Why is investing in performance management important? What business value does it provide?

Performance management is a key investment for business success – fundamentally, no one shows up to work intending to perform poorly. Performance management is about identifying strengths and weaknesses and working to turn weaknesses into strengths.

Employee retention is dependent on management and feedback – people don’t often leave jobs because they dislike the work. They leave because they don’t trust or like their managers. Investing in management skills, particularly in the area of feedback, can significantly reduce turnover and improve overall company morale.

The goal is to avoid surprising developments for employees – the worst thing that can happen in a performance review is a surprise. Continuous feedback and development help ensure that employees are aware of their performance and areas for improvement.

Performance management takes two forms: 

• Formal – semi-annual or annual performance reviews. 
• Informal – continuous informal feedback given to employees live or during 1:1s. 

Giving Feedback

What are examples of what good feedback looks like? What does poor feedback look like? 

Honesty is the best policy – the key to effective feedback is honesty. It’s not about being harsh or cruel, but telling someone the truth and honoring someone enough to level with them. At its core, this helps them understand how they could potentially be better. 

New managers need to focus on being specific and candid – it’s easy to get caught up in trying to avoid upsetting someone. However, if you’re not able to have a candid conversation and provide specific examples of how they could improve, you’re doing them a disservice. 

Not all feedback is a reprimand (and corrective actions aren’t always necessary) – feedback is simply a tool for growth and improvement, not a punishment. Not all feedback is negative, not all negative feedback should lead to corrective action. It’s important to differentiate between a performance issue and a simple mistake or misunderstanding. Corrective action should be reserved for when an issue has been addressed multiple times without improvement.

Good feedback is: 

• Timely – given as close to the precipitating event as possible. This allows the individual to correct their behavior right away, rather than hearing about something they could have done differently weeks later. 
• Empathic – when giving feedback, try to put yourself in the shoes of the person you’re speaking to. Remember that people want to get better and strengthen their skill sets. 
• Actionable – provide clear, actionable steps for improvement. This helps the recipient understand exactly what they need to do differently and gives them a clear path forward.

Bad feedback is:

• Grounded in avoidance – this leads to managers getting frustrated with an employee’s performance, even though the employee may not be aware of what they’re doing wrong. 
• Personal – feedback is not a personal attack, but a tool for growth and development. Help each other become better and work towards the success of the company.

You don’t get good at it unless you do it – we are socialized not to give negative feedback. Giving and receiving feedback is a skill that needs to be practiced. It builds trust within your team and creates an environment where everyone feels comfortable discussing the good, the bad, and the ugly. 

How can managers give effective feedback on a day-to-day basis? How can managers give effective feedback in 1:1s?

1:1s should be employee-led – the most effective 1:1s are those where the employee takes the lead. The employee should come prepared with an agenda in a shared doc between the employee and manager. This is their time to discuss blockers, areas of confusion, and any other issues they’re grappling with. 

They should go beyond status updates – while updates are important, 1:1s should also be a platform for problem-solving and addressing challenges. Employees should come prepared with not just problems, but also potential solutions. This proactive approach can help make the meeting more productive and efficient. 

Managers should provide carve out time for feedback during 1:1s – while the meeting should be employee-led, managers should also take the opportunity to provide feedback. This can be done towards the end of the meeting, and may not be necessary in every session. Document the 1:1 agendas and discussions to help track progress, identify recurring issues, and provide a reference point for future discussions. 

Think about employee development – employees want to know that you’ve thought about their development, their future, and their compensation. Having a performance review process can answer these questions and provide a safe space for employees to advocate for themselves. 

How should feedback be delivered? How should you preface delivery of feedback? 

Don’t get caught up in the tool or the form of feedback – the method of delivering feedback is less important than the content of the feedback itself. The goal is to communicate effectively, not to adhere to a specific format or tool.

Take time to process and respond to feedback – after receiving negative feedback, it can be beneficial to take a day to process the information before responding. This allows for a more thoughtful and productive response.

Not all feedback is a reprimand – it’s important to remember that not all negative feedback is a reprimand. Sometimes, feedback is simply a tool for growth and improvement, not a punishment.

Being open to feedback is a job requirement for employees – while it’s important to respect employee preferences, being open to feedback is a crucial part of professional growth. Managers have a responsibility to help their employees course correct, and employees have a responsibility to be receptive to this feedback.

Manager Development

Why is manager development an important part of a performance management program?

Emphasize investment in junior managers for feedback delivery and reception – junior managers often face the challenge of managing people who were once their peers. This transition can be difficult and may lead to ineffective communication. Organizations can support these managers by investing in their development, specifically in their ability to give and receive feedback.

Create a culture where feedback is expected and appreciated, not feared – good feedback provides thoughtful, actionable insights that help employees improve and your company grow. It’s not just about pointing out what went wrong. 

Recruiting and retaining talented employees is expensive, invest in keeping them – by investing a small percentage of your headcount spend on developing management skills, particularly in the area of feedback, organizations can reduce turnover and increase overall company morale. This investment can lead to significant financial benefits in the long run.

