Ask an HR Expert
Q: We’re reevaluating our performance review system. What are some best practices we should apply?
A: One big thing to consider, if you haven’t already, is decoupling your performance reviews from compensation reviews.
We should also distinguish performance reviews from immediate or regular performance feedback, which should be happening on a frequent basis. Performance reviews are typically annual or biannual formal check-ins that take a big picture perspective of an employee’s performance. At many companies, they are usually the same conversations where pay raise information is being communicated.
However, even if it makes scheduling trickier, if you’re having these conversations together, your employees are not hearing anything but the raise percentage and are definitely not reflecting on their performance. Also, the feedback from managers is generally more retrospective and more negative when compensation decisions are in play.
One simple fix? Have the conversations at two different times and focus performance reviews not only on past performance, but on future growth, goals, roadblocks, and supportive behaviors.
The compensation review can be closer to your annual business cycle. And including information about why and how the decision was made will help with retention. It’s a win-win!
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