. If you know what makes an employee “tick," you can tie more of those motivators into his or her goals and objectives.

Rating Job-Related Behavioral Traits

The bulk of the employee review should be spent discussing the employee’s performance with the four to six main goals/objectives you established for the review period. Depending on the job, however, some of the following traits may also be relevant for the job.


Tolerance of change/adaptability
Conduct with coworkers
Orientation toward service


Internal (with coworkers)
External (with vendors, customers, clients, patients, etc.)
Meeting participation
Email (when relevant)
Phone manner (when relevant)
Conflict resolution
Ability to accept criticism

Job Skills

Project management/planning and organization
Computer and/or systems skills
Problem solving
Quality of work
Quantity of work
Time management/respect for deadlines
Specific job skills

Corporate Values

Respect toward colleagues
Respect for company policies (including dress code)
Respect for company resources
Safety consciousness
When covering any of these traits, make sure you have evidence to support your ratings. Besides your own documentation, you can use timecards, production reports, customer feedback or other records as backup. Rate job performance by focusing on actions and behavior, rather than attitude. (You’ll find it next to impossible to support your opinions on attitude with hard evidence.) Also, use information and evidence from the entire appraisal period, not just the recent past.

Avoiding Performance Review Surprises

The fear of the unknown is a big reason employees dislike or even dread performance reviews. After all, no one wants to hear about their shortcomings when they felt they were performing well.

When done properly, however, performance reviews don’t contain any surprises.

Here are a few tips for making sure employees always know how they’re performing:

Offer real-time feedback. Performance management is a process, not a one-time event. If you regularly meet with employees and give them honest feedback along the way, you won’t have to cover any new ground in formal performance reviews.
Put it in writing. When you meet with employees, have them turn in something in writing, like a weekly or monthly status report. Having employees capture details about their day-to-day work forces them to think about their performance and productivity on a regular basis. Use these reports, too, to jot down notes for easy reference later. The more objective numbers, facts or dates you have on hand, the more accurate your performance appraisal will be.
Conduct performance review pre-meetings. Once it gets close to the actual performance review, take the time to meet with employees for a brief overview of their achievements and challenges. These meetings should help set the tone for performance reviews without going into specifics. For example, if you have employees with time management issues, let them know your concern and recommend they prepare a list of ways to improve next year or the circumstances that are hindering them.
Schedule performance planning meetings. Whenever you create new goals for your employees, arrange performance planning meetings to discuss the details. That way, employees will know what level they need to perform at – and how, precisely, their performance will be measured throughout the year.
Increase the frequency of performance reviews. If you only conduct annual performance reviews, consider adding mid-year reviews. By meeting at the halfway point, you’re giving employees enough time to improve their performance before their annual reviews, which tend to be more thorough. If you already have biannual reviews, hold quarterly check-ins that address more details than weekly meetings.
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