Good performance reviews work. They help organisations of all shapes and sizes achieve results. They bring out
the best in people, strengthen the employment relationship and boost achievement, morale, and productivity across the business.
The only thing is, performance reviews have to be done well and very often, they aren’t. Many organisations, especially large ones, have made the performance review process laborious and bureaucratic, focusing on filling out paperwork rather than enabling regular, meaningful conversations between managers and employees. This has become such an issue that performance reviews have become widely unpopular, and many HR pundits have argued they are outdated and redundant, and aren’t worth the resources spent on them.
But an effective, efficient performance review system is an important tool for ensuring employees reach their potential, and the company runs smoothly and meets its objectives. This white paper covers all aspects of the modern performance review, including why it is important, common mistakes, and how to make performance reviews more effective.
Everyone wants to succeed and improve. Just as you want your business to flourish, your employees want to grow too. But in the busy work environment, it can be hard to get an accurate gauge of how your people are performing against personal and business goals without having some sort of formalised appraisal process. When done well, performance reviews provide a vital tool for management and employees to quantify and measure performance, and to have the opportunity to get together to discuss it.
Other research by Gallup found only 14% of employees strongly agree their performance reviews inspire them to improve).** Feedback and instruction are essential to improvement. They help people understand their abilities and strengths, ways they can use them, as well as any areas that may need development. It’s about recognising when a job or task was done well or when (and how) it could’ve been done better. Performance reviews help provide clarity about company goals and expectations, set a benchmark so it is clear when an individual’s performance slips, and can highlight areas that may need more attention. It may be that the employee needs to gain new skills or wants to get further training.
Performance evaluations are a great way to spot people’s talents and to work on a plan that will nurture them. If there are any issues that are impeding productivity, whether they are personal or more endemic to the company or its systems, an honest review process can help highlight them. Employers then have the chance to work on solutions before there are larger problems that cause disruptions or drive an employee to quit, or need discipline or dismissal. It’s all part of creating a team culture that supports and rewards achievement, and aims to build on it collaboratively. Motivated and valued people want to excel, which is proven to benefit the business as a whole. Without performance reviews, people may just meander along doing what they’ve always done, in the ways they’ve always done them. Same performance, same results.
Performance reviews work best as conversations. When giving feedback, also offer people a chance to raise any concerns and suggestions they have. Maintaining open lines of communication enhances working relationships, encourages trust and collaboration, and raises morale. Acknowledgement and constructive coaching helps motivate people to strive for improvement. Without feedback, your team members may be unaware of poor performance and won’t be able to change it.
Your business’ success relies on the efforts of each person, individually and as part of a team. Reviews help provide clarity about company goals and expectations, and provide a benchmark so you can see what an individual does well or when performance slips. You then have the opportunity to reward good work or collaborate on ways to build achievement, provide additional training or support, or redefine roles. If employees know what is expected of them and ways to boost performance, management can spend less time directing individuals and focus more on building the business.
Performance evaluations provide a view of how your workers are doing in the development of their skills, knowledge, initiative, and engagement with the company’s vision. This ongoing record of an employee’s strengths and weaknesses enables you to fine-tune a career path within the company where they can put their talents and interests to best use. Your people will be more invested in the business, and by promoting internally, the company retains all the organisational knowledge they have built up.
Performance reviews provide an excellent opportunity to identify and discuss any development and training requirements, which can be planned and then assessed throughout the review cycle. Having each member performing at their best means your team will be more productive. You will also be able to match people’s strengths with job duties and identify the best candidates for the right teams.
The review process facilitates valuable conversations with employees, giving regular encouragement and feedback, drawing attention to what’s important, and ensuring they have all the tools, skills, and knowledge to do the job well. By treating employees as partners working towards common business goals, you build a team where people support each other to succeed. This has the flow-on effects of aiding staff retention, recruitment, and improving the service you provide to your customers.
Unfortunately, many businesses go through the motions of performance reviews without understanding why they are doing them or why they need to get them right. Just because a company puts its employees’ performance through an evaluation process doesn’t mean good results are guaranteed.
