Manager Performance Review: A 5-Step Guide and Examples - Spiceworks (2023)

Manager performance evaluation is key to ensuring that your organization’s mid-tier employees are aligned with organizational targets, such that they can successfully translate these targets to ground-tier team members who report to them. We explain the 5 key steps to effective manager performance evaluation.

Managers are among the most critical assets of any organization. They are responsible for encouraging employees, mobilizing their talent, and looking after productivity. They are typically responsible for final target achievement. A good manager will ensure the timely delivery of tasks and create a healthy working environment. Conversely, non-performing managers will negatively impact team target achievements and overall morale.

That’s why a manager’s performance review is such an important part of your workforce management plan. It seeks to identify the right performance goals for managers, evaluate and acknowledge their contributions and achievements, and further improve their capabilities.

Why You Need to Reimagine the Manager Performance Evaluation Process

Research suggests that a company’s managers require special attention when formulating a performance managementOpens a new window framework. Here’s why (insights from TalentLMS’s survey Opens a new window of 500 respondents have major implications for companies):

• More than 1 out of 3 employees turn to their manager when they feel overwhelmed.

• 51% of managers said that they were happier before they became managers, and 62% agree that a sense of “isolation” set in after they were promoted. There is a clear need for regular feedback to engage managers and ensure interconnectedness for this workforce group.

• Only 41% of managers said that they have received role-specific training in the past month. By assigning clear performance goals for managers, which have corresponding learning key performance indicatorsOpens a new window , companies can help managers become more agile and adapt to the requirements of their dynamic job roles.

5 Steps for Effective Manager Performance Evaluation

The staid annual review cycle, where employees go through appraisals once in a year and the manager is evaluated based on how their teams perform, is no longer enough. Instead, companies should consider a five-step journey that involves a broad range of stakeholders, to gain a 360-degree view of manager performance.

By formulating a coherent and future-ready manager performance evaluation framework, you can strengthen these relationships and upskill managers where needed – enabling them to drive up productivity per-employee. This involves six key steps:

1. Continuous manager performance evaluation and management

Continuous performance evaluation and management implies that managers receive periodic feedback on their work rather than just once or twice in an annual or bi-annual review. They can act on the feedback and immediately course-correct without waiting for the appraisal season to come around, which might already be too late.

This doesn’t mean we do not need annual review cycles. While continuous performance management focuses on the day-to-day performance of managers, annual meetings can be focused on discussing compensation and benefits based on overall performance and giving managers career growth opportunities.

2. Clearly define and quantify performance goals for managers

A common pitfall faced when setting performance goals for managers and evaluating manager performance is generic goal setting.

Let’s say a company requires its managers to be “inspiring” and “calm.” Words like these can be ambiguous and difficult to achieve via on-ground performance. Moreover, how can these traits be measured?

Instead, you can break down the word “inspiring” into attainable criteria – Does the manager encourage employees to take ownership? What is the rate and value of innovation witnessed in that particular team? Do employees agree that there is a purpose in their work?

Apart from making goals attainable, it is also a good idea to personalize goals for each manager’s domain – this is particularly relevant for teams where productivity can be measured in quantifiable terms.

Let’s take the simple example of a manufacturing plant, where one team is responsible for assembly and another for packaging. The manager of the assembly team can have a personalized performance goal of reduction in defect rate by X% in a quarter. The manager of the packaging team, meanwhile, could be assigned a performance goal of X items sent to shipping per quarter.

You can additionally personalize these goals based on past performance, targeting specific gaps detected and addressed via learning and developmentOpens a new window in the last quarter/year.

3. Collect data from self, peer, and team reviews

The data for evaluating manager performance cannot be one-dimensional. Managers interact with several stakeholders daily, including juniors, seniors, and peers. Also, a typical manager will have a cross-disciplinary impact, where their job involves regular communication with several teams/departments in your company.

That’s why it is recommended to collect data from three channels (apart from the traditional manager feedback):

• Self-review: Managers are given a self-review form, where they rate their performance based on the attainable and personalized criteria defined in the previous step.

Self-reviews are validated by feedback from other stakeholders – but this is a great opportunity to ask open-ended questions and discover performance highlights that might have gone unnoticed.

• Peer-review: Team leaders in the same department, as well as managers from different business units, are invited to share their feedback.

This shines a light on the manager’s interpersonal skills, their ability to coordinate between tasks, and their understanding of the shared company vision. Based on peer reviews, you can chart a career progression pathway for your managers, identifying the potential areas for lateral transfer.

• Team member reviews: This is among the most critical elements of managers’ performance evaluation. A manager’s direct as well as indirect team members share their views on performance. Given that a manager’s primary responsibility is team building and resource optimization, the opinion of those working under them matters hugely.

