Employee Performance Reviews
by Nicole Adams
So far in our blog series on HR practices for construction businesses, we’ve covered hiring, benefits, workers’ comp, and paid sick leave. Next up: employee performance reviews. We know there’s a shortage of skilled tradespeople in the construction industry. You’ve invested time and money in hiring and training the right employees for your business, now it’s your responsibility to keep them engaged and help them learn and grow along with your organization.
Why Performance Reviews Matter
Reviews provide a way for you to help your employees reach their full potential by supporting them as they develop new skills and interest areas. By taking time to understand how each of your employees is performing and what motivates, engages, challenges, and frustrates them, you can find opportunities to help them grow and succeed both professionally and personally. And in the process, you will often gain valuable insights that can help you improve your own performance and become more capable of managing a strong team and an efficient and resilient company.
Each individual employee review matters, and so does the overall process by which you conduct them. Creating a consistent process helps to promote a sense of fairness. You might work more closely or connect more easily with some of your employees than others, but by following a clear process you are letting everyone on the team know that they will all get an opportunity to meet with you and that those conversations will be guided by the same structure and criteria for every employee.
Having a process also helps to foster accountability and responsibility within your company. You keep yourself accountable to the process by creating a schedule for performance reviews and sharing your intent with the team, which makes you less likely to skip or postpone the sessions when you’re feeling too busy or overloaded. And everyone on the team feels a sense of responsibility to follow through on the goals they have set for their continued growth and development.
When employee reviews are not done well (or not done at all) it can lead to tension and conflict within the company, decreased morale, and higher rates of burnout and turnover among employees. A clear and transparent process for employee reviews helps to reduce these risks by fostering a company culture in which open communication is expected, constructive feedback is welcomed, and growth and learning are encouraged and celebrated. It’s important to give everyone on your team a chance to feel heard, and following up and responding to their feedback is also critical to making sure they see the benefits of the review process.
Every company is unique, and it can take some time to develop a process that feels right for your company. Once you’ve outlined your process, it’s critical that you take time to explain it to everyone on your team and get their buy-in; ultimately, the process cannot succeed unless they trust the process, understand what to expect, and know that you are invested in their personal and professional growth.
Developing an Employee Performance Review Process for Your Company
There is no one-size-fits-all approach to employee reviews; you, as business owner(s), need to take time to consider what feels like the best fit for your company based on its size, structure, values, and culture. Here are some questions to guide you as you work to establish a process that is appropriate for your company:
How often will you meet with each employee to evaluate their performance during their first year with the company? What about in subsequent years?
For employees who have been with the company for at least one year, the most common choice – and recommended minimum – is to establish an annual evaluation cycle, making time to meet with each employee once annually to discuss their performance over the past year and set goals for the coming year. Some employers choose to add a second session midway through the annual cycle to check-in on progress and update goals as needed.
For new employees, we recommend you schedule at least two additional check-ins within their first year of employment (e.g. at 30 days and 90 days, or at 3 months and 6 months) to make sure the relationship gets off to a good start. Do they have any questions or concerns based on their experience thus far? Are they settling in, or struggling to find their place on the team? Is their performance so far in line with your expectations, and is the position in line with theirs? Promptly identifying and taking action to resolve any issues or concerns with new employees helps to establish trust from the start of the relationship and avoid situations where a small issue or miscommunication goes unaddressed and turns into a major problem in the future.
How will you conduct performance reviews with your employees, and based on what criteria?
Again, you’ll need to make a choice based on what feels most appropriate for your company and values, but here’s an overview of three common approaches:
1-on-1 reflection (supervisor & employee) – This approach is focused on taking time to reflect on successes, challenges, and lessons learned since the last review cycle and setting goals or objectives for personal and professional development in the upcoming cycle. A company generally uses a defined list of prompt questions to direct the conversation between the employee and their supervisor(s).
1-on-1 performance review (supervisor & employee) – In this approach, the conversation is based primarily on a discussion of the employee’s performance as compared with the skills and responsibilities listed within their job description. This approach only makes sense if you have clearly documented roles and responsibilities for each position.
Peer review or 360 review – In this approach, input on an employee’s performance is gathered from multiple people within the company (e.g. owners, supervisors, and/or peers with whom the employee regularly interacts). This can be based on prompt questions, as in the first option above; the employee’s job description, as in the second option; or a blend of both.
With this method, since feedback isn’t given only between a manager and their direct report(s), it’s especially important to set clear expectations regarding conduct and confidentiality. Some organizations choose to collect and share peer review input as-is, while others choose to have one person synthesize it before sharing a summary with the employee being evaluated. Some choose to collect and share peer review input anonymously, but this can create problems if it is seen as an opportunity for a consequence-free ranting session rather than a method for sharing constructive feedback. Behavior like this is often a symptom of underlying tension or communication issues within an organization, so it’s important to think carefully about your company culture and set clear boundaries and expectations with this evaluation approach.
What will you do to prepare for each evaluation? What will you ask the employee to do to prepare?
