The McKenzie Mailer

Performance Management Never Stops

It has been some time since we did an article of performance management. In fact, it has been over three years since we ran the article entitled, “Effective Performance Management Systems Are A Competitive Advantage”.

Traditionally, conducting performance appraisals is one of the most painful experiences for both supervisors and employees. However, if the performance management system is done correctly, it is the single most powerful tool management has at its disposal.

Here are a couple of reasons why they don’t work (opportunities) with ways to improve the process (remedies).

Opportunity: Rehashing of the good, bad and the ugly. Most performance appraisals are a discussion on history and, in many of those cases, the bad and the ugly come out more so than the good. The end result is an upset employee and a supervisor who has another problem on his or her hands.

Remedy: Improving Future Performance is the only purpose of performance appraisals. Continuous improvement must be a cornerstone of the culture of your organization. If not you will be continuously rehashing history and getting nowhere. If you think about your job, how many things could you do better? It is important that all employees reflect on their own performance to determine where improvements can be made.

Opportunity: The performance appraisal is immediately tied to a raise. Since most performance appraisals are immediately tied to a raise or a merit increase, the person conducting the appraisal is less likely to give a critical rating. To do so would be messing with the employee’s money and the inevitable conflict will arise.

Remedy: Separate the performance discussion from the merit increase discussion by at least a month. When reviewing performance, the employee is thinking about the appraisal and equating it to a raise without thinking about what is really being said. The thought of how much the raise is takes away from the discussion on performance. Get together with the employee again a few weeks or a month after the performance discussion to discuss the increase.

Opportunity: The performance appraisal is an annual event. The performance appraisal is a chore to complete once every year, placed in a file and never used again. Many performance appraisals are done without much thought. In the mind of many, the easier it is to complete the form, the better. Let’s just get it over with.

Remedy: View performance management as an ongoing, never-ending process. Make a comparison to revenue and profits. These two items are continuously monitored and scrutinized in every business. Doesn’t it stand to reason that the performance of the people who produce the revenue and profits be continuously monitored for output and their contribution to revenue and profits?

Opportunity: Performance is not based on any measurable results. Many performance appraisals have factors such as quality, quantity, customer service, communications skills and teamwork without any thought of what these terms mean to job performance. The opportunity for differing viewpoints on the meaning of each factor increases. The supervisor has one definition of what communication skills are while the employee has a completely different opinion of what communication skills are. These varying perspectives also increase the opportunity for conflict during the performance appraisal discussion.

Remedy: Set expectations at the beginning of the review period. You can’t assess performance if you don’t know what you are measuring. Quality and quantity standards should be defined at the beginning of the review period and performance should be monitored throughout the review period. Likewise, expectations of customer service, communications, teamwork and other performance factors should be clearly communicated to all employees when they are hired and again at the beginning of each review period.

Opportunity: All employees are rated “Walks on Water” or greatly exceeds expectations. Imagine how great our economy would be if all employees were really doing as wonderful a job as their performance appraisals said they were. If all employees are rated so high, either the rater is afraid to confront the issue or the expectations have been set too low.

Remedy: Reset employee expectations of the performance ratings. Think about this – if you are not running at least 98%, you have a bad business. If more than 2% of customers are dissatisfied with the work, you are in trouble. In the financial industry, if the delinquency rate of loans is much more than 2% or 3%, the portfolio is not performing as expected. An employee who is less than 98% accurate and is late with projects more than 2 % of the time cannot be meeting expectations. Therefore a rating of “meeting expectations” should be a reason to celebrate. One other suggestion is to have no more than one rating above “meets expectations”.

Your only competitive advantage is your people and the culture of your organization. Now is the time to evaluate your performance plans and make the necessary improvements to develop your workplace into one whose performance will surpass all of your competitors.

Keep in mind that a performance appraisal has one and only one primary reason which is to “IMPROVE FUTURE PERFORMANCE”. Anyone telling you that there is nothing they can do to improve their performance, is lying or fooling themselves. Effective performance management systems have an ingrained belief that things can always be better.

Have your employees be a part of the process. Get their input and have quality meaningful discussions regarding their work and improvements they can make. Implement new expectations on the rating system, separate performance and merit increase discussions and always keep continuous improvements in mind.

Make it a great rest of the year.

It’s All About the Children