Doing smarter performance reviews. (Business Briefs).

Companies that were giving everyone an easy "pass" a year ago are now subjecting employees to more stringent performance reviews, and employees who thought they were ranking in the middle of the pack now find themselves bringing up the rear.

So says Cambia Consulting, a Boston-based HR consulting firm (www.cambriaconsulting.com). The firm says that last year, performance reviews were so inflated that virtually no one was rated below average. Now, with the economy in a tailspin, companies are lurching in the opposite direction and insisting that managers demand better performance from their people and, where better performance is not forthcoming, mark the poorest performers for dismissal.

This may be the standard corporate reaction to economic woes -- but is it the right reaction? "Flip-flopping a bad performance management system won't make it a good system," says Cambria's Kathy Gagne. "All too often, failing employees don't know what they did wrong or what they're supposed to do to make it right."

Citing studies conducted by Cambria over the past three years, Gagne warns that companies going through downsizing are likely to be disappointed with the long-term results unless they simultaneously improve the way they refocus their people on new goals and manage individual performance. One way to do that: make them forward-looking. "What's important is what the employee is going to do in the coming year," Gagne says. "Once you set forward-looking goals for each

individual, then you can look to see what specific training or other help they'll need to be successful."

Gagne adds, "It's amazing how many employees don't understand how their individual goals relate to the overall objectives of the business. Effective performance management makes these connections clear."