Retooling the Employee Appraisal

By Phillip M. Perry

Photo ©Photodisc

The performance review: Too often it’s an ordeal that’s loathed and feared—and rescheduled until it can’t be put off any longer. So common is this attitude toward the traditional employee evaluation that many have questioned whether the annual ritual is worth the effort. We think, why not drop the whole thing and just get to work?
      However, successful employers have come to grips with such resistance and recognize the performance review for what it is: the best tool for creating a motivated workforce that boosts the bottom line.
      “Having a performance appraisal system is the most important step any organization can take, regardless of its size,” says Dick Grote, a performance management consultant in Dallas (groteapproach.com) and author of The Performance Appraisal Question and Answer Book (AMACOM, 2002). “Every single employee in every single company wants to know the answers to two questions: ‘What do you expect of me?’ and ‘How am I doing at meeting your expectations?’ Performance appraisal is the one system we have that gives people the answers to both questions.”
      What happens if you don’t have a good system in place? According to Grote, you end up with employees who work in the dark and assume they’re doing the right thing because no one tells them otherwise. “Too often managers don’t say anything unless they catch someone doing something wrong,” Grote points out. The fact is, people need continuing guidance to improve.
How do you perform a really great performance review? Here are some tips:

1. Review throughout the year.

Frequently, performance evaluations are lumped together into one high-stress meeting per year. Not good, say workplace consultants. Effective evaluation is a continuing process. Successful leaders work closely with employees throughout the year to set expectations, evaluate progress and readjust performance.
      Regular reviews help preclude an all-too-common disaster: unpleasant surprises at evaluation time. Suppose you take a strong stance about an employee’s poor performance in an annual appraisal meeting. The target of your criticism is likely to come back with, “Why didn’t you tell me this earlier in the year?”
      That’s a good question, consultant Grote notes. He adds, “People want to do a good job. It’s the responsibility of the managers to let them know how to do it.” That means communicating expectations at the beginning of the year and giving feedback regularly as the months pass.
      The frequency of employee appraisals depends on the individual and his or her role, Grote says. For example, annual reviews may be adequate for senior executives, who have a longer track record. Rank and length of time in the position are also factors. A lower rank calls for more frequent reviews. However, if that person is also a seasoned employee, you may only need to conduct a review twice a year. A new employee may benefit from a chat each week.
      Review dates need not be predictable; in fact, the best system doesn’t work on a calendar. According to Don Schackne, president of Personnel Management and Administration Associates, Delaware, OH, “Employees who don’t know when their supervisors will say, ‘Let’s sit down this afternoon for a performance review,’ maintain a higher level of productivity.”
      Conversely, a formal schedule for annual or semi-annual reviews can create what Schackne calls a “performance halo” effect. “As you approach the review date the employee begins to perform better,” he says. “Then after the review takes place, the employee sits back and performance slides again.”

2. Quantify performance.

Suppose that your employee John’s work performance has been deteriorating over the past few months. How would you know? And just how would you communicate your observation to John in a convincing way?
To find the answers we spoke with Daniel P. Moynihan, principal at Compensation Resources (compensationresources.com), a performance and evaluation training firm based in Upper Saddle River, NJ. He boils down the secret to this: “Keep records on employee actions and results, then base performance ratings on those records rather than on subjective feelings.”
      The reasoning here is that numbers make a difference in communicating your concerns to under-performers. Perhaps you’ve received lots of complaints from customers about John. If you tell him, “You need to improve your customer relations skills,” you’ll only cause him to balk. But if you state, “We received six complaints from customers about you during the past year,” then read the details of each complaint from written records, he’ll have cause to listen.
      You can use numbers in a variety of ways. How many times did John arrive late for meetings, and by how many minutes? How many arguments involving him erupted in the workplace? By what percentage has John fallen under a certain required performance level? How many times did he take an extra half hour for lunch?
      Of course, all of this calls for careful record keeping. Moynihan suggests committing notes to paper rather than trusting your memory. “Keep a spiral notebook in your desk drawer with one page for each employee,” he says. “Then write down the good and bad things that occur throughout the year.” Discuss these events with the employees as they occur. During evaluations refer to your notebook as evidence of your desire to give fair assessments based on recorded performance.
      Failing to tie in evaluations with provable workplace events can result in a damaging phenomenon called “performance creep.” Moynihan explains it this way: “Suppose an evaluation form calls for ratings from 1 to 5 on an escalating scale of performance. The first year the supervisor says, ‘I think you met my expectations so I will give you a 3.’ The next year the supervisor says, ‘Well, you did better this year and I don’t want to give you a 3 again so I’ll give you a 4.’ Over time everyone’s ratings skew toward the ‘outstanding’ end of the scale.” As collective evaluations rise over time, the reviews become useless from the standpoint of assessing and improving performance.
      Performance creep can also result from a supervisor’s discomfort with the review process and an inclination to avoid confrontation. If this supervisor assigns a 3 the employee may claim they deserve a 5, so the supervisor backs down and raises the rating.
      Even personal characteristics can be assessed. You can rate attitude, leadership, initiative, cooperation, interpersonal skills and maturity—just make your points with examples and numbers from the employee’s performance record.
      How about those individuals whose work can’t be easily measured? Moynihan gives an example. “The receptionist’s job is to meet and greet people as they come in the door,” he says. “How do you evaluate how effectively they do that? You might have to seek customer feedback. Ask clients and vendors, “Has this receptionist greeted you well, treated you kindly, and answered your questions?”

