Performance Reviews that Work

Company's that take full advantage of performance review processes can realize improvements in employee relations and productivity which will result in a better bottom line position.

1. What the performance review should accomplish:

- Maintain expected production standards and ensure that the employee's performance contributes to company profitability;

- Ensure a steady collection of receivables balanced with a controlled level of payables and continued supplier support;

- Prevent deterioration in customer service while increasing the probability of generating sales;

- Minimize employee negativity and increase positive attitudes in the company's workforce.

2. Structure of the performance review:

- There should be performance review conditions on every function the employee does. To get a true measure of an employee's strengths and weaknesses, you have to break down the various components of their position. Example: A receptionist may answer the telephones and do internal invoice filing. These are the two components to her position and each should be a separate performance review segment.

- Each function must have a defined goal. A goal must be an outcome, not the actions needed to reach them. Goals do not include verbs. Example: A receptionist's goal is not: "Answer the telephone by the third ring". It may be what you want the person to do, but that's an action and probably only one component required to achieve the goal. The goal would more realistically be: "To have the telephones answered in such a manner that the customer will be left with a positive impression of our company".

- Every outcome should have three distinct actions that, when performed, would normally result in the achievement of the stated goal. Using the receptionist's example, we know that an enjoyable experience for the customer is the goal. Actions to make that happen can be to answer the phones by the third ring; identifying yourself by first name; never leaving the customer on hold for more than thirty seconds.

3. Components of the performance review:

Employee involvement:

Employees must feel comfortable with the evaluation process and recognize that reviews are also for their benefit. Working with the employee to determine appropriate goals and tasks will go a long way in eliminating the fear factor of performance reviews.

Employee agreement:

Although an employee may not totally agree with your targets, an agreement has to be reached on the tasks so that employees can be held accountable without any argument that their goals were unrealistic. If it's the first time for this kind of goal and action oriented performance review, you may have to concede some ground to get the process started.

Achievable goals:

Employees must be able to achieve their goals. Wanting your accounts receivable position to be zero over thirty days may be a desirable target, but is it realistic? Having unattainable goals will lead to frustration and negative performance reviews - neither of which is good for the company.

Controllable actions:

It is important that employees are able to control the result of their actions. Getting a sale on every call may be a good way to achieve your goals, but a sales person can't force someone to buy. You have to establish controllable actions and acknowledge that the performance of these tasks by the employee implies that the outcome has been achieved.

Recognizable results:

There has to be a means of identifying that the task has been done. To say that a person must answer the phone in a friendly manner is too subjective. How do you identify friendly? It would be better to say that the person must show a smile every time they answer the phone. No, they may not be happy, but the perception is that they are and it will reflect on the call. And the action becomes a measurable one.

Subjective scoring:

The results of the tasks cannot be subjective. An employee must be able to monitor their own progress throughout the review period and, at any given time, know whether or not they're on target.

Consequence:

Each review must have a consequence to be of any value to the company and employee. The review is to ensure employee involvement in the company's plan and to make sure they are a valued contributor to its success. The employee has to know this. If an employee does not meet any of the expectations, what happens? Conversely, if an employee meets, or exceeds, the demands, what do they receive? This does not mean that there has to be a monetary reward, or that employees are terminated. A consequence could be praise, additional training, or a positive change in the tasks or job functions.

Consistency:

Performance reviews must be consistently administered. It's not good enough to have non-structured reviews. They have to be on set timetables - quarterly, every 6 months, yearly. You have to be able to draw equal comparisons to the employee's work and progress, or lack of it. Performance reviews given 'whenever' are taken as whimsical, unplanned and a waste of time in the eyes of the employees.

Employee review:

If the performance reviews have been administered properly, the employees will already know where they stand which makes this final process a rather simple one. The performance outcomes are reviewed with the employee and the goals and tasks for the next period are discussed and agreed upon.

The key to having successful performance reviews is to take away the employees fear of being evaluated. As long as employees know the rules of the evaluation and can control and monitor their own progress, performance reviews become an extremely valuable company tool.