How the Right Performance Review Can Help Employee Retention

Brad Humphrey addresses the why, how and what should be covered when conducting performance reviews

Most good workers, even those who can slip occasionally, want their performance to be assessed and discussed.
Most good workers, even those who can slip occasionally, want their performance to be assessed and discussed.

What makes performance review so critical in worker retention is that it might be as much of a review of how well we have executed the first six steps to worker retention as it is reviewing the performance of an employee. 

Let’s first clarify what this article is not going to address: I am not going to recommend a formal document to use when conducting a performance review. There are as many templates and formats for performance reviews and appraisals as there are contractors. Many are part of elaborate and expensive software packages or Internet services, developed in a way that an in-house employee, often the HR Manager, can easily oversee. 

My quick word on this point: find or develop a document that is easy to use for both the leader conducting the review and the employee receiving the review. You’ll seldom find the perfect template or supporting system, but you’ll be years ahead of many contractors by embracing a system and document…then just “struggle forward.”

My purpose for this article is to provide insights on WHY to conduct performance reviews; HOW to conduct more meaningful reviews; and, WHAT the reviews should cover and address. Remember, while you should conduct performance reviews on all employees as a normal part of their continued employment, the Performance Review is an especially important tool in helping you retain good workers, especially the new workers.

Why you should conduct performance reviews

First, let’s approach the WHY to conducting performance reviews. 

When a new worker first begins his employment, he often asks three questions:

  • “What’s my job?” (Job Roles & Responsibilities)
  • “How am I doing?” (Performance Review)
  • “Who cares?” (Leader’s Involvement & Feedback)

Even the “Carp-Worker” wants to know what the contractor thinks of him and his performance. However, because most construction workers will be more like the “Fence-Sitter” or “Thoroughbred,” (together these two groups make up about 80% or more of most construction companies) new employees like to get a feel for how their leaders are viewing their performance.

The WHY of conducting performance reviews allows the new employee to assess where he is on the learning curve compared against where he thought he would be. It’s not uncommon for workers, especially those who are objective and sincere, to have a self-imposed expectation for their performance progress. Such workers are a joy to have working for you. They often can nail down 99% of what their actual performance results are without first getting it confirmed by the contractor. 

Good workers know where they stand in their development and growth. The Performance Review allows them to confirm what they think and informs them what their leaders are seeing. They realize that future opportunities are tied to how an employee is observed to be performing.

The WHY also allows the contractor to assess how well the company has executed on-boarding, the 90-Day Plan or provided skill training (steps 1-3). It’s important that contractors assess how well their employee retention strategies and tactics are working, looking to adjust and tune-up any effort. The Performance Review can expose weaknesses in a contractor’s approach as well as highlight good efforts that need to be maintained.

How you should conduct performance reviews

The HOW to conducting the Performance Review is perhaps as important (or more important) to address than the WHY and WHAT combined. So, let’s camp out a few minutes on this aspect of the Performance Review and learn how we can perfect it.

Facts, actual and credible examples, and first-hand observations are all important to bring together at the Performance Review. It is the HOW to bring them together to be meaningful, accurate and sincere that we need to address here. Consider several ways to execute the HOW:

  • Provide a “mini-version” of the Performance Review at the first 30, 60 and 90 days of a new employee’s tenure. This review might not be as exhaustive as the annual review format but it educates a new worker on early progress and prepares the worker for what will become an annual event.
  • Conduct the Performance Review in private to allow and reinforce privacy and establish a comfortable presence.
  • Use examples of observations made of the employee’s work practices or behavior.
  • Allow the employee to complete a “self-assessment” form of the Performance Review document, if the same document is not used. (I recommend using the same document the leader will be completing to better benchmark the similarities and differences.)
  • Provide several positive observations along with observations about areas needing attention. While there does not have to be a “1:1” ratio of positive to negative comments, it is important that the employee knows that he is not a total and major “screw-up.” (Unless he really is!) 
  • Encourage the employee to ask questions about any concerns or any need for clarification.
  • Encourage open discussion of those areas that the employee might feel differently than what was noted on the Performance Review.
  • Include a discussion about performance and behavior expectations. The leader should make this effort very clear if the employee has deviated from what is required or from his or her own previous positive “standards.”
  • If the Performance Review is expected to be primarily negative, it might be wise to have two leaders participate in the discussion. Likewise, be sure to allow more time for such a Performance Review as the final portion might involve more coaching, counseling, documenting discipline or a combination of all three efforts. 
  • Should the employee demonstrate “boiling” frustration, even anger, be prepared to take the discussion in sections. This can allow a bad-tempered worker the time to calm down, in effect taking the steam out of his anger.
  • If the Performance Review is going to be a “Perfect 10” discussion, do not cheat the good employee by shortchanging the setting of developmental goals, with action plans. The tendency is just to tell the “10” to “just keep up the good work.” Great workers do not always welcome such feedback. My experience is that the best workers want to be challenged further to grow and expand their skills and knowledge so they can have a more visible, responsible presence.
  • Include a proactive goal-setting effort with the employee. The goals can be technical, attitudinal or behavioral in scope but they need to be created for every worker.
  • Include a brief but clear action plan that further drives goal achievement. This effort should provide what action the employee will take, what support effort will be provided by leadership and what resources will be needed. The time line for achievement should bump up against the next scheduled Performance Review.
  • Keep a copy of the Performance Review in the employee’s personal file. While the employee might have his own copy, it’s more important for him to have a copy of the goals and action plan that were created.
  • Conclude the Performance Review with words of encouragement, no matter if the review was positive or negative in nature. Employees, even those struggling, often can strive to improve when they capture the sincerity of a contractor (or the leader) who conducted the Performance Review.

