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No two companies conduct performance reviews the same way, but all companies have the same end goal in mind: improve employee performance, improve company performance, and ultimately the bottom line. Performance reviews help organizations realize where improvements are needed and provide guidance to management on how to obtain company goals. 

Below are 5 best practices for how to conduct performance reviews that are effective - and will positively impact your organization’s bottom line:

#1 – Ruthlessly Prioritize Goals & Define Expectations

Start with the end in mind and define what you’re after. When employees know the expectations and understand the direction the organization is going, it’s easier to align their day to day work towards these goals. Each person in the organization should understand how he/she fits into the overall picture. Has your organization defined competencies and are the objectives set to be in line with the business strategy? It is key to determine what the organizations goals are, what needs to be done to achieve these goals (and how are you going to measure this?), and constantly prioritize and align organizational activities to achieve these goals. This allows employee behavior to ideally be aligned with the organization objectives and each person working towards the same success.

#2 – Keep it Simple

Managers and employees alike tend to dread the performance review process. The more difficult the process and disconnected the goals are, the less likely all parties will be bought into the process. This leads to late, and often meaningless reviews for employees. 

As Steve Jobs said, "One of my mantras—focus and simplicity. Simple can be harder than complex. You have to work to get your thinking clean and to make it simple. But it’s worth it in the end because once you get there, you can move mountains.”

Define a few key goals for each employee to work towards and focus employee efforts and momentum towards these clearly defined and transparent goals.

#3 – Manage and Coach to Measure Progress

Every level of leadership in the organization needs focused, year-round support for performance reviews to be successful.

  • Set the expectation and encourage management at all levels to have ongoing check-in meetings with their staff.
  • Establish a roadmap for how employees can progress and provide the tools to do so.

Whether this be webinars/seminars, training sessions, e-learning tools, and/or a mentor, it’s important to provide the necessary tools to equip your team and ultimately monitor how employees are progressing towards his/her established goals and objectives. After all, building employee skills that align to company goals helps the organization achieve success!

#4 – Recognize and Reward on Results

The idea behind performance reviews is for the employee to perform better and positively impact the organization as a result. To measure this, performance evaluations should be tied directly to results and employees achieving those results should be rewarded. Now…don’t forget step #2 – keep it simple! It’s easy to bog down evaluations in metrics, numbers, and reports. Make it meaningful and your employees will perform!

#5 – Consider Creating Individual Development Plans (IDP’s)

Another step successful organizations often take to impact the bottom line is creating IDP’s. These plans give clarity to an employee’s career path within the organization. For those employees looking to grow and promote within the organization, IDP’s give a clear plan with goals and milestones defined to help the employee achieve their individual goals. Managers and mentors can work with the employee to align his/her career goals with the organizations goals to achieve a win-win.

When conducting performance reviews, remember to align and prioritize your organization's goals from the top down and keep the process simple. When you encourage and expect ongoing feedback and coaching aligned with results, you will see the best impact to the bottom line. Using IDP’s will help employees feel a sense of ownership and empowerment that will lead to overall success.

Need a solution to help you conduct performance reviews? We'd recommend taking a look at SAP SuccessFactors Performance & Goals. Contact us today for a complimentary demo to see how this solution can help drive performance and align goals within your organization.

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