Performance Review: A Path to Fair and Informed Decisions

3 Things to Consider to Design a Fair and Objective Evaluation System

The Drawbacks and the Charms of Performance Reviews

Are you curious about how companies should determine employee raises, rewards, and promotions? Is it solely based on leaders' observations or should a performance review system be implemented? While the second option may seem fairer, some find performance reviews intimidating and impersonal. Additionally, this process can discourage immediate or periodic feedback from leaders, as they may feel that feedback given during the review is sufficient. Moreover, if the wrong measurement tools are used, it can lead the companies astray with their decision as it fails to depict the employees’ overall performance.

Yet, there is hardly any effective alternative to replace a performance review. When conducted correctly, a performance review establishes standardized performance criteria for each employee, creating an objective and transparent system for promotions, recognition, and evaluations. Without such an objective and standardized evaluation system, decision-making becomes vulnerable to subjectivity, resulting in an unfair process. Furthermore, employees may struggle to understand how their contributions are evaluated or the company's expectations for good or poor performance. Therefore, despite its drawbacks, the performance review remains crucial.

Factors to Consider for Performance Reviews

The real question is how to ensure that the performance review actually works and provides valuable insights for companies to make informed decisions. The primary concern is undoubtedly to make the process and system as fair and objective as possible. Here are some key considerations before conducting a performance review:

1. Holistic and relevant evaluation aspects

The evaluation aspects should comprehensively cover employees’ strengths so that the performance review process can appreciate any kind of contribution the employees made. These aspects should also be relevant to employees’ work and responsibilities and align with the company’s values and purposes which have been communicated a few times to the employees so they know exactly the expected aspects that will be evaluated.

2. Direct and unambiguous language

To avoid any kind of misinterpretation, every item of the performance evaluation should be expressed in direct and concrete terms, leaving no room for multiple interpretations. For example, instead of stating ‘talent is a diligent individual’, it is better to specify ‘talent always checks their work at least twice before submission’.

3. 360-evaluation implementation

To mitigate subjectivity, companies can introduce a 360-degree evaluation process, where employees are not solely appraised by their superiors, but also by the individuals who engage with them on a deep, day-to-day level.

While performance reviews have their drawbacks, their benefits shine through when executed correctly. By considering the aforementioned factors, companies can make informed and objective decisions that foster employee growth and drive business success.