In fact, having a performance management system that is badly designed and delivered could be damaging rather than improving employees’ and the overall business’ progress. In 2015, Deloitte found that 82 percent of the companies surveyed for its Global Human Capital Trends report thought their employee review processes weren’t worth the time they spent on them. Further analysis of Deloitte’s own approach to performance management found they were wasting 1.8 million hours a year and that employees weren’t engaged and performance levels were dropping. The company (the largest professional services network in the world with over 263,000 employees) then set about reinventing its performance review and management systems to better fit its business and employee needs. This is good news. The team at MyHR sees a lot of errors and poor practices in evaluating and shaping employee performance, and the mistakes often limit the value of doing it at all.
One of the most common mistakes is the organisation and the people in it not understanding the purpose of conducting performance reviews or the system of evaluation itself. There’s no ‘one size fits all’ approach to performance reviews, but whatever process and systems you use, they should be tailored to the needs of the business and understood by everyone involved.
Another common error is using performance reviews to approve or deny a pay raise. This traditional approach can reduce the review into a salary negotiation, distracting from the conversation about a person’s achievements and where they should put their attention going forward. At worst, employees feel they are pitted against each other and management, so instead of working as a team focussed on the goals of the company, people will be more interested in their own salary and ambitions. The potential for disgruntlement is also high if things don’t go their way. It’s better to keep performance reviews focussed on performance and have pay conversations separately.
One of the most common failings in performance review processes is not giving employees regular feedback and then unloading on them during review meetings. The employee can end up feeling unfairly blindsided, especially if the feedback is negative, which can leave them feeling alienated and unmotivated. Instead of enhancing their performance and loyalty, you will have damaged it. Research by global recruitment company Robert Half found that staff would prefer feedback on a more regular basis, either monthly, quarterly, or on the spot. Providing regular feedback and guidance is far more effective for commending good performance and working on ways to develop talent long-term. It helps shift the focus from past to future, from simple performance review to ongoing performance management. Feedback doesn’t always have to be formal either. Another survey by SEEK found that 84% of respondents believed informal feedback was more valuable than formal appraisals. So don’t wait to pass on praise for a job well-done or discuss ways an employee could improve.
Only holding reviews annually presents a whole raft of issues, not the least of which can be the burden of making the process overly formal and complex. Employees and managers then end up bogged down by paperwork, turning the review into a box-ticking exercise that is heavily slanted towards past performance (if you can accurately trace it) instead of ongoing achievement, areas for improvement, and what skills the business needs to meet its objectives. The annual review cycle may work for some roles, but for many others assessment may be much better on a monthly or quarterly basis. People who are new in a position or not performing to agreed levels may need even more frequent check-ins, which will help give them the feedback and support they need to develop and flourish.
One of the main reasons why many employees and managers have such a bleak view of performance reviews is the burden of all the paperwork. If you are evaluating 20 different performance indicators and each is worth 2.5% of the overall rating, you will be wasting valuable time on a completely pointless exercise. You may also resort to using the same measures and methods for all employees and all roles, in an effort to claw back a bit of time. A business should be a team working to achieve the same objectives, with each employee playing a role within it. Having a rigid, blanket review system won’t provide an accurate assessment of each person’s performance and talents, any areas for development, and the possibilities ahead. Management will miss important opportunities to identify processes or relationships within the business that could be improved or to link individual performance with overall company strategy.
Then there’s the problem of the employer or manager being judge and jury, rating employees without input from others – especially that of the employees themselves. Performance evaluations work best as open, honest conversations and shouldn’t be a one-sided discourse where the boss or manager relays his or her own appraisal of the employee’s past performance. Top-down, one-sided evaluations can be clouded by bias and may provide only limited insight into the reasons for good or bad performance, be they personal, collective, or company-wide. There is also a risk of damaging people’s morale and making it harder to get their buy-in to the evaluation process or any future achievement.
