When it comes to performance reviews managers shouldn't just go over the past, says one human resources professional. They should look at the future as well.
Carole Bates says reviews should delve into each staff member's career ambitions and then see how the company can help them achieve their goals.
Says Bates: "In a tight labour market - if you want to retain your good people - you need to help your staff with their careers."
Bates, a human resources consultant and director of Premier Performance, says staff like to know what they are doing well and where they need to focus their efforts. She says giving people specific feedback about their work is essential to a good performance review.
"A tailor-made appraisal generally works better than a more generic system," says Bates. "And it is better if the appraisal links individual performance to the strategic goals of the organisation."
She says employees want to know how their contribution fits in with the business as a whole.
"Having measurable targets, or key performance indicators (KPI), are really important," says Bates. "Because that helps to make the evaluation process more objective. One of the challenges of the appraisal meeting is that often the employee has a different perspective on their performance than their manager."
For a performance review to be worthwhile Bates says the manager must have a thorough understanding of how the person is doing in the job day-to-day.
"Staff need to know what is expected of them and during the review specific examples [of their performance] should be discussed," says Bates. "So if a manager is rating someone as not meeting expectations it is important that it can be backed up with clear examples of objective data.
"It is also important that the review is not the only feedback people get about their performance. It should link in to the feedback staff should get on a day-to-day basis."
Bates says if there are issues about a staff member's performance then it should be brought up and dealt with at the time and not saved up for the formal performance review.
"Bringing up historical issues is not helpful for the individual or the organisation," says Bates.
And she says while annual pay and bonuses can be linked to a person's performance, the review itself is not the right place to discuss a salary increase.
"It is not a good idea to discuss remuneration in the same meeting that you are talking about performance," says Bates. "But there does have to be a link between performance and pay because an effective remuneration strategy will reward the highest performers."
Bates says a professional performance review should be based on facts that can be used to measure relevant aspects of a person's job. And neither party should attend the meeting without having done their homework first.
"It is best if both parties prepare for the review," she says. "Not just the employer or manager.
"And it is important for the manager to feel confident about the whole process. Sometimes a new manager going into an appraisal meeting may not be as effective if they are nervous about it. And that is where preparation can make it a lot easier."
Bates also favours a coaching approach to performance reviews, to help people think through problems for themselves and reach their own conclusions.
"Rather than a manager telling them what to do, a good manager will prompt the employee to think about their performance," says Bates. "For example, if an employee scores themselves high on a self-assessment of their performance, then the manager might ask them to talk through how they came to their conclusion. This way a manager can draw information from the person.
Bates says that while many larger firms have got good performance review systems in place, it is the smaller companies that often struggle to get the balance right.
"In smaller firms employees are treated more like friends than staff," says Bates. "And in these firms managers often lack the training and experience to carry out a staff review."
She says that in her experience small firms either do not performance review their staff or will get in an HR consultant to help them set up a system for them. And that, says Bates, would include training managers to do professional performance reviews.
While many firms survive without reviewing the performance of their staff, Bates says companies that want to get a competitive advantage - and align staff performance with company goals - should introduce a formal performance review process.