Performance Reviews For Success

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Many managers cringe at the mere mention of performance appraisals. Why? The reasons are varied. Some of these include “I don’t need more paperwork,” “I don’t have time,” and “employees should know where they stand.” Others struggle with the development of a performance review program, either not knowing what to measure or not knowing how to conduct the performance review meeting. Here are my thoughts about why you should have a performance appraisal program, what the most common errors are, items you will want to measure, and tips for the performance appraisal meeting.

Why Have A Performance Appraisal Program?
The purpose of any performance review program is employee development. In order to achieve this goal, managers need to identify strong points, as well as opportunities for growth for each individual who reports to them. Once these are identified, it is a manager’s job to coach the employee and to help the employee improve their areas of weakness.

Organizations can use performance reviews to establish performance history, which can be used in promotion, transfer, and merit increase decisions. In addition, performance reviews may be used in reduction-in-force decisions. Therefore, it is essential that performance reviews are an accurate reflection of current performance.

Common Errors
Managers make several common mistakes during the performance appraisal process. One of the most common is doing reviews from memory. Throughout the year, managers should be documenting both positive and negative issues as they occur.

Another common error is what is known as the recency error. Recency error happens when a manager puts too much focus on the most recent events as the basis for rating the employee. If you do a performance review annually, the review should be based on the employee’s performance over the entire twelve months, not just the past month, or two.

Managers also often rate employees inaccurately. Examples of this could be rating everybody highly due to the manager having a hard time giving anybody negative feedback or rating everybody in the middle, which gives the impression there are no great or poor performers in the department. Either way is equally destructive and can cause major problems down the road. If employees perceive a performance rating to be inaccurate and it cannot be justified by management, it can be a morale killer.

The final mistake that many managers make is that they are too vague in their performance review meeting. Comments are made such as “keep up the good work” or “you are doing well” but there is little to no meaningful conversation in regards to what specific areas where the employee has excelled or where development is needed. Often times, this is the result of lack of preparation by the manager.

What To Measure
This is one of the most important pieces of the performance management process. The items you will want to measure are company-specific. What contributes most to your bottom line? What is important to your company culture? If you are able to answer these questions, you will have a good starting point on creating a performance management system that measures the most important criteria for your company.

Ideally, a performance review should be measuring achievements against previously agreed upon, well-documented goals. These goals, which we called key performance indicators (KPI’s), may consist of things like callback rate and sales leads (among other things) for a service technician. In addition to these KPI’s, you will want to measure attendance, appearance/professionalism, and client relations. Another item you may want to measure is time management. To do this, you would want to analyze whether unapplied time (within their control) is kept to a minimum. Does the service technician or customer service rep either rush through their calls or take too much time on calls? Do they have too many personal conversations with co-workers or friends while on the job? Another skill you may want to measure on a performance review is problem solving. Can the employee solve routine problems without needing consultation? Once again, whatever the item is that you decide to measure, it should be specific to your company and what’s most important to its culture.

Tips For The Review Meeting
The actual meeting is often times what is dreaded most by managers. However, there are several things managers can do to have a positive effect on the morale of the employee. First, you will want to emphasize strengths as well as areas that need improvement for every employee. Even a poor performer most likely has some area they are performing well In addition; your top performer is probably able to improve in some area. The goal is to give honest feedback in each criteria that is being measured, so don’t be afraid to rate a great performer poor in a single area if it is the prudent thing to do. Another tip is to make the performance review meeting an exchange of information rather than simply telling the employee how their performance has been. For example, ask the employee for ideas about how to resolve problems and performance deficiencies. If possible, you could even set goals and expectations together for the next performance period. Ultimately, the manager will take the lead on these items but the more interactive the process is, the more buy-in you will get from the employee. One other recommendation for the review meeting is to discuss where they see themselves in your organization in the future. This ties into having a genuine interest in what your employee’s goals and dreams are. Do they see themselves in sales or management 5 years from now? Once you find out their mid to long-term plans, you can discuss development and training plans with the employee. If this piece is executed properly, it can cause morale to skyrocket and turnover to plummet.

Ultimately, the performance appraisal process is vitally important to the success of an organization. After all, performance reviews can affect pay, promotions, morale, and turnover, among other things. They can also be used in court if you find yourself having to defend an employment decision. Identifying strengths and weaknesses of each employee, communicating these to the employee, and coming up with a development plan are at the heart of successful companies. Therefore, spending the time to create and implement a well-thought-out performance appraisal process is one of the most impactful contributions you can make for your organization.

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Posted In: ACCA Now, Management