There’s something that happens at least twice a year in most organizations, and it’s often met with a groan. We’re talking about performance reviews, which can require a lot of work from both managers and direct reports as they try to quantify an employee’s impact. But providing feedback on performance is central to employee growth, engagement, and happiness, so setting up an effective review cycle as part of a performance management system is important for both individual and organizational success. An effective review cycle requires writing useful reviews, which in turn requires starting with good review questions.

In the first installment of our People Success in Practice: Lattice Advisory Services webinar series, People pros Julia Markish and Russell Lobsenz tackled how to set up performance reviews to get the best results for your organization. Read on for their best practices and expert tips.

Where to Start With Questions and Review Forms

Effective performance management starts by identifying the purpose of your review process so you’re clear on what problem you’re solving. Organizations should begin by asking themselves two questions:

  1. What is the purpose of performance management?
  2. What outcomes do you want to achieve?

Defining the “why” behind your approach helps ground your performance review process in clarity and objectives, which not only ensures everyone is on the same page, but can also help inspire people to participate in meaningful ways. Lattice recommends purposeful performance — a holistic, people-centric approach that transforms performance management from a standalone process into one that’s integrated into an organization’s culture to empower employees on an ongoing basis.

Objectives generally fall into two categories: 

  • Assessment or Evaluation: The main focus of reviews for assessment/evaluation is backward-looking, and looks at past performance and contributions relative to expectations. 
  • Development: The focus of reviews for development is future-looking, and takes into account the employee’s strengths and growth areas to help guide them toward achieving career goals.

An organization may want to do both assessment and development reviews, but one thing to note is that doing everything all at once becomes complicated. Instead, organizations should focus on separate cycles so each can be dedicated to a specific objective. Depending on where a business is in terms of size and growth, you may want to have two annual cycles (one for assessment and one for development), or four cycles (two of each) if a company is growing and changing quickly. In short, you can do it all — but preferably not all at once.  

What Do “Good” Review Questions Look Like?

It’s a pretty simple formula: Ask the right question, get a helpful answer. Asking good questions not only leads to effective performance reviews, but equitable ones as well. It’s easier said than done, but here are four guidelines to take into consideration:

  • Set expectations ahead of time. You can’t measure performance against a moving target, so you need to set agreed-upon expectations — whether they’re goals, OKRs, or KPIs — before the review cycle begins. That way it’s clear to both managers and direct reports what they’re measuring against, so the organization can measure equitably across people.
  • Prompt for evidence-based responses. Feedback can be quite subjective, so it’s important to ask specific questions to get evidence on whether or how someone has met their goals. For example, instead of asking, “How well did this person contribute to the team goal?”, consider asking, “What were the three most impactful ways that this person contributed to the team goal?” Being able to list concrete examples removes a great deal of subjectivity from the answers. 
  • Set up for consistent feedback across the board. Specificity is key in getting equity across individuals because there is less room for interpretation in what you’re asking for. Instead of asking broadly for examples of behavior, specify how many examples you’re looking for. Minimize open-ended questions like, “How did this quarter go?”, which can lead to wildly different answers from different people.
  • Align your questions to organizational identity. Reviews should be a reflection of what’s important to a business to make sure people are being measured on things that are consistent with organizational priorities. If an organization has clear goals, OKRs, or KPIs, employees should be measured against those, but if that’s not the case, you can consider using something like an impact scale, where managers rate the impact an individual has on a team, the organization, or customers. 

Ratings: To Rate or Not to Rate

One of the most controversial topics in performance management is whether or not to include ratings, and there is no clear yes or no answer. Rating scales are neither inherently good or bad; they’re a feature of performance reviews that are intended to serve a purpose. As organizations need to make decisions around salary increases, bonuses, promotions, and more, ratings can help guide those decisions a little more easily.

A Gartner study in 2016 looked at the impact of removing ratings from performance reviews and found that employee performance dropped by around 10%. The study was replicated in 2018, and while the decline dropped to 4%, that decrease was still significant. They found that eliminating ratings impacted managers’ ability to clearly differentiate and communicate how pay decisions are made and how to provide actionable steps to improve, which ultimately leads to employees becoming less engaged.

If eliminating ratings isn’t the solution, then how can you use ratings more effectively? First, ask yourself if ratings are right for your organization. Consider guiding questions such as:

  • Do ratings reinforce company culture or values
  • What would you gain or lose if you eliminate ratings? 
  • Do you have the data to make effective talent decisions without ratings? 
  • What’s the link between performance and rewards? 
  • Without ratings, how would you differentiate rewards and recognize top performers
  • Are there external reasons that would make it advantageous to keep ratings in place?

If you determine that ratings are the right path for your organization, it’s important to design good rating scales. Here are some best practices to get you started:

  • Point Scale: Lattice generally recommends a five-point scale because it allows you to adequately differentiate between employees, without creating an undue burden on managers or evaluators to make very fine distinctions in performance with a higher point scale.
  • Descriptive Labels vs. Numeric Ratings: Assigning numeric ratings to employees can be very dehumanizing and impersonal, so instead, consider using descriptions. Having descriptions can also help contextualize the feedback and rating.

Regardless of what rating scale you use, pair the ratings themselves with a narrative to provide context and justification, so it’s clear to the employee what they did or didn’t do to deserve the rating they received.  

Sources of Review Feedback 

Getting 360 feedback can be very helpful in determining a well-rounded picture of an employee’s performance, especially in today’s hybrid work environment where it’s become increasingly harder for managers to observe their direct reports’ performance firsthand.

Different sources of feedback may be used for assessment vs. development reviews, but in both cases multiple forms of feedback can help correct for bias. For example, peer reviews can correct for manager biases such as similar-to-me or recency bias. On the other hand, self-reviews may create a different bias depending on whether an individual is good or bad at self-promotion, which may be correlated to race or gender. In both of these instances, having multiple review sources provides additional information and context, which is especially important when making decisions on compensation or promotion.

Gathering and writing feedback can be time-consuming, so simplicity is essential to a good review experience. Again, teeing up and being specific about the information you’re looking for can lead people to write feedback that’s relevant, useful, and not overly lengthy. Recent Lattice platform research also showed that the fewer questions and the fewer reviews someone had to fill out, the more confidence an employee had in the review process itself.

Beyond that, having a culture of continuous feedback may alleviate some of the burden when it comes to review cycle time. If peers and managers can give feedback along the way, performance reviews end up being a collection and summary of that feedback, instead of a process that needs to be started from scratch.

Learn more about
Lattice Advisory Services or visit our comprehensive Template Library to download helpful templates for performance reviews including 360 reviews, employee development, goal-setting, and more. And for more information about how to create an effective review process at your organization, watch the full webinar here!