Employee Performance - Are you Getting What you Expect?

With rare exceptions, employees are the most valuable resource of a company. They are the only resource that, if treated, managed and led well, can generate multiples of their normal output, not to mention creativity and the affect upon others. Why do we so seldom witness above normal performance, yet often hear complaints from managers and employees alike?

Thirty five years in management taught me that whenever I took over a new organization to first reach for the lever that could best influence employee performance. The lever was performance reviews. I've observed that other managers seemed to avoid this lever, or pay it lip service. Maybe it took too much time, or it was difficult to do, or they never did it properly to achieve positive results. I might have been in the minority among them, because I came to learn what a powerful tool it was.

Very briefly, the tool is this...

  • Job performance objectives per employee are drawn up annually
  • Manager/subordinate face-to-face reviews are conducted each four months
  • A final, annual review is written and signed by both
  • The process is repeated

While this seems simple, I will describe some critical success factors. But first I want to describe the potential benefits.

  1. The employee is able to suggest the areas of the job that he/she would like to improve upon. He/she will feel empowered, while the manager will learn how the employee perceives the job.
  2. The manager is able to make his/her wishes known to the employee regarding which aspects of the job need improvement and their relative importance to one another.
  3. The manager can suggest growth areas for the employee to aspire to. Maybe learn new skills, exploit strengths, assume more responsibility, communicate better, etc.
  4. Reviews provide a structured discussion of progress against objectives. The employee gets the chance to "strut their stuff", while the manager can give constructive feedback on shortcomings. The manager should always complement good performance, which is the "breakfast of champions".
  5. Performance reviews can generate individual training plans and career path discussions.
  6. The wise manager will craft the objectives of most or all of his/her staff in order to align the staff to the direction he/she wants to move the organization. For example, if 15 people all get the same objective and want a good review...
  7. No surprises. Who hasn't heard of someone being very surprised by a poor raise or even a dismissal, when they thought they were doing their job well? Regular reviews eliminate surprises - on both sides.
  8. The process reinforces the boss-subordinate relationship, which is especially important for small and informal work groups.
  9. Performance problems are caught early when they can be most easily corrected. If problems persist, the documented reviews become the justification for disciplinary action or dismissal. They avoid a challenge in court which tend to heavily favor the employee.
  10. Managers can help employees succeed at their jobs by accepting a few "enabling" objectives from the employee for the manager to achieve.
  11. The annual review can easily become the basis for annual merit raises.

Here are some tips and methods that can lead to the benefits discussed.

Objectives

  1. Limit the number of objectives to between five and seven to keep the employee focused.
  2. Ask the employee to come to the first meeting with his/her list of objectives for the year ahead. The manager should also have a list of possible objectives prepared. The discussion should lead to agreement on the 5-7 objectives to be used.
  3. Each objective must be measurable. The more quantitative, the better. Examples: Error rates less than 5%; 10% increase in sales; read two books on xyz and document six things you learned; four customer complements on your service.
  4. The employee must be able to exceed each objective. This will influence both how the objective is worded and measured. Every employee should want to exceed expectations, so a way must be found to define what "exceed" means.
  5. Blend job execution and personal growth objectives. Try to improve how the employee performs the job as defined, plus get the employee to grow beyond the job itself. For example, a salesperson might have defined job objectives to increase the number of cold calls, grow sales of existing customers or reduce order errors. But beyond these defined job objectives, the wise manager might like to see the employee learn some new sales techniques, coach a new sales person, or spend a week making deliveries or working in the warehouse in order to appreciate more of the whole process.
  6. Use a form to define each objective, how it will be measured, and what it means to exceed. Make a copy for the employee. It becomes the basis of the first review in four months.

Reviews

  1. Reviews should be scheduled each four months at a minimum, with 2-3 days advance notice, take place in private, and typically last an hour. The manager should take notes on what is discussed and agreed upon. These notes should be kept for later reference during the annual review.
  2. The manager should allow the employee to not only describe progress against the objectives, but also successes in all parts of the job. Remember that success is the greatest motivator.
  3. The manager should provide honest feedback on employee performance against each objective and other aspects of the job. Feedback should comprise both praise and constructive criticism.
  4. All discussion on objectives should be supported by the measures previously defined.
  5. Some objectives may no longer be valid going forward, in which case they should be replaced by new or altered ones.
  6. All new or changed objectives should be put in writing and an updated set of objectives produced and shared between the employee and manager.
  7. The manager should report progress on any reverse, or enabling, objectives that were agreed to previously.
  8. Finally, this is an opportunity to freely discuss how the organization is progressing overall. Ideas for improvement should be solicited and broader problems discussed. Too often employees don't understand how management of an organization sees things or why decisions are made. This is a great time for such communication. The employee will feel that he/she is contributing to the company success, which can increase the desire to work toward company objectives more enthusiastically.

Annual Review

  1. After the last review of the year, the manager should review his/her notes from all prior reviews of a given employee. From these, a summation should be written for each objective. Then an overall statement should describe the employee's job performance and growth over the prior year. If done correctly, the employee will not be surprised by anything written. The manager should sign the form.
  2. The written annual review should be given to the employee with a place on the form for the employee to respond and comment in turn. The employee should sign the form and return it to the manager. Perhaps another meeting will be needed if differences of opinion are too great. Copies of the final document should be provided to both the manager and employee.
  3. Now the manager has a basis to determine an appropriate merit raise or bonus scheme for all employees in his/her staff.
  4. Very soon after the annual review the first objective setting meeting for the next year should be scheduled. Or it can take place as part of the last review or annual review meeting.

Some Variations

  1. In some firms the objective writing, measurement and results from each review meeting is delegated to the employee. I always preferred to do this myself as it gave me greater control over the process.
  2. Some firms assign a weight to each objective, usually on a percentage basis. In this way, a quantitative performance score can be determined. If performance achievement becomes: 4=Exceeds; 3=Achieves; 2=Mostly Achieved; 1=Partially Achieved; 0=Underachieved; then a calculation of achievement times percent of importance provides a weighted score. For example: 3 x 30% = 90. When summed, an actual performance score results, which can play into merit or bonus schemes.

In summary, adopting the above process might sound like touchy-feely stuff to some, while to others it will be uncomfortable to carry out. But the results carry the promise to limit attrition, to create happy and productive employees, and to unlock the greatest potential found in any company. And one last thought - if you decide to take this process on, be sure you have the discipline to follow through with it consistently over the long term. Failing to do so sends very negative messages about you.