7 minute read

Effective performance reviews form the basis of any sound human resource strategy. If employees have no idea what their specific goals are and how well they meet them, they lose the opportunity to improve. When your staff has this information at the ready, there’s less confusion about what to do next and what standard they should uphold.

Most for-profit organizations understand the importance of performance reviews generally. They spend time at the end of every year conducting annual reviews via a standardized process. This is a good first step, but structured doesn’t always mean effective. In contrast, many nonprofits have a less standardized process that delivers good value through ongoing communication, but this approach can oftentimes feel unorganized and doesn’t give either party ample opportunity to develop substantial reviews.

The best approach is to find the middle ground between the two while providing value and maintaining consistency. Is this where your performance management approach fails as a nonprofit organization? Are you properly balancing timeliness and consistency? Let’s find out.


The Importance of Structured Performance Reviews

Are structured performance reviews really worth the hassle? An optimized performance review process can be your organization’s secret weapon. The nonprofit sector is tough - long hours, short pay, staff being stretched thin. If your employees aren’t certain that management doesn’t have their best interests at heart, your organization will struggle to retain quality employees. Here are some of the most compelling reasons you should optimize your review process sooner rather than later.

Build Leadership Skills

Some managers may feel reluctant to give feedback, especially when they’re a new fit in an existing organization. Others may understand the dread many employees feel and only reach out when they have stellar feedback to share. They then shy away when they have important critiques to make. This is natural, but managers must overcome those feelings to lead effectively and objectively.

Keep Your High Performers

Failing to provide feedback could cost an organization its high achievers while allowing the underachievers to keep coasting without correction. If someone goes above and beyond the call of duty and still gets the same rewards as everyone else, they may leave. A performance review prevents this by setting goals, evaluating achievement and rewarding people accordingly.

Evaluate Managers

Direct reports aren’t the only ones who benefit from performance reviews. Supervisors may also use this to address their management style. They can then make changes to better suit the organizational culture. You may ask questions, such as:

  • Is there an area in which I need to improve?
  • What can I do to make your job easier?
  • Am I communicating clearly?

Show Transparency

Using structured performance reviews helps to illustrate transparency while building trust. The more trust that exists between an organization and its employees, the more likely people are to accept that even negative feedback comes from an objective and honest place. Transparency also helps to protect against claims of favoritism or discrimination.


Provide Documentation

Maintaining a standardized procedure encourages the need to document each review. Note that if an ex-employee does make claims of discrimination, you may find you have no evidence to support your claims of poor performance or behavioral issues. Depending on what state you’re in, it can be very hard to terminate employees. If you’re not documenting everything, you’ll struggle to make a compelling case.

Most nonprofit organizations will agree that their employees are their greatest  asset. But how do you know if they are being managed correctly? Download our HR  Health Scorecard to get started.



The 5 Do’s of Nonprofit Performance Reviews

Use these five best practices to evaluate how solid your current performance review process is. If you don’t currently have one in place, these tips can show you where to start.

1. Do Understand Your Own Weaknesses and Strengths

As a manager, you need to be aware of what your triggers, vices, and biases are. This is the first step toward ensuring you conduct fair performance reviews. Sometimes poor performance in an employee is a byproduct of something a manager may improve. Until that happens, the employee may continue to receive blame for something they are not fully responsible for.

As noted earlier, managers can use performance reviews to evaluate their own behaviors as well. However, the effectiveness of performance reviews for managers and their direct reports comes down to active listening. Defensiveness can cause people to tune others out when the feedback is negative. Both parties need to find ways to counteract this.


2. Do Establish Regular, Ongoing Feedback

Managers should provide immediate feedback based on performance as the need arises. Keeping up with check-ins throughout the year mitigates year-end surprises during an annual performance review. Also, the more regular these check-ins are, the more they begin to feel like just another conversation instead of a dreaded task.

For example, if a client has negative feedback about the way an employee handled an incident, you should deal with that immediately. This allows the employee to articulate what happened because it’s still recent. It also gives the employee the chance to change their performance faster, which is better for your organization overall. Remember to document these conversations and review them at regular check-ins.


3. Do Determine the Right Cadence for Reviews

Ad-hoc feedback has its place in the performance review process and so does scheduled reviews. However, managers struggle to determine the review rhythm they should settle into. How often is too often? What counts as not enough? This may take some trial and error based on organizational culture and size. One recommendation is to use quarterly and annual reviews along with ad-hoc check-ins.

New hires require more ongoing feedback and monitoring to ensure they are a good fit and are adjusting well. We recommend reviews quarterly, bi-annually and annually. Studies show this type of approach increases job satisfaction and retention. In the beginning, the employee may require more hands-on assistance. The ad-hoc, quarterly and biannual reviews address this while evaluating progress. Then, the annual review mirrors the process used with other employees.


4. Do Align Reviews With the Organizational Culture

Your culture and mission are what attract your employees to your nonprofit in the first place. Make sure that the culture you establish is reflected when evaluating performance. Is this employee helping or hurting your mission to create a bigger community impact? Why or why not? Also, keep in mind what motivates your employees. Are compensation increases tied to performance or just cost-of-living increases?