      If you can’t come up with good measurable objectives then take the three or four main components of the person’s job description and evaluate them against actual performance. Ask, what are the key metrics to get job done and is the person performing well?

3. Identify causes of poor performance.
You know that your employee Joe is doing badly, but why? The causes of poor performance can be difficult to determine. Sometimes people are in the wrong role, or outside problems are impinging on their work. Other times there’s a manager-employee personality conflict. Try asking Joe, “What would you say is one of the key reasons for your poor performance?” People tend to shift away blame from themselves, so get a discussion going. Ask, “What can we do to improve the work environment to help you perform?”
      These conversations can be difficult because they often touch on issues of personality and style. It’s important to encourage the employee to open up and contribute. “Make the review a two-way conversation,” suggests Schackne. “Maybe you say, ‘Here is how I see your performance,’ and then the employee replies with, ‘Here is what I think.’ Make each of your statements a discussion point rather than a threat.” A good program, says Scahckne, will let someone like Joe leave his evaluation knowing that his boss didn’t tear him apart or belittle him.

4. Leave money out of it.
It’s a big mistake to discuss salary increases during performance reviews. “You want to avoid a situation in which the employee is interested only in the last 30 seconds of the meeting and keeps wondering, ‘How much am I going to get?’” Schackne says. Employees should spend these meetings focused on self-improvement.
      Also, employees should view performance as valuable for its own sake rather than as a stepping stone to higher pay. They’ll never make that distinction as long as you hold out pay raises as carrots. Schackne’s suggestion: “Start out with a statement such as, ‘We are going to sit down today and talk about performance we are not going to talk about money.’“

5. Set future goals.
It isn’t enough to delineate employees’ good and bad points of the past year; you must set specific goals for the coming 12 months. Create a “vital tasks” agenda for each employee in which every measurable high priority task is outlined (see “Get SMART,” below). Also ask employees for insights. What performance improvement would bring them greatest personal satisfaction one year from now? What talents can be honed?
      Timetables are important milestones that help avoid procrastination, so set them to keep employee progress on track. One of the typical failings of evaluations is lack of follow-through, so make sure you’re following the timetable as well. Mark your calendar at checkpoints that have been coordinated with the employee and meet on these dates to discuss progress.Far from something to dread, the annual performance review is the No. 1 tool for creating a dynamic workforce. Help your employees set their own goals so they’re invested in the process. Review performance on a regular basis to avoid surprises at the annual review. And finally, go by the numbers: Quantify performance to make sure that facts, not opinions, are the operating mechanisms that assure fairness for all. The result will be motivated workers and a profitable organization.

Here’s an example of a goal that meets the SMART test: “Reduce absenteeism next year from 10 days to five.” This statement is specific in addressing absenteeism; measurable in specifying exact days; attainable because the employee can reach it; results-oriented because it leads to conduct that’s beneficial to everyone, and time-bound in that it states the goal must be reached by the end of the year.

Source: Compensation Resources, Inc., Upper Saddle River, NJ

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