Saying what needs to be said sounds pretty easy, right? But in reality, it’s anything but simple — whether at work or outside of it. For many small business owners, evaluating employees and giving constructive feedback can be downright uncomfortable. And are those hard conversations truly necessary?
The short answer is yes. Research shows that employees want feedback. In one survey, 96% of workers said that receiving feedback regularly is a good thing.
In my experience, performance reviews, one-on-one meetings, and on-the-spot check-ins, provide your team with the feedback they need. Read on to learn how I handle performance reviews and get some tips for giving difficult feedback.
Performance reviews: The good, the bad, and how often to hold them
When done well, performance appraisals have tons of benefits. They can boost retention, engagement, and employee satisfaction. They help employees understand areas they can improve and give you a structured time to highlight an employee’s meaningful contributions.
However, hosting a performance review just to check it off the list can hurt employee morale. First, sitting in a performance review and not getting relevant feedback is boring and a waste of time for all parties. But you’re also missing a valuable opportunity for two-way feedback, where employees can share their thoughts on the job and employers can provide insights on performance.
As far as cadence, a good rule of thumb is to have performance reviews for all team members twice a year. Some companies do it less often, but an annual performance review is too long to go between meetings.
How to prepare for performance reviews
You can go about effective performance reviews in two ways. I lean toward employee-led reviews in my own business, but you can also experiment with employer-led reviews and see what works for you.
No matter which one you go with, remember that there should be no surprises during performance reviews. This also shouldn’t be the first time someone hears about an area they need to improve on.
Let’s dive deeper into the difference between these two performance review strategies.
1. Employee-led
With employee-led performance reviews, we have the employee reflect on their performance first, then use that as the basis for the meeting.
We follow a simple template we send to the employee and ask them to spend a few hours filling out the answers:
- 3 to 5 major achievements from the last six months
- 3 to 5 strengths
- 3 to 5 areas for improvement
- Long-term career goals
From there, the manager responds to their answers and adds more of their opinion. Then the manager and employee meet to discuss the feedback.
2. Employer-led
These are more “traditional” performance reviews, where the manager leads the meeting. You’ll want to go over the core expectations for the role and then indicate whether each employee didn’t meet, met, or exceeded those expectations.
Even though these are employer-led, you should still think of this as a two-way discussion for goal setting, career development, and honest communication. You want to encourage employee input, learn about their goals, and hear their point of view on what’s working and what’s not. Use this to develop an action plan for the next performance review.
How to objectively evaluate performance and behavior
There should always be transparency around the expectations team members are measured against. Ideally, job expectations are laid out during onboarding (or even as early as the job description or first interview) to ensure fairness.
I recommend basing performance evaluation criteria on KPIs or directly observable behaviors to help eliminate bias.
KPI-based metrics
KPI-based expectations are pretty straightforward to measure. You either hit a metric, or you don’t.
We create a clear 7/30/90-day plan for all new hires. That way, everyone knows what they’re expected to do early in their roles. They’re able to onboard while getting up to speed on the KPIs and competencies they’ll be measured against, and they can ask questions along the way.
Once the onboarding process is completed, they’re responsible for making those KPIs happen. How well they satisfy or exceed those expectations will determine their success.
Some examples of KPI-based metrics to track an employee’s progress could include:
- Upsell at least 2 clients a month
- Follow up with customers within two hours
- Receive at least a 75% CSAT score each month
You can see that for each of the above, there’s no issue determining whether or not that expectation was met. For the first one, if your employee called 95 people each day, they aren’t meeting expectations, and that should be noted. On the other hand, if they called 110 people every day, you should commend them for exceeding expectations!
Though you might set initial KPIs, they can change over time. When someone gets promoted, for example, they’ll need to learn about their new role and the associated expectations. This might also be true if someone’s been with the company a long time. What you consider high-quality performance from someone who’s been with you for five years is going to be different than what you’re looking for in a new employee.
Observable behaviors
If you want to evaluate team members on things that aren’t tied to numbers or metrics, be sure to identify an observable behavior. For example, “Be friendly to clients” isn’t directly observable. If you ask 10 different leaders what “friendly” means, you’ll likely get 10 different answers. The same goes for other common terms like “teamwork” and “initiative.” You can run into a lot of bias if you have managers subjectively evaluate employees on traits.
Alternatively, “Greet each client by name” is trackable — and can tie into friendliness. You can observe an employee interacting with customers and know whether or not they’re greeting clients by name, and you can measure performance in an objective way.
Qualitative, or open box, factors
Open box items cannot be quantitatively assessed — for example, “quality of work” or “working well with others.” These aren’t tied to quantitative observable behaviors; instead, they’re qualitative criteria. Questions like, “What were this employee’s greatest accomplishments?” accompanied by a blank space are considered open box.
While these may seem okay to include, research shows they tend to introduce bias, particularly for women and underrepresented minorities. Whenever possible, use objective metric-based criteria.
How to handle difficult feedback
There’s a reason feedback doesn’t happen as often as employees might like: managers struggle with difficult conversations. I suspect this is why the book Radical Candor: Be a Kick-Ass Boss Without Losing Your Humanity is now a NYT and Wall Street Journal bestseller. People need help with challenging meetings!
Here are some of my best tips:
Tip #1: Let them start the convo
Encourage employees to lead performance reviews, as they’re often self-aware of their areas for improvement. Having them lead the conversation allows you to give more relevant feedback and can ease initial discomfort.
Tip #2: Reframe the feedback
Shift your mindset to view constructive criticism as a way to help employees improve. You might be worried you’ll hurt someone’s feelings or damage a relationship. But if you don’t tell someone what they need to change, they’ll never know.
Additionally, balance positive and challenging feedback.
Tip #3: Come from a place of care
You care about this team member, and you’re invested in their professional growth. Telling them how they’re missing the mark helps them improve and be successful in the long run. Caring about your team member demonstrates empathy, and they’ll likely be more receptive to what you’re saying.
Tip #4: Be direct
Yes, come from a place of care, and you still have to be direct. It needs to be clear what you’re communicating and what you’d like that person to change.
Tip #5: Tie your feedback to the numbers
The goal is actionable feedback, so tie it to a number. Your employee needs to know how they missed the mark and what they need to do to improve. For example, if you want support calls resolved within two hours of receipt and a team member consistently takes three hours, discuss what’s keeping them from hitting the two-hour mark.
Tip #6: Explain the impact on the company
You should also explain why this area of performance matters for your company. What’s the impact when this KPI is missed? For example, do other team members have to work overtime if someone is on their phone scrolling social media instead of resolving a case within the appropriate time? Or do customers have to wait, resulting in a poor experience?
Sometimes, helping people see how their individual performance fits into the larger organization can make a difference.
💡A note on tying performance to pay
Some companies link pay to performance reviews, which requires a more formal performance review process. When money is tied to reviews, you want to be sure each reviewer understands the performance expectations and how to measure them.
Establishing a formal system allows you to show why you pay certain employees more than others based on performance. This might make sense if you’re in a business that incentivizes high performance and have the tools and resources to be more structured about performance reviews.
A fair performance review process benefits everyone
Finally, don’t wait too long to give feedback. It’s better to give real-time feedback to your direct reports than to let things pile up and wait for your performance review. When you wait too long, the feedback feels irrelevant and untimely, and the employee may struggle to remember what you’re talking about.
Regular performance reviews are a necessary part of the ongoing feedback cycle in your company.
If you want to shift gears and focus on other areas of management, check out this post on customer service management. Or dive into more training materials and learn about call shadowing for new reps.