The suggestions just presented, while exhaustive, barely touch all that can be considered part of the HOW to conduct the Performance Review. It is important first to conduct a Performance Review on each employee, no matter how long his or her service with your company has been. While this takes time to complete, it is critical to the overall retention of employees to be consistent with conducting regular Performance Reviews. 

One additional thought on the HOW to conduct the Performance Review: Depending on the size of your construction company, I would recommend a minimum of one Performance Review per year. The new employee might receive two or three “mini-reviews” just in their first 90 days as presented earlier, but the employee who has passed his probationary period should expect to receive at least an annual review.

What should be in a performance review

Now, let’s turn our attention to WHAT should be addressed in the Performance Review. 

The WHAT of any Performance Review should, at the minimum, include the following areas for inclusion in the review effort:

  • Past performance and productive positives since last Performance Review should be included so both employee and his senior leader recognize growth and development.
  • Observed “negatives” or opportunities for improvement that need to be addressed, corrected, and improved.
  • Specific areas on which the employee is to be assessed and reviewed. This might include areas such as: technical skills; job-related skills and knowledge; behavior with co-workers, leaders, clients, and vendors; problem-solving skills; attitude and effort to improve; attendance history and adherence to company policies etc.
  • Tied to all of the above is the future effort that needs to be addressed for the employee. This includes the setting of improvement goals and the appropriate action plan of items to accomplish the goals.
  • As presented earlier, there should be a “self-assessment” effort provided the employee. While the same Performance Review document to be used by the leader can be provided to the employee to use, it doesn’t necessarily have to be the exact same document. No matter your document, it is important to include the employee’s completed assessment in the Performance Review process.

The WHAT is rather simple to execute. The actual document used needs to be easy to understand, with enough room for writing observations and opinions. It needs to be forward-looking enough that both the leader and employee are projecting where the employee needs to be by the next review time.

All contractors should conduct performance reviews

Some final thoughts on this seventh and last step to employee retention: Unfortunately, the smaller the contractor (whether GC or specialty) the less likely they are to conduct any form of a Performance Review. This is unwise from an employee growth strategy and as a way to retain workers – especially the better workers. 

It seems to me that some contractors would rather not give a struggling employee an excuse to leave due to the accountability of a Performance Review. Funny thing, however: Most good workers, even those who can slip occasionally, want their performance to be assessed and discussed. They welcome this opportunity and the accountability that can come with it. It’s only the lazy and contrary workers who breathe easier if they can live without any accountability.

As I have written in an earlier article for this series, it’s not a matter of using one or two of the seven steps. Instead, it’s very important that all seven steps are executed. Unless you are ready to experience 10% to 20% of unnecessary turnover, integrating the “7 Steps” into your company’s strategy will help you retain workers and will help you fight off what looks to be a challenging shortage of construction workers.

Review your Performance Review to improve your company’s performance!

Read Brad's articles on the first six steps to worker retention:

Step #1: On-boarding

Step #2: The 90-day Plan

Step #3: Skill Training

Step #4: Coaching and Mentoring

Step #5: Engagement and Participation

Step #6: Responsibility Enhancement

*This article was originally published in 2014 and updated in 2019.