We call them performance reviews. This is somewhat of a misnomer. Yes we're looking back at how you've done, but what is the purpose of a performance review, really?
It's not to analyze the goods and bads of the past year and use those to determine a pay increase. First of all, it definitely shouldn't be a whole year since your last review. Second, reviews are meant to be a period of reflection and planning.
You should look back on performance against expectations - given the responsibilities of the job function - and use that information to guide future goals. Future development rather than past performance.
If you're not looking and planning for the employee's future growth, why are you even doing reviews in the first place?
Too many companies use the standard, old, tired, review system. They meet with the employee to go over the results and end the discussion by telling them if they're receiving a raise (or not). This transactional framework is detrimental to the business-employee relationship. Not only are you putting financial pressure on the business, paying out increases at the same time each year, but you're also cementing the focus on past behaviors.
Instead, focus on the future you'll have with this employee. What goals can we set for them to be a better contributor to the team? Can we set up frameworks or give them responsibilities that will help them develop more quickly?
Perhaps a given employee has done poorly in the past? Don't punish them by withholding a bonus or stripping responsibilities. What does this do to their mindset? It crushes them. They have nothing to look forward to because they know they're playing from behind. They lose the motivation to do better. Turnover is inevitable.
Changing the perspective from a focus on the past to one on the future will fundamentally change your culture. Team members will be excited for future opportunities. They'll look for ways to grow.
Be open to talking about their dreams and career aspirations. Odds are they're not planning on staying around forever. So why not help them to become the best they can be - helping your business to be more productive along the way?
Don't do performance reviews, instead evaluate and create performance projections.
