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It's Not About the Form!
Cumbersome processes, vague standards and complicated or one-size-fits-all performance metrics are just some of the reasons most managers and employees dislike performance reviews. HR leaders need to design appraisal processes so performance objectives and priorities are illuminated and corporate goals can be achieved.
A critical -- but disliked -- responsibility of managers is conducting performance reviews. But too many performance review or appraisal systems are poorly designed and deliver many unintended consequences. The process is too often driven by forms, not job requirements. And many of those forms list vague standards, ambiguous adjectives or elaborate job descriptions that can confuse manager expectations. At the same time, there may be overly broad performance measurements that complicate fair evaluations or one-size-fits-all elements that obscure individual results. Another common problem with appraisals is that employees are measured on behaviors or personal characteristics instead of job results. In many organizations, the performance-review process is subjective, cumbersome and time-consuming. All of which leads to difficulties in setting effective performance goals and objectives; in conducting on-going or formal performance-review conversations; and in assigning fair and justified performance marks. Overwhelmingly, managers and employees concur the performance-review process is littered with these concerns. HR leaders should consider a different approach to reduce flaws in the traditional evaluation process. Such a new approach must be tailored with a focus on critical contributions; provide key performance outcomes and standards for each job; employ simple metrics; and increase concrete performance discussions between managers and employees. Realistically, management subjectivity plays an essential part with any performance management process. The key is for managers to clarify the meaning of any subjective standards or measurements -- to themselves and to their direct reports. Any effective process requires managers to articulate performance results that indicate success and specifically what is measured, regardless of the form. Managers must illuminate performance objectives and priorities so employees understand what they are really being evaluated on. This eliminates the game of attempting to transfer performance the manager actually evaluates to a generic form, unrelated to what the manager deems important.
Responding to Problems
Job requirements must drive the performance-review process and become the specifics of the review form -- not pre-established performance characteristics. A job's performance requirements should drive what the critical performance expectations are and how performance is measured. A pre-printed form for all employees never provides fair and accurate evaluation and measurement. One-size-fits-all performance review forms are like one-size-fits-all anything -- they fit no one well and everyone poorly. Many managers evaluate performance they consider pertinent, then conform their opinion of employee performance to pre-designated characteristics on last year's appraisal form. Most managers set their own standards of what meets acceptable job requirements anyway -- and this is what must be documented and communicated to employees and developed as elements of the performance review process. What they think is important is going to be put in play regardless of the form -- so the goal is to make it well thought out and legitimate. No wonder research shows that over 85 percent of both managers and employees dislike the performance review process. HouseValues, a Seattle-based realty-related technology company, changed their generic performance form to include a quarterly objective for all jobs. These objectives are created exclusively from the executive team business goals that are updated each quarter. The goal is to keep people's performance focused on meeting company objectives routinely. To ensure that valid performance issues drive the process and not the form, HR leaders and managers should: * Develop job descriptions that are focused on contributions, not job tasks. The description identifies the key reason the job exists. Asking "Why do we have this job?" clarifies the job description. * Identify the Key Performance Expectations. * Identify three to eight performance expectations that contribute to the organization's business goals. Evaluating 20 expectations -- not infrequent -- creates an overly cumbersome review process.
Results-Oriented Expectations
The performance-appraisal process should ensure that performance expectations are result/outcome oriented. HouseValues previously evaluated performance on cold calls made. This assumed the number of cold calls determined sales numbers. The unintended consequence was that sales people exceeding their quota without making the minimum number of cold calls were taking hits on specific elements on the form and were not receive a top performance ranking. Worse, sales people making the required number of cold calls yet not meeting their quotas were getting equal -- and in some cases better -- performance marks. Cold calls should be measured, but for developmental purposes. Considering them a "result" measurement means: * Employees are not measured on their true contribution to company goals. * Top performers become de-motivated by performance mark hits when they don't follow the pre-determined process. * Managers don't address specific talents that employees bring to achieve success. It's imperative to push as hard as possible to create result/output-oriented performance expectations. Performance review forms are overloaded with performance expectations because too many "input" expectations are included. Many key results cannot be achieved without performing the inputs -- so why bother to evaluate the input when the result measurement will suffice? For example, HouseValues measured teamwork as a performance characteristic. Yet teamwork was not really the goal. HouseValues realized what they really wanted was a smooth handoff of customer leads for qualified sales. That became the focus for performance. Creating Performance Standards
HR leaders and managers must create performance standards for each key performance expectation. A standard should reflect the acceptable level of performance required to hold the job. Standards automatically create a pass/fail measurement for each performance element. Performance below the standard doesn't meet the job's performance requirements; at or above the standard is acceptable. Performance standards are the foundation of accurate and fair performance evaluations. To ensure accurate and fair reviews: * Create a valid, reliable "standards" scale for each key performance expectation * Identify "acceptable" performance for each expectation, and develop an evaluation scale that describes differentiated performance ratings. We recommend a scale of no more than four deviations ¿ i.e., "below", "meets", "occasionally exceeds" and "consistently exceeds" job-requirement rating each performance expectation. There is no need for two deviations below the "meets" performance level. Employee performance is either acceptable or it isn't. Performance continually below the "meets" level shouldn't be tolerated. HouseValues moved away from the 5-scale, but interestingly, found some resistance among employees who objected to being a 2 on a 1-4 scale. Innovatively, the company created the scale to reflect 2-5 (instead of 1-4), so that a 3 indicated a solid performer, and a 2 was 'not meeting expectations.' That slight modification of numbers -- keeping the four deviation scale -- increased employee acceptance. It's important for managers -- and employees -- to understand that performance should be evaluated against valid performance standards -- not past "expectations" High performers may receive 'average' performance marks when they meet the manager's very high expectations due to their past performance. Such employees should not be punished for meeting these high expectations with exceptional performance. If an IT specialist demonstrates remarkable expertise in rapidly fixing system problems, a manager might develop very high expectations. Does the employee deserve an average mark -- acceptable job performance -- when he/she continues to "pull off miracles"? When "expectations" contribute to unfair performance evaluations, high performers will look for greener pastures.
