What are Best Practices for Employee Reviews? Five Examples

Situation: A CEO is evaluating her company’s employee review process and seeks input on alternative practices from other companies. What are best practices for employee reviews in terms of frequency, format and structure?

Advice from the CEOs:

  • Company A conducts annual reviews. They ask for written input from the employee, peers, and manager. The review is a sit-down meeting between the employee and manager.
  • Company B conducts formal annual reviews, with informal 6 month reviews. The annual review evaluates the employee’s performance on 15 key variables, and is prepared by the manager. The review is a sit-down meeting between the employee and manager
  • Company C does not conduct reviews. They have tried several formats over the life of the company, but found none satisfactory. Instead the company continually monitors key metrics on a green, yellow, red scale. As soon as yellow appears on a metric for an employee, the supervisor meets with the employee to discuss the situation and to formulate corrective action. The result is that reds do not occur.
  • Company D conducts annual reviews on the employment anniversary. They request written input from both the employee, and manager. The employee, manager and President meet over lunch, off-site. The objective is to communicate plus and minus points, taking a long-term approach in a conversational setting.
  • Company E conducts annual reviews, with quarterly self-evaluations. Both reviews and evaluations include a key question: “what can management do for me to improve my performance?” The review is a sit down meeting between employee and manager. Results of reviews are tied to quarterly profit sharing.
  • All companies agreed that, generally, in evaluating the options, the most important questions to ask are:
    • Why are we doing reviews?
    • What is the objective?

    The answers to these questions help to evaluate review options.

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