Be careful about actions that people may see as taking advantage of nonprofit employees. Many nonprofits don’t have the resources to give big pay increases. Still, you should find ways to reward high performers, even though they are doing charitable work. Some appropriate rewards nonprofits may consider include sick time increases, PTO increases, discretionary year-end bonuses, and more flexible work schedules.


5. Do Use the Same Standard Forms in all Reviews

When it comes to maintaining consistency during performance reviews, using a standardized form is key. Some organizations may need different forms for different levels in the hierarchy or different departments. We recommend using a four-point scale because it provides just enough range when ranking feedback. 


Grading Scale_ME_v2


Some organizations, however, prefer a three-point system, while others go up to five.

We also recommend adding a comments section, so that you can remark on why an employee exceeded or fell below expectations. This can help them to pinpoint exactly what they need to improve.

Looking for a way to accurately evaluate your organization's performance as a  whole and determine problem areas you may need to address? Use our HR Health  Scorecard to get started.


The 5 Don'ts of Nonprofit Performance Reviews

Use these pointers to avoid practices that may undermine your performance review process. If you have a longstanding procedure in place, these may help identify areas that may hinder your best results.


1. Don’t Wait Until Year-End To Get Up To Speed

Just-in-time communication is more valuable than having a performance review done only at the end of the year. If it’s not done regularly, then it has no prescriptive value. It also puts a huge responsibility on both the employer and employee to document successes and failings independently. This either demotivates the employee or allows undetected poor performance to slip through the cracks for another year.


2. Don’t Make Feedback a Surprise

If the results of a performance review come as a surprise to an employee, the fault lies with the manager. This is why open, frequent communication with employees about their performance is important. An employee should never walk into a performance review thinking they’re going to get great feedback and then receive low ratings. The opposite of this scenario is also unacceptable.


3. Don’t Focus on Negative Feedback

If you only reach out to employees when they make a mistake, they will dread feedback. Let them know when they’re doing a good job and when they exceed expectations or set new ones. In the more structured reviews, always start with the positive. Put the meat of the review in the middle. This includes goal setting and any negative remarks. End with something positive and show optimism for the future.


4. Don’t Make the Results a Secret

A mistake many managers make is waiting until the time of discussion to share the formal review documentation. Even if an employee heard great things about their performance all year, they will feel more tempted to read through the document than pay attention to what you have to say. Consider giving them the document beforehand and then scheduling the discussion after they’ve had time to digest its contents.


5. Don’t Mix Compensation and Performance

Most people tie performance reviews to compensation, so it’s inevitable this will come up. Try saying, "Your compensation review is based on several factors, so we'll need to do a follow-up." Then, get back to them within a reasonable time frame. Separating these conversations gives the employee a chance to correct their course without the idea of compensation playing into it. It also frees them from being absorbed with how to bring up the sticky topic of compensation. Be upfront about the fact that this review is for performance, and there will be a subsequent meeting to discuss compensation.


Frequently Asked Questions

Performance reviews are complex and rely heavily on interpersonal relationships. So, it’s only natural for you to have additional questions. Here are our answers to the ones we get most often.


When Do I Need To Start Considering a More Structured Approach?

This primarily depends on the size of your organization. When you get to a staff of 20 employees or more, it may be time to start formalizing the process and aligning it with your organizational culture. Continue to make changes as you experience different phases of growth.


What Are the Components of a Four-Point Scale?

The wording varies on different forms, but this is the one we use:

  • Point 1: Unsatisfactory
  • Point 2: Improvement needed
  • Point 3: Meets standards
  • Point 4: Consistently exceeds standards


Should I Use a 360-Degree Model for Reviews?

This model provides feedback from the employee, supervisor, work peers and/or clients. It sounds great on paper to get a full 360 view of an individual’s performance. However, it’s a long and tedious practice. It also takes some of the focus away from the supervisor-to-employee relationship.

That said, there is no one-size-fits-all approach. Some organizations have automated tools and other resources to pull this off seamlessly.


How Do I Turn an Underachiever Into a High Performer?

Most of the time, successful employees have uneventful reviews. They know what their goals are and have been actively working towards them. However, turning around a struggling employee takes a little more work:

  • Develop a plan to correct their poor performance if necessary
  • Do more than just list their shortcomings; show them where they do well too
  • Provide this plan to the employee at the time of the review process
  • Set up a debriefing a few days later to make sure everyone is on the same page
  • Ask for feedback on the plan, such as potential concerns or thoughts on improvement


How Mission Edge Can Help

Chances are you still have questions about nonprofit performance reviews. Maybe you feel so overwhelmed by the process that you think of scrapping the whole plan altogether. Another option is to outsource some of that responsibility. We provide HR support so that you can maintain a solid and effective performance review plan.

To start you off, we provide at least two standardized forms for your organization. These are based on whether you want a three-point, four-point or five-point ranking system for your evaluations. We then train managers and supervisors on how to use them, while seeking buy-in from your employees.

In addition to this, we help organizations align their performance reviews with their organizational culture. You always want to ensure you’re measuring the things that matter and setting goals that feed into your mission and objectives. This makes it possible for you to serve the communities that rely on you as a team instead of a disjointed organization.


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