Your situation might look like this: Your organization understands the value of performance reviews, but has struggled to implement them.
You try to adopt annual performance reviews to improve your company's overall performance management, but perhaps your company is young and it undergoes many changes in a single calendar year. Annual reviews might feel unsatisfactory to everyone involved due to promotions, shifts in positions and duties, and staffing changes — by the time you get to reviews, so much has changed that whatever feedback is there might not really apply any more.
Fortunately, you’re not chained to annual performance reviews: your review system should work for your business, so can conduct annual, semiannual, or even quarterly reviews. Lattice is a flexible system that enables you to match the frequency of your reviews to the needs of your business.
During any performance review, managers give performance feedback to employees -- drawing on real-time feedback and praise regarding the employee's work, the progress on performance goals since the last review, and general assessment of work performance. Performance reviews are also a time for managers to help employees create forward-thinking goals towards performance improvement/ their overall productivity, specific projects, job descriptions, and more. These goals—whether short-term or long-term, public or private—can be assessed and updated during one-on-one meetings, which ideally occur regularly.
Now you know that you can hold reviews more frequently than once a year. But how do you know which type of performance review works best for your organization? Here are a few questions to ask yourself to figure it out:
An annual review is performed once a year. 70% of companies swear by annual performance reviews; it’s obviously the most popular structure, as well as the most traditional option.
California-based security company Area 1 said implementing annual performance reviews turned out to be a great success, because utilizing Lattice’s platform encouraged managers and employees to engage in the writing and submitting part of the review process.
Since engagement was higher from the beginning, employees were actually eager to receive information about their performance review. However, they were even more eager to take part in a culture of continuous, regular feedback instead of simply waiting for an annual review and the review period. The annual performance review then served as a starting point for employees to set goals to work towards in smaller amounts of time, which would be addressed in real-time feedback on a regular basis.
Annual reviews may be preferred by those who manage a lot of employees, since it can be difficult to keep up with multiple reviews per year for a large number of employees.
Semiannual reviews are performed twice a year, ideally once at the beginning of the new year in January and again at the beginning of July. 16 percent of companies prefer this type of performance review process.
Semiannual reviews allow for twice yearly looks at an employee’s performance, sort of like a check in at the halfway point.
One of these reviews can be tied to compensation. Rather than the employee bringing up a raise or bonus, salary increases can be embedded into one of the review cycles, complete with ratings or designations to give managers a quantitative basis to compare employee performance. That way, the case an employee makes for why they deserve more compensation is more streamlined, and raises are granted on a more objective basis.
The other semiannual review can be focused on employee development. This review will benefit the employee in the long-term, in that it shows them how they can continuously improve their job performance through giving and receiving feedback.
Quarterly reviews are performed four times a year. Ideally, they’d follow the schedule based on each financial quarter. These are sometimes viewed as “performance snapshots” since they tend to focus more on short-term goals.
Quarterly reviews may benefit younger, rapidly growing organizations looking to make improvements in short amounts of time. Rather than doing 360-degree reviews every time, quarterly reviews can serve more as check-ins, and a way to get regularly scheduled feedback rather than a comprehensive performance evaluation.
To supplement these quarterly reviews, Richmond-based computer software company Foster Made, which has about 20 to 30 employees, introduced quarterly reviews to help employees get into the habit of receiving feedback regularly. They chose to utilize this model as a way to really integrate feedback into their organizational culture.
There are a few factors to consider when choosing how often to conduct performance reviews.
Consider the organizational culture. Is direct feedback natural in conversations? If yes, that takes away the pressure of having reviews often. If no, you may want to consider holding reviews more frequently, at least until giving and receiving direct feedback becomes a more integrated part of the culture.
Consider your manager-to-employee ratio. Those managing fewer employees likely have more time to devote to a review process. Although your organization may be medium-sized or large-sized, each manager may be overseeing just a handful of employees. Conversely, at a small or developing organization, a single manager may be overlooking dozens of employees, so a quarterly review structure likely wouldn’t be feasible.
Consider whether a review focuses on compensation or development. You should be conducting reviews regarding compensation, so your employees have an opportunity to receive a salary increase, bonus, etc. However, these reviews should be separate from reviews based on employee development, or how an employee can improve their overall performance.
Consider how long an employee has been employed at your organization. In addition to annual performance reviews, Phoenix-based healthcare company Solera provides new employees with a 60-day evaluation, two months after their first day.
Consider the pace of growth. Is your organization young and/or growing fast? Are you expecting it to undergo changes, especially structurally? Has it recently taken on new investors and funding? Instead of holding off on performance reviews altogether — and missing important opportunities to provide employees with the feedback they need to grow — think about implementing them in smaller bursts.
No matter what type of performance review you choose to implement, remember that it’s okay to experiment and see how your organization responds to the reviews. You may find that after trying out annual reviews, semiannual or quarterly reviews are a better fit; or you may discover that the rapid organizational shifts that necessitated quarterly reviews for a time slow down enough that annual reviews make more sense. Lattice can help you determine the right timing for your organization.