The Performance Review. Formal or Informal?

A performance evaluation is an
opportunity for a manager and an employee to meet and discuss the employee’s
job performance, organizational priorities, and performance goals. For
employees this process can be something they dread or look forward to. Despite
being a star employee there might be things that they can still improve on but
receiving that type of feedback can feel like being put in front of a firing
squad. As new generations continue to enter the workforce the way they receive
feedback varies. Formal processes can seem daunting, where an informal review
might put them at ease.

Can the actual performance review,
where promotions and raises are being determined, be informational and informal?
Yes. The informal review process takes stress off the back of the employee and
gives the manager the ability to connect with them on a level that is less
daunting. What about the legalities in pay raises and formal coaching
processes? Are those informal too? The way a manager handles a situation
determines the answer to that question. No matter what happens, there should be
a period where the manager takes a step back and collects their thoughts before
handing out corrective action. Use this as an opportunity to build a better
relationship with your employee.

Compensation is the number one
question on your employees’ minds when it comes to any type of performance
review. They’re thinking, “It’s been 6
months, do I get a raise? Will I get a raise after another year?”  Unless you’re in Human Resources you may avoid
questions that have to do with raises and bonuses because it’s a sensitive
subject for many employees. Creating an informal communication channel about
important topics such as compensation will allow for better work relationships.

Far too often supervisors avoid the
crucial, honest, sincere, developmental one-to-one discussions between their
employees and instead focus on taking the safe route and simply checking a box
on the Performance Review when dealing with compensation. We are no longer in 4th
grade where simply checking “Yes” or “No” is acceptable. We go down the road of
formal compensation processes
because we want to avoid doing, saying,
breathing, moving wrong or anything else that’ll have recourse of legal action.

Learn More About Our Compensation Software


Along with the need to go away from
the formal performance review is the connection between that and compensation
increases. If no correlation can be made between the two, should they be
separated? Can you really deny an employee a raise or some type of increased
compensation if they don’t have any negative reports on file and their
performance has been as par with the rest of the organization?

The review process of
traditionalists no longer works for that of Generation Y or Z. Companies need
to look for ways to effectively evaluate their employees in a way that doesn’t
create mounds of stress, which could produce an atmosphere of fear of losing
one’s job. This type of atmosphere decreases productivity and ends up making
employee retention more challenging and pushing turnover rates higher.

has been your experience when discussing compensation in a performance review?
Do you tend to stay on the straight and narrow and be more formal?

More than 2,300 organizations use PayScale’s subscription software to:

  • Allocate raises. PayScale Insight allows you to allocate raises based on employee performance and labor budget.
  • Attract talent. Price jobs based on your local market and competition.
  • Retain employees. Get pay right and show them how you did it. Your employees will be more satisfied to stay.
  • Drive performance. Get their salary right so they can focus on doing a good job.
  • Be confident. With know-how to talk about comp with anyone.

What are you waiting for?
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Ina Eksteen

Would like to try the demo