Are you trying to identify the best type of performance review for your company? We're here to help! In this article we take a look at the different types of performance reviews. Each business has its own unique needs so there is no "right" or "wrong" review structure, only the best fit for your organization.
Annual performance reviews
These continue to be the standard in many companies, and as their name indicates, are held once a year. Managers meet with their direct reports to discuss performance, highlight areas for improvement, and plan for the upcoming year. They may be asked to give team members a score based on performance, evaluate them against goals set out the previous year, as well as checking based on departmental or role-based goals. Individuals may also be asked to complete a self-evaluation before meeting with their manager.
While the annual performance review creates an opportunity for managers and their direct reports to check-in, there are still several downsides to it. The infrequency is challenging from a business perspective since priorities shift throughout the year, making it harder for people to course-correct and re-direct career development (if need be).
It also creates a lot of pressure for the manager and their team members. Both spend the year waiting with baited breath: for managers to sum-up performance conversations in one short moment, and for employees to find out how they've done. Not to mention the difficulty to recall what happened.
Lastly, the annual performance review tends to have more of a top-down focus with managers reviewing team members. This is a missed opportunity for manager performance reviews or 360 feedback from peers.
2. Bi-annual performance reviews
These follow a similar procedure to annual reviews, with the small difference that there are 2 opportunities to discuss performance throughout the year. This does increase the ability for people to course-correct and discuss changing business priorities. However, there are still not a lot of opportunities to diversify the types of questions asked, or to do more than review past work.
Both managers and their direct reports still face the pressure of having to recall 6 months of work and need to dedicate a chunk of time to the review process that detracts from their daily productivity. In both the annual and bi-annual performance review format, it's unlikely people will have an opportunity to discuss professional development goals or anything besides productivity and output.
3. Quarterly performance reviews
For most companies this is the optimal frequency. Reviews are regular enough for projects to be easier to recall, but not so frequent as to become a burden. Since most businesses work in terms of quarters they follow the natural business cycle, making it easier to evaluate projects, their impact on the business, and an individual's contribution to success. They also allow for employees' goals and objectives to be more closely aligned with those of the company.
Quarterly reviews provide an opportunity to start varying the types of questions you ask. For example you may want to use the "Stop, start, continue" model around employee actions and behaviours, helping people understand what to double down on, vs. what they should stop doing altogether. This should improve overall team efficiency and help managers develop individuals.
It can also open the door to leadership or manager performance reviews, creating an opportunity for upward feedback. Again, this can help to develop your managers and support them in their role, ultimately increasing overall team productivity and synergies.
4. 360 performance reviews
This type of performance review can be used at any time, regardless of the frequency. However it might be easier to gather 360 feedback when you are running performance reviews more regularly, thereby reducing the burden on managers to compile the feedback, and on those contributing to the review.
The advantage of 360 feedback is that it allows managers to gather input from a variety of sources. This means peers, senior and junior staff are all able to contribute, creating a more rounded view of someone's skills and competencies. Peer feedback can often be the most valuable, as people who work closely together on a daily basis are perhaps the best positioned to provide accurate feedback. A 360 review also removes some of the onus from the manager as the sole provider of feedback, and helps them get a broader perspective of how someone is performing.
5. Take five performance check-in
A take-five is a more lightweight approach to performance management that you can host ad-hoc. Its aim is to align managers and their direct reports on achievements, company values, development, support, and general wellbeing. It doesn't have to be as in-depth as a quarterly or annual performance review, simply allowing you to check the pulse.
You ask a maximum of 5 questions and cover 3 different perspectives: manager —> employee; employee —> manager, and self assessment. You can ask questions around delivering on commitments, living company values, being invested in the team member's development, giving the team support they need, and job satisfaction.
This creates an opportunity for conversations between managers and their direct reports, enabling them to discuss any pressing issues and quickly finding solutions. The answers from the "take-five" can also support further performance conversations.
6. Create your own cadence
Annual or quarterly performance reviews may not work for everyone, depending on how you work. For example, development teams tend to work in sprints or you may work in a project-based manner.
In that case you can conduct light weight performance reviews at the end of each project cycle or sprint, perhaps combined with a retrospective. This allows you to quickly find out what worked and what didn’t during the project, understand which team members might have struggled or what could be done differently to ensure greater success for the team.
Which type of performance review is for you?
While each of the processes outlined has its pros and cons, they cannot effectively measure performance, engagement and general job satisfaction all at once. Instead, we would recommend trying a combination.
For example you could combine quarterly or bi-annual reviews with a 360 performance review, helping employees to remain engaged, while fostering a culture of feedback, learning, and development within your company.
You could also combine engagement surveys with leadership reviews, or support a bi-annual review cycle with take-five check-ins. Regular check-ins make the performance review process much less daunting for managers as the information is readily available.
Are you ready to try a different kind of performance review process? Download our “2019 Guide to Modern Performance Management” for best practices and examples to get you started today.
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