At minimum, you should prepare for the evaluation conversation by taking time to look back on your notes from past evaluations (if any) as well as the employee’s current job description, and write down key thoughts or talking points you want to discuss. If you have asked for input from the employee’s peers, take time to review that as well to make sure you fully understand it and have it in a format that you are willing to share with the employee.
It’s helpful to ask the employee to complete a self-evaluation and share it with you before you meet. This helps you understand what the employee is and is not aware of regarding their own performance. Their perception of their performance may or may not align with your own, but either way you will be able to plan and prepare for a more focused and constructive conversation if you have this information up front. The self-evaluation may also ask employees for feedback on how their manager or the company as a whole can support them.
It can also be helpful to get in the habit of taking notes about each employee’s performance throughout the year to help keep your memory fresh when it comes time to sit down and prepare for their evaluation. If you see a behavior pattern emerge or notice something that you want to celebrate or discuss, jot it down before you forget.
Will you score the employee’s performance based on a set scale, or do you prefer a more qualitative method? How will you document the evaluation and follow up on the actions that came out of the conversation?
If you prefer to use a predefined rating system to assess overall performance, it’s important to clearly define what each level means. Specific words or phrases – e.g. not meeting expectations; needs improvement; good; excellent – are more easily and universally understood than symbols or number scales.
If a rating system doesn’t feel like the right fit, you may prefer to just write up your notes or summarize them in a paragraph. Whatever method you choose, it’s important to keep a record of your discussion with each employee for future reference. If you’ve asked for a self-evaluation or peer review inputs, those should be added to the employee’s personnel file. If you’ve taken any notes before or during the conversation, these should be kept as well.
Whatever information you and others have prepared beforehand should be used to guide the review conversation, with the employee being given the opportunity to respond to and ask questions about the feedback you share. If they do not fully agree with the feedback you provide, you should take notes so that their perspective and concerns are on record too.
As you discuss the employee’s goals for the coming year, hopefully you will define some specific actions that you and/or the employee can take to work toward those goals. It’s important to think about how you will keep track of those actions to make sure they’re completed and not forgotten. Be as specific as you can about defining tasks, due dates, and methods for following up. The last thing you want to do is start preparing for next year’s review and realize that you haven’t made any real progress on the goals from last year’s discussion.
Will your employee evaluation process be tied to your compensation review process, or kept separate from it?
Though of course there is a link between an employee’s performance and their compensation, we generally recommend keeping these processes separate. It may be difficult for some employees to be fully open and honest about their performance, aspirations and frustrations if they are worried about how it may affect their pay. And if you opt for a rolling evaluation schedule (e.g. based on employee hire date), you may be regularly putting some employees at a disadvantage if their evaluation is scheduled during a slow season or at a point in your fiscal year where money tends to be tighter. A more equitable option is to keep your compensation review process tied to your annual budgeting exercise, using your records from employee reviews as input at that time.
Tips for Conducting Employee Evaluations
Once you have established a process that feels appropriate for your company and you’ve helped your team understand what to expect from it, here are some final thoughts to keep in mind as you prepare for each employee performance review:
Schedule a time for each conversation when you know you can be fully present without interruptions or distractions. Setting aside your other tasks to focus fully on the employee you’re meeting with lets them know that you respect them, value their contributions and experiences, and want to help them succeed. Give your employee at least a week’s notice of the review meeting so that they can prepare their thoughts and aren’t caught off-guard.
Remember that each of your employees is a unique individual. Some people on your team may be nervous or resist being open with you, or find it challenging to articulate their thoughts and feelings. Be patient, remind them of the purpose behind the process, and do your best to meet people where they are.
Be careful not to assess someone’s performance based on their personality or personal preferences (yours or theirs) – try to separate the two objectively and without judgement.
Relax, remain open, listen actively, and resist becoming defensive. The employee may bring up frustrations or ideas that feel personal or trigger an emotional response for you. If this happens, take time to breathe and think carefully about how you want to respond. Again, remember the purpose behind the process – it isn’t about you, though it may still uncover opportunities for you to learn and grow too!
When giving feedback, be specific and give clear direction to guide positive changes. What exactly do you expect? What needs to be done differently? What conditions or situations seem to be causing issues? What behavior changes are needed? Vague feedback is not helpful and often only serves to create more confusion and frustration. Identify what you’ve observed, how that action affects you and/or others, and what the change is you want the employee to make.
Remember that a performance review should never take the place of an issue-specific conversation with an employee. If there is a problem in the workplace – e.g. a dispute between team members, a report of harassment or disrespectful behavior, a specific performance issue – do not wait until the next scheduled evaluation of the involved team member(s) to address it. Prompt resolution of such issues is critical and should be taken up separately from your regular review process.
Above all else, approach every performance review by reminding yourself that the primary goal of your review process is to give your employees what each and every one of us needs in order to do our best work: a clear understanding of what’s expected of us; belief that we are valued and appreciated for our contributions; and opportunities to continue learning and growing.