Clarifying Standards
The next step HR leaders should take in revitalizing the performance-review process should be to clarify subjective standards and measurements with the employee.
Ideally, all performance can be objectively measured. Yet where people are called upon to plan, think, and act, many performance elements remain subjective in differentiating poor, good and excellent performance. Managerial discretion in performance review is necessary and practical. However, an effective manager can clearly articulate to the employee what makes up the subjective performance standard. Employees must know performance facts and specific situations that doesn't meet, meets, or exceeds the standard. AquaStar, a Seattle based purveyor of frozen seafood, customized its performance form to clarify subjective measurements. For instance, the marketing department managed a company test kitchen to entice potential customers with tasty seafood dishes. The test kitchen employee was required to write the recipes and prepare the meals to serve to potential customers. The standards could not merely include objective elements, i.e., 'use easy to obtain ingredients', or 'create a simple recipe to fit on the back of a card'. To be successful and attract new customers, the meal had to taste good. That subjective measurement was the vice president of marketing's responsibility, who was hired because she was experienced and knew what sold. Such clarity put more demand on the employee and the vice president to make sure they were on the same page. The kitchen employees can regularly confer with the vice president and accordingly adjust their activities and recipes to meet the vice president's expectation. Clarifying the subjectivity actually led to more communication and feedback. Critical Elements
Performance elements of some jobs are of critical importance to the organization's success. While all performance elements are important, some do stand out as "below the waterline" performance -- where poor performance causes significant harm and superior performance makes a substantial contribution to the organization. Critical performance elements should be recommended by the manager and decided upon by the executive team. Weight factors may give employees higher marks when their performance is at level 3 or higher. Organizations can recognize critical contributions with the same performance rating scale. Note: Weight factors should never be given to performance below acceptable job requirements.
Also critical to the process is the evaluation of the employee related to the core values of the organization. A 2-point performance review system -- 0 or 2, or pass/fail -- should measure established business principles or core values. The professional conduct of all employees plays a critical role in attracting and retaining talented people as well as the company's reputation. Reviewing professional conduct lets everyone know those behaviors are important. Anyone not behaving in accordance with the code of conduct doesn't deserve a point towards their overall performance. Thus, business principles or core values are supported without complicating reviews or manager/employee relationships.
Overall Performance
To get an overview of staff performance, HR leaders should require an overall performance rating. To get that, managers can take rating points earned by each employee and divide that number by the total points possible for each position. This eliminates the need to use the same number of performance characteristics or rating scales for each expectation. Note: Critical weight factors don't affect the points for key performance elements. Employees can earn more points in critical job areas to improve their overall rating as a reward for good performance in a critical area.
This appraisal approach requires managers to identify the important aspects of a position; designate acceptable performance; communicate clear expectations to employees regarding performance and how it will be rated; provide feedback during the rating period; and evaluate performance on agreed-upon performance targets. These steps will make performance management at your organization effective, consistent, fair and focused on business results. Rick Tate and Julie White, Ph.D., are senior managing partners at Impact Achievement Group, www.impactachievement.com. Rick is a best-selling author and an internationally recognized expert on customer loyalty, leadership and change. Among his books, articles, and programs are Leadership and the Customer Revolution, and Legendary Service. He co-authored People Leave Managers ... Not Organizations with Julie, who is author of five best-selling audio and video programs, including the national best-seller, Image and Self Projection and The Psychology of Self Esteem. She is an internationally recognized expert in management development and service quality improvement
May 1, 2008 Copyright 2008© LRP Publications |
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