Employee performance doesn’t occur in a vacuum. Setting each person’s performance targets without considering how their goals will contribute to the company’s overall objectives could mean your team members’ efforts are arbitrary and disjointed. The company’s strategy and targets should be defined first and every employee’s objectives should sit within this strategy, so when individual goals are achieved, the collective results deliver the overall company result. Everyone in the business should know what they are part of and what they are striving for, so make sure your vision and goals are communicated widely and often. Also ensure each employee is evaluated on factors they can actually influence. You don’t want to penalise a high-performer because others who contributed to overall results failed to deliver. The performer is the one your business needs to keep.
In a business world that’s rapidly changing, companies recognise that they need to adapt. There’s little point in having a performance review and management system that can’t change with the times or what employees need to succeed.
Fortunately, many companies across the world have recognised the need to overhaul their dated annual performance reviews and, like Deloitte, are instituting more dynamic, streamlined strategies that measure performance as accurately as possible and regularly connect management and employees to discuss the results and ongoing development and success. Open, two-way conversations are key. People want to work in an environment where they feel supported, trusted, and valued. They want to take pride in their job, to be rewarded when they are doing well, and given opportunities to apply their talents or be offered assistance if there are areas where they could improve.
Every employee is an individual, so performance review systems should be flexible enough to recognise each person’s skills, interests, and aspirations so they can be developed and rewarded. If the review hones in on weaknesses without charting a practical course for improvement, there is a real risk of discouraging rather than motivating people. Likewise, measuring every single aspect of an employee’s efforts and producing a lengthy review like a school report may be counterproductive (not to mention tiresome). Forms and documents are useful for defining and communicating expectations, assessments, and results, but they shouldn’t come at the expense of regular, honest dialogue.
Involve the employee in performance planning from the outset. Agree on fair, quantifiable objectives that are relevant to each person’s role along with the skills needed to achieve them. This will ensure the review is both effective and easily-achievable. Include a plan for development activities that the business and the employee can complete to improve skills, achieve the objectives, and enhance their career.
Don’t wait until scheduled performance review meetings to give or receive feedback. Not all conversations have to be formal. The process should be continuous, helping people understand their strengths and the connection between their performance and the business’ success. It should also provide a safe channel for the employee to rate their performance and to raise issues. Things change, whether inside or outside the business, so a performance appraisal system should be able to adapt. Business goals can shift. The market can change. An employee might develop new interests or want to alter their hours. By working together, you can help ensure your people stay connected and committed. Don’t forget that people-management skills are vital, so senior leaders and managers may need support and training, too. Be objective. If practice shows there are aspects of the system that aren’t working, don’t be afraid to modify or jettison them.
Experts that understand good performance management can ensure your system is tailored to both the goals of team members and the overall business. An integrated digital
Make sure it fits the role and the individual.
Focus on the conversations, not the forms.
Get the review cycle right.
Keep it simple so everyone understands it.
Use software
Long and complicated forms with massively complex matrices and measures detract from the real conversation and encourage a focus on filling out forms. To simplify, try this structure:
What you need to do to be successful:
3 - 5 Key Performance Indicators.
Only activities that are over-and-above the core role, nothing about “turning up on time”.
These are “hard” measures, easy to articulate and measure.
What skills do you need to achieve the objectives:
These are the softer measures that can sometimes be harder to rate.
Linking them to the objectives makes them easier to measure.
Development activities you and the employee will complete:
The activities will help improve skills, which will help achieve the objectives.
And help with career development.
Follow these steps and you’ll notice how your performance reviews start to encourage ongoing and active conversations around performance. They will help you all deliver great results, rewarding good people and dealing with any issues before they become entrenched.
Recruitment isn’t an exact science. There are many steps in the process and no single step guarantees you’ll attract and select the right candidate. It can also be flawed by any number of errors, whether it’s bias, omission, or over-reliance of one criterion over others. Let’s take a look at the most common recruitment mistakes and ways you can avoid them.
Approaching recruitment haphazardly can really hamper the results. You may have a great role that many talented people apply for but then make mistakes due to a messy interview process or random candidate selection. The trick is using all the steps together consistently to get the best outcome. Be aware of the pros and cons of each phase, so you know where you might discount or endorse someone incorrectly. The pros of one step should mitigate the cons of another. A structured approach is also much easier to implement, which means it is easier to analyse and improve upon next time. Remember too, that you will have way more unsuccessful candidates than successful, and if they have a bad experience, that will damage your reputation. Be organised when they show up. Uphold any time commitments you make. Communicate proactively with all the candidates, so they are informed of progress.
