How to run a leadership performance review

TL;DR: Leadership is difficult to define, but it’s a skill that can be built. Managers account for 70% of the variance in employee engagement, and are an important element of any company’s performance and culture. By using the right metrics and frameworks, companies can measure and develop leadership competencies through performance reviews, helping leaders grow and reassuring them of their purpose.

How do you evaluate leadership performance and skills for managers?

Leadership is a key element of business success. However, finding and developing leaders is no small feat — a Gallup report shows that companies fail to choose the right leadership talent 82% of the time.

Evaluating leadership skills can be challenging, because leadership is quite a complex concept. Ask any two professionals what they think makes a strong leader, and you might get completely different answers.

The International Institute for Management Development defines five key leadership styles: authoritarian, participative, delegative, transactional, and transformational. Each of these styles may be used at certain times, and has different pros and cons.

Although soft skills like leadership can be difficult to define, that doesn’t mean they’re not important — far from it. HR professionals have long understood the importance of soft skills; 67% have even withheld a job from an otherwise qualified candidate who didn’t have them.

And just like individual contributors, managers need a specific set of soft skills to succeed in their position. The Wharton School of the University of Pennsylvania names some of the top leadership skills as communication, motivation, strategic thinking, delegation, and emotional intelligence.

Whether you’re evaluating current managers and executives or looking for promising candidates for promotion, an effective leadership performance review can help you gather the input you need to move forward.

Leadership performance reviews may differ from individual contributor reviews. For one thing, leaders are often more accustomed to giving feedback than receiving it. They might feel wary of the process if they feel they’re being scrutinized. To build a people-focused culture, make it clear that performance reviews are a tool for learning and development for managers and employees alike.

🚀 Unleash employees’ potential with structured performance reviews

Use Leapsome’s performance review software to run effective feedback cycles that support growth and development

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Wann Sie dieses Playbook verwenden sollten

When to use
this playbook

This playbook is geared towards HR and people ops professionals looking to evaluate leadership competencies. It might also be helpful for other stakeholders involved in leadership performance reviews. In some companies, for instance, the board of directors is responsible for executive reviews.

Individual employees can also read this playbook for insights into how leadership skills are assessed, and what they should focus on if they’re interested in a leadership position.

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Was Sie für dieses Playbook benötigen

What you’ll need for
this playbook

A definition of leadership success

You’ll need to map out the attributes leaders will need to be successful within your company.

Leaders are usually judged on their impact on business growth and on team members. Company culture starts from the top, so a leader’s behavior plays a key role in the company’s overall direction.

A culture of growth-based performance management

Today, many companies are taking a more growth-based approach to performance management. Reviews can be used to deliver constructive feedback, find learning opportunities, and identify employees with leadership potential.

Hinweise & Tipps
  • Create a “single source of truth” for your performance review process — a place to gather important information, including policies, written feedback, and review documents.

  • Be transparent about how the review process works, how potential leaders are identified, and how individual contributors can become leaders if they want to.

  • Keep consistency in how often reviews are administered.

  • Avoid biased questions or language in performance reviews. For example, some cultural references might not be understood by everyone. Here are some useful performance review phrases to guide you.

  • When defining objectives, aim for specific examples over general skills. For instance, instead of asking individuals to rate a peer on “teamwork” or “cooperation,” try using a specific statement to be rated on a scale from 1 to 5: “The employee asks for/offers help when needed.”
  • Consider offering different growth path options within your company to accommodate different skill sets. For example, a software developer could choose to advance to either senior developer (requiring advanced development skills) or team lead (requiring people management skills).
  • Leadership performance reviews will typically look different at different levels of the organization. While executives may spend much of their time focused on business strategy, mid-level managers usually focus more on communication and managing teams.

How to run this People Ops Playbook:

Wie Sie dieses People Ops Playbook durchführen:

1. Set your objectives

The first place to start is by setting your objectives. This means deciding which skills are most important for leaders, and which benchmarks they should be meeting. You can later use these benchmarks to develop the questions which will make up your performance review.

Try to build your objectives around the two dimensions of leadership success we mentioned before: business performance and relationships. A successful leader should be steering the business in the right direction. They should be able to tolerate stress and balance long-term strategy with quick thinking when needed. They should also be able to bring out the best in other people.

Brainstorm a list of qualities that are essential for leadership success, and make sure that they also communicate your company’s values.

2. Define the questions you will use

The qualities defined in step 1 will be the basis of your performance review form.

We recommend using a five-point scoring scale for reviews. Instead of simply evaluating skill levels as “good” or “bad,” these can give a more nuanced indicator of company expectations. Here’s an example of what this type of scale might look like:

1 = Needs Strong Improvement
= Needs Improvement
= Meets Expectations
= Exceeds Expectations
= Superb

Quantitative data (like the above) can be very useful for understanding performance trends over time and across different departments. But qualitative data is also a must for leadership performance reviews. Qualitative data comes from open-ended questions and provides a deeper insight into performance.

We recommend using “what” questions to gather qualitative data during your performance reviews. For example: What should [employee] keep doing? What should they change?