How can your organization develop managers that deliver effective feedback? What training or practices should you implement? 

Invest in training managers to give good feedback – through training sessions with role-playing and mock feedback sessions, you can improve the capabilities of your managers to give candid feedback and develop productive relationships with employees. Half of being a manager involves directing the work that needs to be done. But the other half involves understanding how to motivate people, what they need to hear, and how they learn. These are big learning hurdles to overcome as a manager, especially if you’re not taking it seriously. 

Radical Candor is an effective training framework – this can provide your org with a common language to talk about giving and receiving feedback. Steeping your employees in it can facilitate honest performance management conversations across the organization. The best companies develop their own internal language. This includes mandating a performance review cadence or one-on-one feedback cadence across managers in every function. It’s important to have a philosophy and an expectation of what these meetings should look like. 

Model good behavior – one of the best ways to learn how to give feedback is by seeing models of good behavior. Early career employees should observe other managers who are good at delivering hard truths in a safe and empowering way. Seeing good feedback practices from the top down can shape you into a better manager. 

Create a Culture of Feedback and Improvement – to create a culture of feedback and improvement, it’s essential to model it from the top down. It’s also crucial to communicate what you mean in multiple ways and multiple times, as people don’t all learn the same way.

How should managers solicit feedback on their performance from employees?

Regularly solicit feedback during 1:1s – managers should have at least one 1:1 per month where they ask for feedback. This open communication allows for growth and improvement on both sides.

Accept that not everyone will like you – as a manager, it’s important to understand that not everyone will always like you. This is a part of leadership and should not deter you from making necessary decisions. It’s important for managers to be able to take criticism and learn from it, rather than letting their ego get in the way.

Encourage honest communication – managers should encourage their team members to share their thoughts and feelings, even if they might be uncomfortable or potentially hurtful. This honesty allows for growth and improvement. Managers should reassure their team that they won’t be hurt by their feedback, but rather, they would be more hurt if they weren’t told something they needed to know.

Performance Reviews and Performance Comp

When during the year should you hold formal performance reviews? 

If reviews are tied to comp, schedule reviews immediately before comp changes –  if the reviews will determine comp changes, then the timing of these comp reviews should be decided first and the performance reviews scheduled ahead of those changes so that employees understand why their compensation changed as it did.

What content should go into a performance review?

No surprises – formal reviews should not be a source of anxiety, and should not be the first time an employee hears about their performance. Instead, they should be a recap of the continuous feedback and development that has been happening.

Identify Strengths – when conducting a review, it’s essential to highlight the skills that set the individual apart. This not only boosts their confidence but also helps them understand their unique value within the team or organization.

Provide insights for growth – conducting effective reviews requires a lot of thought and preparation. It’s not just about listing out points but understanding the individual’s performance in depth and providing valuable insights for their growth. This is why reviews can be time-consuming but are ultimately beneficial for both the individual and the organization.

Provide constructive feedback – along with recognizing strengths, it’s equally important to identify areas that need improvement. This should be done in a constructive manner, focusing on the skills or behaviors that need to be developed or enhanced.

Incorporate 360° Feedback – There are various ways to incorporate 360° feedback that is not part of the performance review process. This could include NPS scores, pulse surveys, check-ins, etc. It’s important to have a way for employees to provide feedback.

What is HR’s role in performance reviews?

HR’s role is to ensure objectivity – HR professionals read all of the reviews with a critical eye, striving to maintain objectivity. They assess whether the feedback is fair, actionable, and effectively communicates the intended message to the employee.

HR can help calibrate reviews across functions – HR plays a significant role in the calibration process, pushing managers to have difficult conversations when necessary. Some managers may resist using the review to deliver unpleasant feedback, and HR’s role is to encourage them to do so.

HR ensures that managers are communicating effectively with their employees – they ask managers whether they’ve told employees everything they need to know regarding performance improvements. This includes outlining what great performance looks like, identifying the employee’s unique contributions, and highlighting areas for improvement or further investigation.

HR pushes reviews into professional development – HR helps guide the conversation towards the employee’s professional development. They encourage managers to ask questions that will help employees understand how to move their professional development forward.

Should you incorporate employee self-reviews?

Self-reviews are a valuable tool for employee self-assessment and growth – they allow employees to reflect on their performance, achievements, and areas for improvement. This exercise can be enlightening for both the employee and the manager, providing a platform for open discussion, demonstration of self-awareness, and development. They can also be used as a platform for employees to vent their frustrations, particularly if they have issues with their manager. It’s important to approach self-reviews with an open mind and a focus on constructive feedback.

Have employees complete their self-review first – to ensure the performance review process isn’t overly lengthy, have employees start their self-reviews about a week before managers begin their portion. This allows for the employee feedback to be considered as the manager completes their review.

How can you increase the accuracy and decrease biases when delivering performance reviews? 

Calibrate at a High Level with HR review – before conducting performance reviews, it’s important to calibrate at a high level. This involves setting clear expectations and standards for performance, which can help ensure that all employees are evaluated fairly and consistently. HR professionals are trained to identify and address bias, having them review ensures that performance reviews are fair and objective.