Starting recruitment with a job description that doesn’t accurately define the work you need done is a really basic error. Many people don’t take the time up front to determine the current and future needs of the company and role, and then let the recruitment process shape the position. Everything flows from having a clear view of the job, tasks, and your expectations. Ask yourself what you’re recruiting for? An accurate, honest job description will keep you focused on the sort of person, skills, and qualifications you need. It will also mean potential candidates know exactly what they are applying for, which will help attract the right sorts of people. But there is a balance to be struck. You don’t want the job description to be so detailed and granular that it’s hard to understand and the purpose of the role gets confused.
In seeking to attract the cream of the crop, it can be tempting to aggrandise the position or promise more opportunities than there actually are. It won’t take long for your new hire to find out whether the role is more limited (or more demanding) than they were expecting, or if any promised likelihood of advancement or bonuses were exaggerated. Any mismatch in expectations can cause a sharp loss of focus and motivation or start the person looking for work elsewhere. Again, the work you do in defining the job will help clarify what you need from a candidate and what you can offer them.
Some employers spend hours pouring over CVs, analysing and comparing details. Others may take all the glowing praise of referees literally. CVs really aren’t that accurate at predicting a candidate’s suitability for the role; it’s easy to embellish or make up details, and it’s hard to verify any claims made. We recommend sorting quickly through CVs to create a short list. Look for consistency, alignment with your needs, quality formatting, grammar and spelling. Compare them to LinkedIn (or other social media) profiles. If any achievements look too good to be true, flag them for checking later. Use referees to supplement the information you collect during the interview and selection process. We all choose referees because we know they’ll paint us in a favourable light. When talking to referees, ask about strengths and any development needs to help get a fuller picture of the person.
Interviews are an important chance to meet candidates, get a feel for their abilities and personalities, and hone in on their background, insights, and motivations. But too often they can be variable, vague, or overbearing. Interviewing is a skill that needs to be approached with preparation and structure. You’re not sitting down for a cozy chat but nor is it an inquisition. Try to create a relaxed but purposeful atmosphere. Have basic set questions so you can compare responses. Also have some curly or unusual ones that require thought, self-reflection, and creativity to answer so you can get some detail about what a person has previously done, what they’re good at, areas for development etc. Don’t do all the talking or use questions that leave candidates with little room to discuss themselves or their skills. You need more than ‘yes’ or ‘no’ answers. A good rule of thumb is to have the candidate speak for 80% of the interview. Remember, some people are better than others in an interview situation and this isn’t always a fail-safe predictor of their ability to do a job (e.g. research shows narcissists do well in interviews, but you wouldn’t necessarily want one in your team).
By this stage in the process, recruiters usually develop a sense of which candidate(s) they prefer. But paying too much heed to ‘gut feelings’ can lead to hiring mistakes. We like to think we’re rational and balanced thinkers but our intuition is usually informed by a lot of things, including unconscious biases and social preferences. So instead of looking objectively at candidates, you can end up narrowing it down to those who share your background, ethnicity, age, gender etc. (also known as the ‘like me’ bias). To balance your intuition, include a range of assessments that give you some concrete results, like psychometric tests and work samples. If you’re still in doubt, step back and get someone you trust in the business to give you a second opinion. Having them review the information or join you for interviews could really clarify things.
There’s no reason to assume the best candidates aren’t already working with you, but plenty of people overlook existing employees to cast their net in the wider market. Quite apart from the time — and cost — savings, filling roles internally means the person is already part of the team, understands your company’s culture, processes, and mission, and is likely to get up to speed in the new role faster than a brand new hire. Promoting and training up your own team members is good for wider morale and team spirit, as it clearly demonstrates career progression and trust. It also helps you retain any intellectual capital that you’d lose if the person left.
