“Performance review” is the formal process of evaluating your employees by using a set of pre-developed criteria. To be effective, performance reviews must provide an honest, accurate, complete and fair evaluation of each employee’s performance, benefiting both the individual and the organization. To accomplish this goal, organizations have heavily focused on improving the technical aspects of review (the process and measurement), while giving little attention to the social context of the performance appraisal (workplace relationship).

Before we move further to understand the impact of social context, let’s look at what research studies have informed us:

• Performance review systems have not been developed and implemented in a way to achieve their desired effectiveness despite the widely recognized need for reviews. Even when a performance review system was acceptable by design, it was resisted or rejected by many users due to a lack of appropriate implementation.
• When employees perceived that performance ratings did not accurately reflect their actual work performance, they reacted to performance reviews negatively. The degree of their satisfaction proportionally affected their motivation, job attitude and work productivity.
• When employees perceived the performance review process as fair, even when review outcomes were unfavorable, they reacted to them positively.
• The quality of supervisor–subordinate relationships influenced the outcomes of performance reviews. Subordinates in high-quality exchange relationships interacted more often with their supervisors and received more developmental opportunities and positive reinforcement. As a result, they demonstrated more loyalty to their organization, produced higher job performance and felt more satisfied with their performance review than employees experiencing low connections with their supervisors.
• The way in which a supervisor delivered review results affected subordinates’ perceptions of the entire performance review system. If the supervisor shared performance ratings and feedback in a timely, candid, respectful and unbiased manner, supported by detailed explanations, then the employee perceived the process as fair and accepted the outcomes in a positive manner.

This research evidence tells us that to increase the effectiveness of performance review, we need to expand our focus by elevating our awareness of perceptions and feelings of the system users (the supervisors and subordinates) and by paying closer attention to the quality of relationships between them. As a dynamic component of the organization, the social context affects individuals’ satisfaction levels with the organization, their job and the appraisal process.

In the context of performance review, dissatisfaction indicates that employees’ goals have not been fulfilled as reflected in the feedback they receive. So, pay close attention to your employees’ reactions to their performance review and the way your supervisors handle the review process and deliver the review outcomes. By doing so, you and your people managers will be better positioned to tackle performance review challenges in terms of their practical application and acceptance by users.

Further, for your supervisors, there is much they can do to gain their subordinates’ fair perception of the review process. For example, during the review process, a substantial amount of interaction and communication takes place between the supervisor (the rater) and the subordinate (the ratee). To ensure these exchanges are perceived as fair by the subordinate, the supervisor must demonstrate authentic and helpful behaviors such as:

1. Show respect and courtesy when having a review feedback conversation with the subordinate.
2. Tell the truth when sharing performance ratings and feedback, and refrain from making inappropriate or prejudiced remarks.
3. Provide adequate explanations that would justify the review decisions and outcomes.
4. Deliver review outcomes in a timely manner.
5. Suggest areas of improvement including an action plan.
6. Focus on future development instead of past performance.

A well-designed and implemented performance review system acts as a guardian within an organization and sends signals to the outside world that the firm is well-managed and doing the right thing. Properly conducted performance reviews will motivate employees at all levels to assume responsibility for producing optimal organizational results.

As part of the management team, supervisors and managers play a key role in influencing employees’ perception and overall effectiveness of the performance review process. In the end, their relationships with their subordinates matter and their ability to make sound performance judgment matters. So managers and supervisors: Exert your influence wisely and sensitively, and invest time in making authentic connections with the people working for you.

Learn more new ideas and best practices, and get step-by-step practical guidance by reading Optimizing Human Capital Development: A Distributor’s Guide to Building Sustainable Competitive Advantage Through Talent Strategy. Use this tool to achieve business excellence by maximizing your human capital potential!