3. Decide who will be involved in the review

To get the most valuable information from a review, you should ideally use a 360° review process. This means feedback will be coming from more than one person — it may come from board members, other managers, direct reports, and via self-assessment.

By using a 360° process, you’ll be able to get a more in-depth picture of leadership performance.

4. Determine how often reviews should take place

Today, companies have shifted towards offering feedback more than once a year. We recommend at least bi-annual formal reviews, while informal feedback can (and should) be offered even more frequently.

Continuous performance management is becoming more popular, and for good reason. According to Deloitte, 90% of companies that have redesigned performance management have seen direct improvements in engagement, 96% say processes became simpler, and 83% say that the quality of conversations between employees and managers went up.

Research has shown that employees appreciate frequent feedback. And although leadership roles offer a lot more autonomy, executives often want feedback as well.

Frequent performance reviews help reviewers avoid “digging up the past” or setting long-term goals that will inevitably be forgotten by the following year. Instead, employees and leaders can receive time-sensitive feedback and quickly act on it.

5. Gather relevant data

Once you’ve put together a plan for your review process, it’s time to kickstart these reviews. During each leadership performance review, you’ll need to gather feedback from employees, managers, peers, and via self-assessment.

You’ll want to make sure this information is kept in one place, clearly recorded, and that reviews are conducted regularly. Keeping performance reviews on record is very important for legal accountability and company culture.

A platform like Leapsome can help you organize your entire performance reviews process — from setting up the questions and respondents to analyzing performance changes in different areas over time. With visibility over the whole process in one digital tool, you’ll be able to keep tabs on what’s happening, increase peer participation, and quickly pinpoint any problems and areas for development.

6. Analyze the data

Performance reviews can help you understand an individual’s performance — but what about performance trends across your company?

That’s where people analytics comes in. People analytics is about using data to gain insights into your HR function. Companies are becoming increasingly interested in people analytics, with 71% seeing it as a high priority, according to Deloitte.

When looking for a performance management HR platform, make sure you find one that offers analytics insights to help you understand leadership potential (among other metrics), based on the feedback gathered during performance reviews.

7. Act on the results

At the individual level, leadership performance reviews can be used to guide leaders’ learning and development.

Once you’ve conducted a review, schedule a development talk between the person being reviewed and their manager to offer immediate feedback on leadership skills. This should be presented as a constructive talk, with both parties given the opportunity to offer their opinions.

Then, create development goals to build on strengths and solve any problems identified during the review. Like individual contributors, leaders can benefit from learning programs and development modules, especially if they’re new to managing people. With higher-level executives, feedback should be more generalized and designed to point them in the right direction; the executive will ultimately be responsible for changing course.

Additionally, if someone is performing well the results of their review can be used as an indicator of a performance bonus they deserve.

Follow-up best practices for leadership performance reviews

Integrate the performance review process with your other HR initiatives

Ideally, HR functions shouldn’t live in silos. The performance review process can be integrated into your other HR initiatives, like succession planning and training programs.

Although performance reviews can be linked to financial incentives or promotion, we recommend keeping salary talks separate from a performance review discussion. This will allow the performance review to stay focused on progress and development.

Ensure everyone understands what’s expected of them

It’s always good to set clear standards for leadership success. You should also let leaders and employees give feedback on the review process, as they may have insights into what is and isn’t working well.

🚀 Interested in implementing reviews to boost employee performance and engagement? Access our leadership performance review template with best-practice questions for leadership appraisals and other types of review. 😉

Turn managers into leaders with Leapsome

Leapsome is the only platform that closes the loop between performance management, employee engagement, and learning. 

Effective leadership performance reviews include feedback from reports. Watch this video to learn how employees can easily share their opinions using the reviews module in Leapsome.

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Frequently Asked Questions

How does a leadership performance review differ from an individual contributor performance review?

Individual contributors are mainly judged on how well they meet their day-to-day objectives. They need to produce quality work, incorporate feedback, meet deadlines, and help the company reach goals.

On the other hand, leadership performance appraisals focus more on soft skills to enable and coach reports, as well as goal-setting. Managers must point their team in the right direction and be a touchpoint for help and support.

Since leaders typically have more autonomy within the company, they may be expected to put performance recommendations in place independently. Junior contributors may need more hands-on guidance with their professional development.

What are some indicators that an individual has leadership potential?

When choosing a future leader, look for:

  • Consistently high scores on performance reviews
  • Positive feedback from peers, and a collaborative attitude
  • A self-starter with fresh ideas, who can help and inspire a team 
  • A demonstrated commitment to professional growth
  • A combination of soft and hard skills. Leadership candidates should know their field of expertise well, but they should also be enthusiastic about passing on this knowledge to others.

How can you prevent bias in leadership performance reviews?

It’s important to prevent bias in leadership performance reviews. Employees expect (and deserve) a fair and bias-free environment: perceived bias lowers employee engagement, and may constitute discrimination.

Using a tool like Leapsome, you can standardize performance reviews to ensure the process is fair. What’s more, you can set clear metrics and goals for leaders and individual contributors by creating a development framework (also known as career progression framework — download our free template!).

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