The Importance of End-of-Year Performance Reviews and Common Rating Errors

Written by: Stephanie Burford, PHR, HR Manager and Advisor HR

Where did time go? We are right around the corner from 2025! As businesses start to wrap up 2024 and begin planning for 2025, it’s important to keep performance reviews at the top of the priority list. Yes, they can be time-consuming.  However, performance reviews provide a formal opportunity for the employee and manager to reflect on the employee’s accomplishments over the past year, discuss areas of opportunity and improvement, and have a deeper conversation about their career development. These conversations increase employee engagement while giving employees an opportunity to reflect on the previous year and discuss how they can continue to grow their professional career.

The purpose of a performance review is to provide honest feedback to employees. Even employees who have not been with the company for very long. It’s a common misconception that honesty means being rude or harsh to get a message across. The goal of a performance review is simply to evaluate an employee’s work performance, provide feedback, and set goals for the future.

There is rarely a time dedicated specifically to having a conversation with employees about their performance. Take advantage of it and use this time as an opportunity to not only help them grow professionally but listen to what they have to say. 

Before going into a performance review discussion, managers should be prepared. Some common rating errors to be aware of are:

1.        Bias aka “similar to me” – There is a natural tendency for raters to provide more favorable ratings to someone like themselves.

2.        Halo/Horn – This happens so often it’s common to overlook. This is when the rater lets one strong value the employee has color their judgement of other behavior traits. This can be good or bad.

a. For example, the employee is great at what they do and the quality of their job, however, their behavior towards others is rude and demeaning. The manager may overlook the employee’s behavior and rate the employee highly because the employee does great work.

3.        Leniency – This is when a rater may be afraid to hurt an employee’s feelings or to hurt the employee financially.

4.        Recency Error – This is very common. Recency error is when an employee is evaluated negatively or positively based on a recent situation that happened (an employee made a big sale, they lost a big sale, they fixed a machine that has been down forever, etc.). Performance reviews should cover the employee’s behavior and performance and the extent of the progress during the time period from one appraisal date to the next. If an employee is new, focus on what you have observed since they started, not just recent issues that may have occurred.

Being aware of these errors are crucial when preparing for a performance review. Rating someone incorrectly can lead to unfair evaluations, impact employee morale, employee motivation, and career development. A performance review should be based on concrete data while avoiding personal biases. This will ensure fair treatment and an accurate assessment of an employee’s performance. 

Advisor HR provides a customized approach to performance management. If you are interested in streamlining your organization’s performance management process, reach out today!