We all know the one about the prince or princess who waited for their perfect match and ended up forever spouseless. It happens in recruiting, too. While there is little point in filling a role with someone you don’t expect to succeed, keeping the vacancy open indefinitely can put strain on you, your team, and the company. If you’re having trouble finding someone after advertising a couple of times, it is probably time to check if your expectations about the role, the market, and pay rates are realistic. If you’re not getting the calibre of person you want, either you’re not positioning the role right, you’re not offering sufficient incentives (not just remuneration), or there’s something else going on that makes your organisation unattractive.
Of course, recruiting is about filling an immediate gap in the team. But don’t make the mistake of discounting the wider, long term picture. Just as you want people to grow into invaluable employees that help drive your business, people want to develop and grow. Again, this speaks to the defining work you need to do up-front, so the role is informed by your company’s strategy and vision. A new hire that leaves after a short time will ultimately cost your business time and money in lost productivity and low motivation, and you’ll also be back recruiting again.
Nothing sets a new recruit up for failure quite like cutting them adrift as soon as they’re hired. Once you have offered someone a job, communicating poorly (or not at all) only serves to create doubt and uncertainty about their decision. Instead, see it as part of the recruitment process that starts with the job design and ends when the new employee’s onboarding (induction) is complete. Don’t wait until after they start to provide them with an employment contract. Give them any important company policies or documents to review before their first day. There may also be tools or programs that they can get familiar with. When the person arrives for work the first time, ensure you are totally ready. Be there to meet them and spend time with them. It may sound cheesy, but a buddy can help the new person with all the unofficial, cultural practices in the organisation and provide a safe person to ask questions. It typically takes a new hire around 3 months to become fully integrated into the team and hit their straps in a role. If you’re experiencing any employee churn in those first 90 days, then you probably need to brush up your recruitment practices.
You are simply trying to identify the best potential candidates for your organisation and quickly get rid of those who don’t fit your needs. CV screening is an imprecise process. CVs are very easy to ‘dress-up’, the truth is easily stretched and a piece of paper doesn’t really tell you much about a person. For this reason you must be prepared for a decent interview process once you have identified your candidates. A CV that ticks all, or most, of these boxes could be the sign of a candidate worth interviewing. A CV that doesn’t should be binned. Make sure you act on a good CV — even in a tight job market, a good candidate will have a number of options available to them. Don’t lose good talent. Simple!
The CV's you select should tick as many of these boxes as possible, in priority order:
Skills, education & experience relevant to your job
Stable job history
Concise, well-formatted and easy to follow (2–3 pages)
No spelling mistakes or grammatical errors
No unexplained gaps
Targeting the needs of your job: relevant
Legal right to work in Australia
Check again: skills, education & experience
Why are you interested in this position and what was your motivation for applying?
Tell me what you know about our company, our industry and this position.
What accomplishments in your current (or most recent position) are you most proud of? Explain why.
Outline the duties that take up most of your time in your current (or most recent) position. What are the top 3 things that you are measured on?
Tell me what you like best and least about your current position and why.
Why did you (or why are you planning to) leave?
Who has been your favourite manager in your career so far?
Why did you like working for them?
What is your ultimate career aspiration?
How do you hope this position will contribute to your aspirations?
Give me an example of when you exceeded a sales target. What was the target? How much did you beat it by? What do you attribute to this success?
Tell me about a time when you converted a particularly difficult client. What did you do to turn them around? How long did it take? Would you do anything differently next time?
Explain how you would go about identifying potential clients for our company and connecting with them in order to make a sale.
Describe what you would consider to be the unique selling points of our product / services. How would you emphasise these to help grow our sales?
If you were successful in securing this position when would you be able to start? What is your current notice period?
Do you have any pre-arranged leave we would need to factor in if you were offered this position?
Are you constrained by any restraint of trade clauses in your current employment contract that may affect this position?
Safety is very important to us. Do you have any medical conditions or injuries we should be aware of and which may affect your ability to perform this job adequately and safely? If so what are they and what can we do to help keep you safe?
What base salary and benefits package are you seeking?
Do you have any questions for me?
Plenty of companies are happy handling recruitment themselves and approach it in quite a traditional way: advertise the role, shortlist candidates, then interview and reference check before selecting the new hire.
