Time for the annual performance review? Quite possibly, this is the most hated interaction between manager and employee to be scheduled all year. Too often for employees, after having his or her say, the boss will meaningfully glance at a clock, limiting response opportunity. Another fear — one recent mistake will become the overlay for an entire year’s worth of hard work. And both parties dread the salary discussion component, right? Will the employee ask for a raise the company can’t afford, or be told that their salary is frozen, with more work expected for the same pay in the coming year? There is no winning side of the desk to occupy for those discussions.
Ideally, salary talk is scheduled after performance reviews, not as part of one. Negotiations are more meaningful and fair after performance corrections or accolades are noted. Commission, not salary, is a motivational tool or a gilded hammer; salary is based on fair compensation, taking into account employee talent and experience, recent market conditions, and company profitability. With the stakes so high, a compensation package deserves its own appointment.
Want to transform a performance evaluation from a gut wrenching experience into a retention tool? Our company’s performance review process was cited as a key reason IB earned the prestigious “Psychologically Health Workplace Award” from the Wisconsin Psychological Association for its business management practices. We changed from the more traditional “each manager handles it his or her own way” to a company-wide, fair and predictable process, and so can you. Here’s how:
1. Create a clear list of responsibilities, not tasks, for each employee. A job description is dynamic, changing as company needs and staffing levels change. But those goals should remain clear and measurable. For example, at IB, the editorial director is responsible for producing (with his writing staff) 64 editorial pages by the 16th of every month, plus any sales copy ordered by the 5th of that month. His other duties, like web content, are likewise reduced to outcomes, not tasks, with clear “completed” or “not completed” accountability.
2. Once the outcomes list is defined, the employee ranks his or her performance with regard to each item on the list using a scale of 1-3 in this way: 1 (needs improvement), 2 (meets expectations) or 3 (exceeds expectations). The manager likewise ranks the employee’s performance. Then they exchange ratings at least three days before the performance review. That way, there will be no ambushes, reducing the employee’s fear of the review process and increasing time for both to think about how to address “1” areas.
3. At the face-to-face meeting, there is no discussion of anything with a “2” rating. Why dwell on areas where expectations are met? For any “1” ranking, an action plan needs to be put into place, and that action might be more allocation of company resources for that employee, or a more realistic job expectation going forward. It isn’t always a one-way street; both employee and company process are being reviewed at this meeting. Where will the employee find time to improve, given today’s workloads? Look at the areas with “3”. You’ve agreed on what “meeting expectation” means; can they take some time away from activities now earning a “3” and put that time toward the “1” areas?
4. Set a deadline for those items to be addressed and schedule (do it that very day) future followup reviews or appointments. It’s all about accountability.
5. Before the formal review process ends – whether this takes one hour or several meetings — the two separate rating sheets need to be merged into one; hence the need for candid discussion. Both parties then sign off on the sheet, and that becomes the action plan and job description for the next year or the next six months, or the next quarter – however long it will be before the next performance evaluation.
Simple, right? Actually, it isn’t rocket science. Framed properly, a performance evaluation can be a dynamic tool to keep in proper perspective (and balance) the needs of the customer, the company, and the employee.
It soon becomes clear, based on the ratings, if an employee should be cut or kept, and what their compensation level should be. If someone has all “2” ratings (rare), you don’t need to meet at all except to let the employee know how important they are to the company’s success and to thank them for their performance. Lots of “3” ratings? Consider giving this person more responsibility, as there is extra capacity there. Too many “1” ratings — should you divide the job into two positions, or is this person truly under-qualified? Will additional training be beneficial or wasted?
Join me again next week, when we’ll explore how to contain and de-escalate conflict in the workplace.