Go Beyond the Annual Performance Review

It’s time to rethink the practice of evaluating your employees only once a year. A continual feedback loop will lead to great success and engagement. Here are some painless and productive ways to critique your employees.

May 3 2011 by Morey Stettner


Like most senior executives, Doug Bettinger believes in giving ongoing feedback to his direct reports. He wants them to know what they’re doing right and how they can improve their job performance.

But Bettinger doesn’t rely on annual performance reviews. Instead, he prefers monthly and quarterly “process reviews” that provide a more comprehensive, detailed analysis of both the employee’s performance and how it ties into the firm’s latest product-related news.

“Our process reviews usually take two to four hours and we like to do them face-to-face,” says Bettinger, chief financial officer of Avago Technologies, a semiconductor firm co-headquartered in Singapore and San Jose, Calif. “Our CEO does process reviews for our general managers and their director-level staff, and I may travel with him or other management team members” to administer the reviews in person or via videoconference.

In these meetings, the top brass don’t just rate an individual’s performance or competencies in specific areas. They discuss the company’s goals and financial milestones, along with product and project updates as they relate to each employee.

“As a result, employees understand what they need to accomplish and how they’ll be measured in terms of how we define success,” Bettinger says. In reviewing a new product rollout, for example, he might address questions such as, “How is this product resonating with our customers?, “Are we behind or ahead of schedule?” and “If we’re not on track, how will we change to get back on track?”

By connecting an employee’s daily activities to larger operational issues, a process review has more impact than a traditional performance review that’s narrower in scope. Rather than critique a manager’s work in isolation, the focus expands to evaluate the status of products or projects under that manager’s purview.

Keep Score of Performance

Entrepreneurs love launching businesses, but they usually dread conducting performance reviews. It’s rarely gratifying to tell employees what they’re doing wrong or why they’re not getting a pay raise.

Fortunately, there are creative solutions that make such reviews easier to administer. Start by placing less emphasis on formal appraisals. Shift your focus to educating workers about what constitutes success.

For new hires, have their job description double as a performance evaluation tool. List the tasks they need to do and your expectations for their role.

“Make the job description document serve as your performance review document,” says Rick Galbreath, president of Performance Growth Partners, a leadership development firm in Bloomington, Ill.

To ensure that employees understand how their performance contributes to the organization’s bottom line, use a “balanced scorecard.” Popularized in the 1990s, it’s based on a summary report consisting of key measures along with desired targets.

The scorecard results enable both employer and employees to keep track on a daily basis of individual performance as it impacts larger outcomes. Appraisals thus become a relatively painless outgrowth of a simple scoring system that everyone understands and accepts.

Deliver Criticism That Sticks

While assessing an employee’s performance is typically a structured process involving forms and rating systems, it’s also a test of your communication skills. You need to deliver constructive feedback in a supportive tone while explaining the consequences of continued underperformance.

If you overdose on faultfinding, you risk alienating the people you’re trying to help. Workers tend to tune out or defend themselves if they perceive their boss in attack mode. What you view as straightforward input may come across as stinging criticism to your angry or quivering listener.

“You can’t pat a dog and kick a dog at the same time,” Galbreath says. “Audit yourself to make sure you’re mixing some positive comments with negative ones.”

To criticize performance without provoking a backlash, provide neutral descriptions rather than expressing opinions. Cite specific examples to support your general observations—and include a time, place and activity to pinpoint the behavior that needs to improve.

If you want an argumentative service rep to speak more diplomatically, for instance, say, “I observed your conversation in the showroom at noon today with the roofer who wanted shingles, and I noticed you pointing in his face while your voice volume turned a few decibels louder.” That’s better than saying, “You were too loud and aggressive today.”

 

USING KEY PERFORMANCE INDICATORS: A CASE STUDY

At Exemplar Companies, Christopher Marston doesn’t just conduct performance reviews once a year. Instead, the chief executive of the Boston-based professional services firm tracks key performance indicators (KPIs) for each employee and uses them as the basis for leading 15-minute feedback discussions every quarter.

“If you only sit down once a year and employees don’t make the goals, then you’re really reprimanding them,” he says. “And you have to wait another year to see if they make the next set of goals.”

For a salesperson, Marston might set a goal of generating $3 million in annual revenue. Every three months, he’ll meet with the individual to “review pacing numbers so that they understand whether they’re on track,” he says.

Marston conducts performance reviews—and quarterly KPI discussions—with 10 of his company’s 30 employees. He models the kind of performance evaluation process that he wants his managers to follow with their direct reports.

“Every employee has metrics that are specific to the job,” he says. “These metrics are part of the quarterly KPIs, which are tied to compensation.”

 

LINKS AND RESOURCES

Websites

* Download a performance review template at Demand Metric to help standardize your approach to conducting employee appraisals (www.demandmetric.com/content/practical-tools/performance-review-template).

Perfode makes Web-based performance review software. The program guides you through the process of administering online performance reviews (www.perfode.com). A competing software product by Dick Grote, a performance management consultant, is available at www.groteapproach.com.

* At PayrollServiceProvider.com, you can obtain price quotes from competing firms, browse providers by state and get shopping tips and supplier contact information. Resource Nation provides a similar portal to compare payroll providers’ rates (www.resourcenation.com/business/payroll-services?version=C).

Bacal & Associates, a consulting firm, provides a clearinghouse of free performance appraisal tools and information at http://performance-appraisals.org.

Articles

SuccessFactors offers tips to write effective performance reviews (www.successfactors.com/articles/writing-effective-appraisals).

HRN Performance Solutions lists a series of articles on specific aspects of successful performance reviews such as how to avoid errors in misjudging employee performance and how to minimize legal risks (www.hrnonline.com/performance/evaluation/performance-appraisal-forms.asp).

Books

1) 2600 Phrases for Effective Performance Reviews by Paul Falcone (AMACOM, 2005) is a 224-page book with suggested prompts to conduct a positive appraisal.

2) The Essential Performance Review Handbook by Sharon Armstrong (Career Press, 2010) is a 224-page book filled with checklists to guide managers through the performance review process.

3) How To Say It Performance Reviews by Meryl Runion and Janelle Brittain (Prentice Hall, 2006) is a 224-page book that suggests what managers can say at different stages of the performance review to advance the conversation.