This may get good results, but it’s time consuming, and there are a lot of tools and support out there to streamline and hone the process. Engaging a recruitment consultant is one obvious option. While small business owners might rule it out on cost, a good recruitment professional will provide value for money, save you time and hassle, as well reaching a wider pool of candidates. Software and other cloud-based technology can bring many benefits by automating administration tasks, and speeding up the screening, interview, and response processes. Technology can also help with onboarding and managing the ongoing employment relationship and individual performance. But remember, no matter how helpful the technology may be, it’s still not a cure-all. Human interaction is best at authentically connecting with candidates, building relationships, and bringing a new person into the company. Technology needs to work seamlessly with your people processes. You want to bring good candidates in, provide a painless recruitment experience that leaves the successful applicant and unsuccessful candidates with a good impression.
Over the past decade, social networks like Facebook, Instagram, and Twitter have grown from being systems for private communication and connection into being powerful commercial tools. Many companies are profiting from the sales and marketing opportunities social networks present, but not all of them are using them to amplify and hone their recruitment efforts. Most people across age groups (not just young people) are active on social media and are using it to search for jobs and check out potential employers. While the more traditional recruitment strategies, e.g. posting on job boards, in newspapers, and at employment offices, are still effective and valuable, social media offers many benefits and efficiencies in helping you find and hire new talent. ‘Social recruiting’ (as it’s known) can be active or passive, and each social platform has strengths and weaknesses and appeals to different groups, ages, and professions. Get familiar with the various networks, their features and products, and tailor your recruitment efforts accordingly.
Cheaper and more responsive than traditional channels.
Attract better talent.
Reach people who aren’t actively looking for a job (passive candidates).
Build a large, high-quality talent pool.
Quickly narrow the candidate pool and find people with certain qualifications or skill-sets.
Learn more about applicants’ backgrounds, personalities, and fit for the business.
Build two-way communication with potential employees.
Increased employer brand and recognition, providing insight into the company, its mission, values, and culture.
Requires ongoing effort to do well.
Need to develop a dedicated strategy on what to post and when.
Learn how to use each network and any advanced features, e.g. LinkedIn Advanced People Search, Facebook’s Graph search.
Tailor your message to the right individuals.
Take candidates profiles with a grain of salt (it’s easy to look good on social media).
Create a smooth application experience with as few steps from the job post to completion as possible.
Think mobile first - most people apply for jobs on mobile, while on the bus etc.
Get your employees involved to help promote job vacancies and the company.
Be up front about any use of social media in the selection process (consider developing a procedure that complies with the Human Rights Act).
Measure and analyse your results and update your strategies accordingly.
Be genuine and creative to stand out for the right reasons.
Many candidates will go and look at your company’s social media pages to get a sense of who you are, what you’re up to, and whether they would be a good fit for the company culture and brand. Having active social media feeds with a range of content and tone will help you attract the right sort of people, especially younger people, who want to feel connected and aligned with their employers. Be mindful though; people are busy, social networks can be unforgiving spaces, and information is easily shared. Your social media presence should be coordinated, purposeful, engaging and honest. Aimless or poorly executed social posts could do your reputation and appeal to potential employees a lot more harm than good.
Based on your criteria, figure out what your actual talent pool looks like and how many people exist within that. This will give you your total addressable talent market.
Once you have your total addressable talent market then you need to understand who your strong leads are and who you need to ‘warm up’. Your strong leads could be people that have applied to your organisation before or who may be following your company page(s). Those that you need to warm up may not have any connection to your organisation and will likely become your longer-term talent pool.
Contact these people. Express interest in their background and explain that you would like to tell them all about your organisation and give them the opportunity to learn. Be sure to keep these conversations high level, inspirational and ideally more about you than them. Be clear about your intentions and be open.
Is the person interested in moving forward to a recruitment process? Are they happy where they are but open to future opportunities? Did you identify a red flag or misalignment therefore they are unlikely to be a fit for your organisation?
If successful in this, you will have opened up top talent that was not actively looking for a job in your organisation. You will also have built a pipeline of future talent — be sure to have regular touch points with these individuals.
