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How to Create a Formal Performance Review Process for Your Employees

By February 23, 2021No Comments
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Looking to create a formal performance review process for your employees? Then you’ve come to the right place! All businesses, small or large, should have a formal review process put in place and effectively implemented every year. If you’re nodding your head in agreement but don’t have one put in place yet, keep reading! In this article we’re going to break down how to create a formal review process step-by-step. Let’s get started!

What are performance reviews?

Before we get into the details of how to create a formal review process, let’s talk about what exactly a formal performance review is. A performance review, also known as employee evaluations, end-of-year reviews, or employee assessment reviews, is a written evaluation of your employee’s contributions in a certain time-frame. They can be conducted in a variety of ways and at different frequencies (i.e. quarterly, bi-annually, annually). When done properly, they can be an effective way to improve employee engagement, communication, professional development, and skills growth.

Most business have some sort of formal performance review process. For the employee, it typically entails a self-evaluation and meeting with their manager to receive and discuss feedback. For managers, it includes creating written feedback for employees as well as discussing the review face-to-face. Not only do performance reviews help individual employees, but they are also beneficial for the company at large.    

How to Create a Formal Performance Review Process

1. Outline the Structure

The first step is to create the structure of your formal performance reviews. The two main questions you need to answer here are:

  • How often will you hold performance reviews? 
  • Who will be conducting the reviews?

The frequency of the formal performance reviews are completely dependent on your business. It’s common to have quarterly, bi-annual, or annual performance reviews. We recommend that you hold a formal evaluation at least twice a year. Depending on your company, you may choose to do it more or less frequently.

Truthfully, it really depends on your business capabilities, needs, and goals. For example, a very large company may opt to hold bi-annual performance reviews, as it can take up a lot of time and effort to do so and two formal reviews may be sufficient for them. In this case, managers also may have a high number of direct reports, so performance reviews can be very time-consuming for them. That’s why in the first step, you also need to decide who will be conducting the reviews and how you will consolidate the data for an overall report.

Performance reviews should be conducted by someone who knows and works with the employee getting reviewed. That way, the assessment will be accurate and beneficial for both the employee and the company. It’s common that an employee’s direct manager conducts the review, but you can see skip-level reviews pretty commonly, too. However you decide to do it, ensure that you create a reporting mechanism by which you can gather overall data from all of the employee reviews so that you can learn from them.

2. Set the Review Criteria

After you decide how often to hold evaluations and who will be holding them, you will need to decide what the evaluation criteria will be. Of course, this can be flexible and change per review period, department, or even team member. Our suggestion is to write categories that you will include for every review and then change the criteria when necessary. Some commonly used criteria are:

  • Goal Achievement
  • Teamwork & Collaboration
  • Time Management
  • Professional Development
  • Growth
  • Quality of Work
  • Strengths & Weaknesses
  • Leadership

Not only should you decide what you will be reviewing, but you should also think through some measurement mechanisms. For example, if you’re reviewing goal achievement, you should have already set goals and know how you will measure their success. Or if you are reviewing quality of work, you will need to have guidelines for what constitutes quality. 

3. Employee Self-Evaluation

After you create the review criteria and let your employees know what it is and when their review is, it’s time to start actually doing the evaluation. It is most beneficial when both you and your employees fill out an evaluation. That way, they can review themselves, highlight their strengths and weaknesses, and bring more to the formal review conversation. So, at least a few weeks before the review meeting, create and send your employees a self-evaluation form (there are examples of this later), including all of the criteria that you will be reviewing them on. Have them fill this evaluation out before your meeting. You can even have them send it to you in advance if you’d like — we recommend you do.

4. Prepare & Write Your Feedback

Now, it’s your turn. Prepare and write down all of the feedback based on the evaluation form that you’ve created. Make sure that you are detailed, clear, and transparent in your written feedback. Depending on what criteria you use, your feedback may come in the form of paragraphs, bullet points, quantitative values, or a combination. Include both strengths and areas to improve for your employee. Remember, this isn’t just about constructive feedback. Formal reviews are the perfect time to let your team members know that they’re doing a good job.

So, take some time to think through and write down feedback for each employee you’re evaluating. If you spent enough time creating the actual evaluation form and making it straightforward and easy to follow, this process shouldn’t be too time-consuming.

5. Hold the Review Meeting

Formal reviews are best done face-to-face (or if you’re a remote team, over the phone). Discuss both your feedback and your employees’ self-evaluation during this meeting. In the meeting, you will review your feedback with your employee, commend them for any accomplishments, and talk about areas where they can grow. This is also a great time for your employee to ask any questions they may have or talk to you about potential professional development or skills growth opportunities they would like.

It’s common that your employee’s self-evaluation and your evaluation aren’t identical. That’s no reason for concern, so don’t sweat! If there is confusion or big gaps in the two evaluations, the face-to-face meeting is a great place to discuss and clear up any confusion. That’s why you should request to see your employee’s self-evaluation before the in-person meeting. While these meetings can be intimidating for all parties, if you conduct them well and make them engaging conversations, they can be incredibly fruitful and beneficial for the future.

6. Send Them a Copy

Finally, send your employee a copy of your written feedback. This can either be done before the review meeting or afterwards, depending on how you’d like to structure the actual meeting. Either way, make sure that you send them written feedback so they can refer back to it and so you can have documentation for future reviews. You may also send a copy to your HR department or your managers, depending on your business.

Here are examples of what performance reviews can look like:

  • Workforce: Three Month Performance Review
  • Grosum: Quarterly Performance Review
  • People Goal: Annual Performance Review: Self Evaluation

If none of those examples float your boat, remember that performance reviews don’t have to be done manually! There are a lot of different performance management software available that are made for small, mid-sized, and large companies alike. If the prospect of creating your own performance review process scares you, you might want to consider signing up for a performance management software. It’s as simple as that! While formal reviews do take time, they are definitely worth it. So, invest some time into creating the actual performance review process and then implement it to your business. Trust us, you won’t regret it.

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