5 Simple Steps to Conducting Successful Annual Reviews

Five simple steps to conducting effective annual reviews that will boost employee performance.

Annual performance reviews exist to provide employees a chance to reflect upon their professional development within the organization
Following these steps requires adopting an authentic approach to the conversation, in which we lay all the cards on the table, so as to empower the employee
Following the five steps will allow managers to conduct annual reviews smoothly and efficiently, using a defined structure

The purpose of annual performance reviews

At the end of another busy year, full of work, events, plentiful successes, and a scattering of disappointments, it’s time to have “the talk” with our employees.

Whether by virtual means or in a face-to-face meeting, annual performance reviews are an important foundational tier in an organization, aimed at providing managers an opportunity to reflect to their employees what they did well, what they didn’t and how to improve. Furthermore, the review provides a platform for sharing and exploring new ideas, and sometimes just to listen – to allow the employee to be, and feel, heard. This year-end ritual is designed to strengthen the bond and discourse between employee and manager, thus also solidifying the bond between employee and company.

The review’s objectives are:
  • Allowing for personal “quality time” to be devoted to the employee by his or her personal manager
  • Recognizing employee strengths.
  • Encouraging and directing employee development for the following year.
  • Addressing the employee’s viewpoints and feelings.
  • Allowing a safe space for constructive criticism from the employee about us as managers and about the organization.

The Authentic Approach to Annual Reviews

Plenty has been said and written about the necessary steps to take when offering feedback to employees (see for example the “sandwich method”, among many others).

After years of experience accompanying managers and employees through the process of conducting personal reviews, we strongly recommend adopting the authentic approach to feedback. As part of this approach, one should aim on the one hand to congratulate the employee for their accomplishments, success, and good performance, while on the other hand pinpointing places and processes that require attention. In other words, we should strive to simply let everything be said – with one goal in mind – to empower and improve the employee, recognizing it as an essential element of our responsibility as managers.

It is the intention behind our words that will make the employee feel that we are on their side; whether we are discussing positive or negative aspects of their work, thus leading to a sense of commitment and cooperation with the process.

Annual Performance Reviews - Plants

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The Annual Performance Review – In Five Easy Steps


Step A: A safe space for employee expression

As an icebreaker, let the employee talk and express themselves freely by inviting them to share their experiences of the past year. “How did you feel this year?”, “What was the most significant event for you?”, “What did you learn about yourself/the organization throughout this year?” – These are questions that allow employees to be open.

Step B: Highlighting strengths from the last year

Identify and share 3-4 personal or professional strengths exhibited by the employee. The aim is to empower the employee by providing a sense of meaning and connection to the organization. In addition to emphasizing the employee’s strengths, these should also be accompanied by a brief explanation about how they positively affect the staff work environment and the organization as a whole.

For example: “Your sales ability really raised the bar for the entire department and inspired everyone to try even harder”. This can also be a good time to present the employee with data that support the praise (e.g., output indices, goals reached, etc.).

In order to continue a positive and successful conversation, it is essential to start with his strengths. By doing so, we can strengthen the employee.

Step C: Points to improve and implement next year 

 At this stage we’ll be focusing on 2-3 personal and professional points for growth and improvement relevant for the employee. These improvement points are the most sensitive part of the conversation, as they often tend to bring out our critical side as managers, and the defensive side of employees.

Hence, we will aim to apply the following plan of action (SIRS) in order to make this step effective

To avoid the employee feeling judged unfairly, it is best to give one-or-two concrete examples that are consistent with the point being made. For example, a claim such as “you are often argumentative” is more likely to be accepted when accompanied by a real-life example (preferably from a recent occurrence), that will help the employee to understand what we’re talking about. At this point, it is important to create an observational space where things can be discussed in a non-judgmental manner, thus allowing the employee to feel safe without going on the defensive.

In order for the employee to feel that they’re being treated fairly and not being unduly judged, managers should focus the discussion on the impact of the conduct in question. For example one could say, “when you are late for meetings, it causes others on the team to allow themselves to turn up late as well”. Or “your late arrival often disrupts the dynamics and pace of the meeting”.

Having explained our point, we’ll throw the ball back to the employee and ask what they think about what was said. Do they identify and agree with the gist of things? Do they disagree? If so, how do they see it and explain things?
Allowing the employee to have a chance to respond gives them a sense that we haven’t passed final judgement on their case. This is a vital element in dismantling and disarming possible resistance to criticism.

Having achieved mutual understanding of the points presented, we’ll invite the employee to join us in identifying ways to improve on these issues in the future. Going beyond that, we should also consider asking the employee if they need any assistance from us to facilitate the required improvement in performance and outcome.

Step D: The employee’s turn for feedbak

At this stage of the conversation, we invite the employee to share their thoughts about working with us and in the organization. As the employee’s improvement process aids the organization as a whole, our goal as managers is to learn where we too can improve. Now is the perfect time to take a pen and paper and write down the points raised by the employee, from which we can later produce relevant action items. By doing so, we will be acting in accordance with the principle of executive responsibility, which is one of the three main principles of the IM method.

Additionally, this should be the opportunity for the employee to bring up any requests, needs, thoughts, or ideas they’ve had but haven’t yet had the chance to share.

Step E: Set goals for the year ahead

Choosing two or three personal or professional goals that the employee will work toward in the next year. Goals can be quantitative, like “I will produce X transactions”, or qualitative, like “I’d like to give a complete investor presentation in English”. In order to achieve each goal, the employee will list three actions required (like improving my speech, taking an English class, etc.). 

It’s important to remember that part of the organization’s goal is to make sure our employees have a safe place to develop. Therefore, our job as managers is to support our employees throughout the year and help them reach their goals.

Additionally, the conversation provides an opportunity to discuss next year’s plans with the employee. For example, salary increases, remuneration, promotions, and training.

The annual review is not a substitute for continuous communication with employees

The annual performance review should be seen as one component among many others in the process of building your relationship with your employees, as it allows both for a shared summary of the year that’s been and for planning in anticipation for the one to come. However, it is vital to remember that these reviews cannot replace routine contact and conversations with employees throughout the year, especially with remote work becoming ever more commonplace.

An ongoing, authentic dialogue, in which we listen to our employees and provide them with feedback on their work (on a weekly/bi-weekly basis), is essentially integral to each employee’s professional development, to their bond with the organization, and to the foundation of a healthy and successful long-term professional relationship.

For in-depth reading about motivation just click  EIAI Model for intrinsic motivation.

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