29/03/2011

8 ways to overhaul performance reviews and transform your culture

Quint Studer

Performance reviews can have a positive impact on corporate culture, but you have to train your managers to perform effective performance reviews to ensure consistency in evaluation.

Performance reviews tend to get a bad rap. Employees dread them, vacillating between cynical eye rolls and desperate last-minute bids to suck up to the boss before review time. Managers see them as an obligation to plow through the ordeal before they can mark one more task off their endless to-do lists. Performance reviews themselves aren’t the problem; it’s the way companies handle the review process that’s flawed.

Performance reviews are necessary, and, when they’re done properly, people actually like them. Employees want to know how they’re doing. They want to connect with their managers. For those in charge of staff and departments, performance reviews provide an opportunity to measure performance results, reward great employees, and move not-so-great ones up, or out. As important as they are, many companies need to overhaul their performance review system. Changing the approach to performance reviews not only will make the process more effective but also can have a positive impact on company culture.

These are eight ways to overhaul your employee evaluation system and transform your culture:

 

1. Lay the groundwork for performance reviews all year long.

Too often, employees go about their work and managers go about theirs. Then suddenly, once a year, they meet to discuss performance. That one encounter is expected to yield a productive meeting of the minds, followed by growth and progress on the employee’s part. It rarely works that way. In the same way that a doctor makes rounds to check on patients, leaders need to make rounds to check on employees. “Rounding for outcomes”, practised weekly or even daily, helps leaders stay in close contact with their employees. It provides the opportunity to touch base regularly with employees, make personal connections, recognize success, find out what’s going well, and determine where improvements are needed.

Rounding for outcomes is not about tossing out a casual “How are you?” and then walking off without waiting for an answer. It means asking specific questions in the right sequence: Do you have the tools and equipment you need to do the job? What is going well? What isn’t going well? Is there anyone who’s been particularly helpful to you that I should recognize? Always listen and write down your answers, and then follow up. If you don’t do this last part, it negates all your hard work. When you build your reviews on a foundation of rounding, the performance review process becomes meaningful. Neither party is surprised by what the other party says during the reviews because the issues have been raised before, and probably more than once.

 

2. Hold reviews four times a year.

The annual performance review should become the quarterly performance review. If this sounds like a lot of work for managers, it is. But it’s also far more effective than the annual review, which too often reflects an employee’s performance during the previous month leading up to the meeting. Quarterly reviews are a far more accurate reflection of the employee’s overall performance. They force leaders to pay close attention all year long.

 

3. Link reviews to organizational goals.

The main goal of performance management is to improve the performance of individuals to improve the performance of the organization as a whole. It may seem an obvious strategy, but surprisingly few leaders structure employee evaluations around concrete company-wide goals. This is a mistake. When employees know they are going to be graded on the progress they made toward departmental and company-wide goals, they will alter their behaviour accordingly. But don’t just impose these goals: Get employee input up front. This helps employees “connect the dots” regarding the impact they have in the organization.
When employees are involved in crafting organizational goals, they are far more likely to understand them, buy into them, and work toward them. When leaders bring up these goals again and again in performance reviews, it reinforces the employee’s efforts.

 

4. Make review criteria as objective as possible.

One of the major criticisms levelled at performance reviews is that they’re based on maddeningly subjective criteria. Performance, as perceived by managers, can vary wildly. This inconsistency in ratings among supervisors is the result of different perceptions about what constitutes acceptable performance. For example, a manager who supervised the employee last year rated the employee high in communication skills, while this year’s manager rated the same employee in the mid-range.

To prevent this subjectivity, tie efforts to outcomes. You cannot disagree when you measure with hard numbers. For example, if customer follow-up calls increases return business, an employee measurement would be to make a certain number of calls a week.
During the performance review, you can then tie the employee’s efforts and performance to the outcome. Look at how many calls are actually being made and how much return business they’re generating. When you keep an eye on these follow-up calls all year long, you can more accurately track what’s working, and change the script for effectiveness.

 

5. Strive to make performance reviews conversations, not confrontations.

The best leaders draw employees out, solicit their ideas for improvement, and offer concrete suggestions on how to better pursue the goals they’ve set together.

 

6. Avoid falling back on “we/theyism”.

Let’s be honest. Most employees come into performance reviews with the hope of walking away with a pay increase. Leaders often have to disappoint them (especially in today’s economy). And many of them fall prey to the we/they phenomenon as in: “Well, Rick, I fought for your pay raise, but you know those tightwads over in Corporate.” The problem is, the we/theyism has a divisive effect on company culture. This is rarely a deliberate choice, but rather the natural fall back position of someone who hasn’t had formal leadership training.

Make a conscious effort not to do it. In fact, make an effort to position the company as a united entity. It’s fine to say something like “Sales are down 11%, and no one is getting raises. But we have a great team, we’re all working hard, and I’m confident we can turn things around.”

 

7. Make sure all leaders are singing from the same choir book.

Standardizing the review process and incorporating clear, measurable performance standards is a must. Leaders are not born knowing how to hold effective performance reviews. Before rolling out the initiative companywide, train your managers to perform effective performance reviews to ensure consistency in evaluation.

 

8. Use reviews as a springboard to move low performers up, or out.

The whole idea behind these reviews is to improve employee performance and the performance of the organization as a whole. So what do you do when certain low-performing employees refuse to budge?

What you don’t do is let them hang around year after year. If low performers don’t or can’t improve, let them go. When they’re tolerated in a company, they tend to pull middle performers down to their level. Worse, your high performers will get frustrated and leave. When you make a decision to let low performers go, your middle performers will naturally start to emulate the behavior of your star employees.
When performance reviews are frequent, objective, and goal driven, it enables you to keep a careful watch over low performers to try and turn things around. If performance is not improved, you have the measurement evaluation information you need to let them go.

 

Transforming your performance review system can transform your entire company.

The way you motivate and reward employees is everything. When employees believe they are treated fairly, when they are engaged in the company’s mission, when they are coached toward meeting clearly stated goals, they’re going to put their hearts into their work. They’re going be passionate about what they do.

A great culture outperforms strategy every time. Highly engaged, committed, and contributing employees are critical for enabling an organization to realize its vision and achieve its goals.

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Reprinted with the permission of Quint Studer, author of Hardwiring Excellence: Purpose, Worthwhile Work, Making a Difference; 101 Answers to Questions Leaders Ask; Results That Last: Hardwiring Behaviors That will take Your Company to the Top and Straight A Leadership: Alignment, Action, Accountability.For more information, visit http://www.studergroup.com or contact Dottie DeHart, DeHart & Company Public Relations in the US at (828) 325-4966.