In my nearly 30 years as a management consultant, one complaint has been a constant with employees at all levels: "I don't have a clear enough picture of how I'm doing."
No matter the type of company, the job title, or the location, employees don't get enough feedback from their bosses. As human beings, we need feedback on how we're doing. From a company perspective, it's vital that employees get feedback so they know what to keep doing and what to stop doing. A formal performance-review process is one way to make sure employees know where they stand.
My first job out of graduate school was in the finance department of a large aerospace company. I worked under a supervisor for a year when performance-review time rolled around. My colleagues and I laughed; we knew it was review time because it was the only time that our boss wore a tie.
As my review approached, I did a quick assessment of how I thought I had done over the past year. I had been highly recruited out of college, I set up some new processes, I worked with the computer folks on some new programs, and I put in a lot of late nights to get work done. Overall, I felt good about my first year in this job and was confident that my boss would feel the same way. The rumor was that raises were in the 3% to 7% range, so I gauged myself to be in line for a 5% to 6% increases.
When my boss called me in his office, I was all smiles and ready to hear about what a superstar I had been over the past year. My boss started the conversation saying, "Steve, you know the work you've done over the past year?" I said, "Yes sir!" with a big smile on my face. His next comment still gives me a shiver 30 years later, "We could have hired someone out of high school, and they could have done better." What was planned as an hour conversation went on for nearly three hours. I could not understand how our perceptions of my performance could be so far apart.
That experience was a major factor in moving me from a finance career into a management-consulting career. I knew there had to be a better way to manage people. I was determined to find it and help other companies avoid similar situations.
ONE IMPORTANT ASPECT of managing people is to be very clear about the objectives. It is best to set the objectives through open discussion and negotiation. Sure, there will be some objectives that a boss must give the employees, but try to leave plenty of room for them to come up with their own. Employees are more motivated to achieve objectives that they had a hand in developing. Make sure each employee has three to five specific objectives to work on during the year. They should cover areas like quantity of work, quality of work, timeliness, cost and customer service.
Employees are most motivated by objectives that are written using SMART criteria - an acronym for specific, measurable, agreed to, realistic and time bound. Again, specific means that both employer and employee are crystal clear on exactly what is to be accomplish. To check this, show the objective to a third party. If that person can understand exactly what it is, it's probably specific enough. Each objective must have some measurable number or percentage attached to it. We all like to have scoreboards, and scoreboards have numbers on them.
Treat employees like adults and seek their input and agreement on their annual objectives. Have an honest and open discussion that ends in true agreement. Remember, if employees don't buy into the objectives and they are not met, they are your objectives not theirs. All objectives must be within reach. If, on their best day, employees can't achieve the objective, it's not motivating. As much as I would love to play one-on-one with Kobe Bryant, it's not realistic, therefore not motivating.
If you can make your employees stretch with the objectives, that's even better. There's a sweet spot between realistic and challenging that you should strive to hit. Finally, make sure all of the objectives have due dates. These dates can be incremental milestones or final due dates. The accountability that comes from due dates helps a person stay on task and motivated.
We all know that business conditions today are often not the same business conditions we will encounter tomorrow. That same reality should carry over when implementing performance reviews. After setting the objectives, find time each quarter or at least semi-annually to review the objectives. Are they still valid? Did business conditions change dramatically? Does the employee still have the same resources available?
It does no one any good to hold an employee accountable for objectives that are no longer realistic or even valid because of changes in business conditions. Some objectives may need to be adjusted, some may need to be discarded and some may need to be added. Be open to making the adjustments at various points throughout the year for valid reasons. An employee that is highly motivated to achieve certain objectives at the beginning of the year is unmotivated by the same objectives if they are no longer realistic.
WHEN THE YEAR is complete, it's time to see if the objectives were actually accomplished. Employees look forward to the formality of this, but also are nervous at being evaluated. Managers are generally nervous as well, being put in a position of making decisions about a person's career, pay or advancement potential.
One thing that helps both parties deal with that stress is to show employees what the form looks like, and even let them evaluate themselves in advance. The hallmark of a good final review session is that there are no surprises. This meeting should simply be a summary of conversations throughout the year. Some managers feel hampered by a system that tells them they can't give employees performance feedback until the end of the year. Make sure the process not only allows on-going feedback but, encourages and even mandates it.
To be most effective, a performance-review process calls for bosses to give regular, specific, on-going feedback to their employees. This includes correcting behaviors, as well as providing positive feedback. Documents of both should be collected all year long and shared with employees.
It's difficult for managers in this fast-paced environment to take time to collect performance information and give good feedback to employees regularly. However, employees' performance, in many cases, is a direct reflection of a manager's willingness and ability to coach them effectively throughout the year. Good managers hold themselves accountable for giving employees good feedback and coaching throughout the year. This time investment will pay big dividends in a highly valued, motivated and productive employee.
Nearly every performance-review process has money tied to the employees' performance. Too many organizations turn to the finance department at the end of the year and ask how much money is available for performance increases. Then, the money is doled out to each department and the managers are forced to rank employees and give out money based on a bell curve. There is no quicker way to de-motivate a group of managers than to have some corporate finance person tell them how to rate their employees.
If a performance-review process calls for money to be given out based on the rating, try to hold the two discussions at separate times. If employees know that at the end of their final year review discussion they will be told what their raise is, they won't want to listen to the performance discussion. They'll probably think, "skip all that stuff boss, and just tell me how much money I get."
Most companies ask managers to rate their employees using some sort of numeric scale, usually 1 to 5 or 1 to 6. This seems to make it easier for the finance people to budget for salary increases. Those numbers typically have descriptive phrases associated with them like: 4 - This person exhibits performance that is continually well above average. Objectives are regularly exceeded; tasks are ahead of schedule. Too many companies forbid managers from handing out top scores - 5s or 6s. I have yet to learn why the numbers are there if a manager can't use them.
NO MATTER HOW clear the descriptions are, it's still very difficult for a manager to honestly differentiate between a 3 and a 4 performer - not to mention, explain that to the employee. The best way to rate people is with a simple three-criteria system: meets expectations, exceeded expectations, or did not meet expectations. Those three ratings are tied directly to the objectives that were written at the beginning of the year. They also allow a manager to evaluate a new employee and a veteran employee using the same criteria. You wouldn't have the same expectations for an employee in their first year as you may for a 20-year veteran.
Performance reviews are great tools to develop employees. If you implement them and carry them out well, employees will be highly motivated, and the performance results will show it. If the reviews are not handled well, your performance results will show that also.
Steve Schumacher has worked with mining and other industries for over 25 years, and is a frequent contributor to Rock Products. He can be reached at firstname.lastname@example.org