Is it that dreaded time of year again when annual performance reviews are due? Already? It sneaks up on us like the holidays do. Many employers dread not only the time it can take to do employee performance reviews, but also facing employee performance issues they may have been putting off for an entire year! Here are some suggestions to help make the process less daunting and more productive.
Setting goals and clear expectations is a critical first step. It is difficult for an employee to meet expectations that have not been clearly outlined. It should be clear to them the job duties they are responsible for, the expectations for meeting those duties and whenever possible, you should have ways to quantify their performance related to those duties. Do your employees understand your company's mission and your overall organizational goals? What does it take to be successful in their position, to get promoted, to earn a larger salary, bonus or other benefits? These are all things that should be understood by every employee in your company. This process can be as simple as having a conversation; however we recommend that you write it up in a formalized document that both you and your employee can sign and revisit.
Continually monitoring performance is your best strategy for effectively communicating with your employees about their performance. It also allows you to break free of the "annual" performance review drudgery! Do it monthly, do it quarterly, whatever works best for your business cycle. Many studies indicate that employees are very interested in receiving feedback on their performance and ways to improve it all year long. Remember, performance reviews are just as much about praising performance and a job well done as they are about calling out issues and areas that require improvement. Performance reviews should always include praise even if that employee may be struggling in their position. It is important to point out what is working, but also taking swift action to counter poor performance is so critical to your company's success and overall employee morale. Why not spend five minutes thanking them for a job well done and suggest areas of improvement. It might pay off on the next project.
Developing the capacity to perform is your opportunity to address poor performance and support and coach an employee to improve their good performance. Have you reviewed your company's training program and resources you provide to your employees? We are not suggesting that you need to implement an elaborate training program, but simply reviewing what you offer your employees and maybe taking it up a level could really benefit your employees. It could also be as simple as a day of shadowing with a manager or more experienced employee, one-on-one training on equipment or technology, handing out best practice worksheets or "cheat sheets." No matter the size of your organization it is important that your employees have resources available to them to help them be successful in their position. The cost of not providing ongoing training and clearly communicating job responsibilities can be seen in increased turnover rates, low morale, poor customer service, and maybe lost customers and revenue.
Periodically rating performance might have a look and feel of a report card, but this process documents a summary of the employee's performance and assigns an official rating against the work plan that you completed in the first step. This can then be filed in their personnel record. Again, this can be done as often as you would like. We typically recommend quarterly ratings on both qualitative and quantitative measures and comparing performance over periods of time (year to date; quarter to quarter, etc.). This rating also establishes a baseline of their performance and can be used to compare against other employees across the company.
Performance reviews and merit increases don't always have to go hand and hand. In other words, don't think that every time you give your employee a performance review you must also give them a salary increase. It is important that employees also understand that reviews and merit increases are not necessarily given at that same time. There should be no expectation for an "annual increase." It is best to set up a system that provides salary increases based both on merit and company financial performance. It is important to reward good performance and that can be done in a number of ways not just through wage increases. Rewarding employees for a job well done should be done frequently, done in individual and/or group settings and the recognition can be formal or informal. We are often asked, "What should I give my employees for a good performance?" There is a broad range of suggestions from monetary incentives, time off, gift certificates, plaques and certificates and much more. Find out what motivates your employees to perform well. Sometimes a simple "Thank you" recognizing their efforts and performance goes a long way.
Embrace the performance review process, don't let it scare you. Create a system that is time-efficient and effective and then commit to it. You will see the benefits in your overall business performance. Regular reviews backed up with appropriate training and built on a foundation of clear job descriptions will increase employee retention, increase productivity and improve customer service. With results like that, you will no longer dread the review process but instead look forward to it!
Sarah Sommers is a managing partner of Solutions At Work, a Reno-based Human Resources consulting firm. Contact her at sarah@mysolutionsatwork.com or 827-9675.