Data from these three sources can be combined with the ratings provided by the manager’s manager before arriving at a performance improvement profile.

Learn More: How to Train New Employees: 5 Steps for PlanningOpens a new window

4. Assign an action point for every performance goal that you set for managers

Each goal can have either a positive or negative outcome. In other words, managers may be rated either above or below average for a specific performance parameter. Both these outcomes should be linked to an action point for your manager’s performance evaluation to be truly effective.

In the case of positive outcomes, you can suggest career growth and additional new responsibilities – for example, the manager of a software development team who obtains an impressive score in conflict resolution and problem-solving might have a future in Ops. You could even recommend that the manager becomes a mentor, guiding new recruits who join the company in similar roles.

On the other hand, if the manager scores well below the company average, it is time to recommend course-corrective measures.

An important note here: Goals for manager performance should be segmented as must-haves and nice-to-haves. An average score on a nice-to-have parameter can be deprioritized. However, managers must maintain a steady performance rate for must-have skills.

Domain expertise, teamwork, foresight, and responsiveness are some of the must-have performance goals for managers, regardless of industry or business unit.

5. Deploy learning and development (L&D) intervention

A rigorous performance review process is of no use if it doesn’t lead to measurable improvements in the long run. This is why the final step in completing the evaluation process is learning and development (L&D). Here are some of the methods you can consider to upskill your managers and boost their performance:

• Executive coaching: Executive coaching for managers is vital, as it equips them with the requisite soft skills needed to navigate a diverse and multilayered workforce. Interestingly, coaching doesn’t have to be limited to C-minus or senior leaders – middle managers too can benefit from this approach.

• Reverse mentorships: In a reverse mentorship, a manager is paired with a direct report to learn emerging skills and new perspectives. It can be invaluable in building empathy, as the manager gains a first-hand understanding of how their team members approach work and complete tasks. It also highlights latent challenges within a team, which the manager can address in the next performance evaluation cycle.

• Minternships: This is primarily geared for managers who have displayed outstanding potential in an area beyond their immediate domain of expertise. They can shadow peers in other departments to pick up new skills and diversify their capabilities.

Finally, you can consistently monitor learning metrics to gauge how far the manager has progressed on their assigned performance improvement track.

Learn More: Top 8 Best Practices for Employee Cross-TrainingOpens a new window

Manager Performance Review Examples from Leading Companies

Review structures for managers vary widely from company to company. And most keep their approach strictly confidential to retain a competitive edge. Five top-performing companies present great examples of manager performance review approaches:

1. Facebook

Facebook analyzedOpens a new window approximately 10,000 employees to identify the most satisfied/engaged teams. This revealed common traits among Facebook’s top-performing managers: caring about others, promoting growth, transparency, responsiveness, being helpful, recognition, and accountability. These could be among your core goals for manager performance.

2. Google

Google asks employees to rate their managers on 11 parametersOpens a new window , ranging from “no micro-management” to technical expertise. The company also asks two open-ended questions: Which is the element that managers should a) keep doing and b) stop doing? If you’re interested, this particular template for manager performance feedback is publicly availableOpens a new window .

3. Starbucks

At Starbucks, managers and employees continually measure each other’s performance via informal observationOpens a new window of day to day work. Managers receive 360-degree feedback from peers as well as junior executives. This tactic promotes transparency, ideal for small teams like those at each Starbucks outlet. Managers can act on feedback in real-time, improving performance incrementally.

4. McDonald’s

McDonald’s has a highly structuredOpens a new window manager performance appraisal framework, with clearly defined goals such as knowledge of work, expense management, and safety. Each manager is rated either unsatisfactory, below expectations, meets expectations, exceeds expectations, or outstanding. McDonald’s even explains what a positive review and a negative review implies.

5. Netflix

At NetflixOpens a new window , both managers and employees follow an “honor system” where everyone is expected to act in Netflix’s best interest. Managers are regularly trained and motivated so that they can build great teams. A key performance goal for managers at Netflix is ownership of culture – corporate policies and a casual, innovation-friendly startup culture shouldn’t be at odds with each other.

Learn More: What Is Employee Appreciation? Definition, Strategies, Ideas, and Technology PlatformsOpens a new window

There’s no Single Right Way of Conducting a Manager Performance Review

As these manager performance review examples suggest, there is no single “right” way of doing it. Your goals, measurement framework, and action plan will depend on the nature of your business, the culture you promote, and the baseline set by managers in historical performance review cycles.

However, the six-step framework we suggested can be an effective launchpad, even as you tweak specific elements and customize your managers’ journey. Ultimately, it’s all about making your managers feel valued and motivated (as opposed to mere drivers of the on-ground workforce and giving them the requisite tools and opportunities to maximize their potential.

What is your approach to evaluating manager performance? Tell us on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We’d love to hear more about your strategy!