Do a peer gut check – if you have peers who manage similar teams or have an understanding of your team, a gut check can be a useful tool. This involves discussing performance reviews with these peers to gain additional perspectives and insights. However, it’s important to be careful not to broadcast an individual’s performance issues too widely.

Avoid the “Halo and Horns” Effect – this is the tendency to allow recent events to color our perception of an individual’s overall performance. To avoid this, it’s important to keep good notes and review them before conducting performance reviews. This can help ensure that the review is based on the individual’s overall performance, rather than recent events.

Hold regular 1:1s – Regular one-on-ones with employees can provide valuable insights into their performance. These meetings can also provide an opportunity to address any issues or concerns in a timely manner, which can help ensure that performance reviews are accurate and fair.

Avoid complicated review systems – while performance review systems are important, they shouldn’t be too complicated or time-consuming. It’s better to keep it lightweight and learn as you go. It’s also important to walk before you run – start with setting clear expectations from the company to the employee, and once you get good at that, you can start soliciting feedback in a more formal setting. 

Should you have numeric performance ratings? What types of rating scales are most effective?

A 1-5 rating system can be effective in the right situations – the ratings tend to look like:

1. Significant improvement is needed
2. Room for development
3. Doing what needs to be done
4. Going above and beyond
5. Exceptional performance 

However, performance ratings can be subjective and potentially demotivating – some employees may feel discouraged if they don’t receive a perfect score. It’s important to remember that not everyone can be a 5 all the time. Factors outside of work can impact performance, and it’s unrealistic to expect constant peak performance. If you use them, communicate how they’ll be used to the employee. 

Performance ratings should not be the sole determinant of an employee’s value – while they can be a useful tool for determining pay or promotions, they should not be the only factor considered. Other aspects such as an employee’s potential, their contribution to the team, and their personal circumstances should also be taken into account. 

Avoid forced bell curves – while it’s important to ensure consistency across departments, it’s not recommended to force evaluations into a bell curve. Instead, the focus should be on ensuring fair and accurate evaluations. 

Should you tie compensation to performance? Should comp be discussed in performance review meetings?

Decoupling feedback from compensation is not entirely practical – feedback often informs compensation, so completely separating the two can be challenging. However, some companies have found success with this model. It’s natural that performance conversations would inform compensation decisions. This doesn’t mean that every performance conversation leads to a raise, but the information gathered during these discussions can help determine where an employee’s compensation lands.

Robust feedback culture reduces pressure on annual reviews – if you have a strong culture of feedback and one-on-one conversations, the pressure on semi-annual or annual reviews is reduced. These reviews aren’t doing the heavy lifting of many things. If you’re consistently discussing an employee’s performance, strengths, and challenges, the annual review becomes less of a blockbuster event and more of a summary of ground that’s already been covered.

Striking a Balance is Key – many companies fall somewhere between the two poles of comp being tied with complete fidelity to the results of a performance review, and compensation having no relation to performance. While it’s important to provide regular feedback and have ongoing performance discussions, it’s also crucial to remember that work needs to get done. 

The importance of calibration meetings is increased if you tie comp to performance – after performance reviews are completed, a senior leadership calibration meeting should be held. This is to ensure that evaluations across different departments are consistent and to prevent bias. This meeting can also help determine how available funds for raises or bonuses are allocated.

If comp and feedback are separate, you end up doubling the performance meetings – if feedback and compensation are separated, this could result in double the meetings (one of comp and one for feedback). However, this can be mitigated by holding a calibration meeting after the performance reviews.

Overall

What are the most important things to get right? 

Believe in your employees’ potential – it’s important to remember that no one shows up to work intending to perform poorly. This belief should be your guiding principle when managing employee performance.

Investigate your own bias – everyone has biases, and they can often cloud our judgment. It’s crucial to take the time to investigate your own biases and emotions that may be influencing your perception of an employee’s performance.

Treat people with respect – regardless of their performance, all employees deserve to be treated with respect. This not only fosters a positive work environment but also encourages employees to improve their performance.

What are common pitfalls? 

Failure to communicate expectations clearly – managers often assume that telling an employee something once or twice is enough. However, if the desired change is not happening, it means the message has not been communicated effectively. Managers need to ensure they are clear and consistent in communicating their expectations.

Neglecting to give constructive feedback – it’s a common pitfall for managers to avoid giving feedback, especially when it’s negative. However, not providing feedback denies the employee the opportunity to improve and grow. It’s crucial for managers to provide constructive, actionable feedback regularly.

Not investing in employee development – managers who don’t invest time and effort into their employees’ professional development are missing a key aspect of their role. Employees need guidance and support to improve their skills and performance. Managers who neglect this aspect may find themselves dealing with performance issues within their team.

Avoiding difficult conversations – it’s not uncommon for managers to avoid difficult conversations with their team members. However, avoiding these conversations can lead to unresolved issues and tension within the team. Managers need to be willing to have these conversations and address issues head-on to maintain a healthy and productive work environment.