5 AVOIDABLE MISTAKES IN YOUR PERFORMANCE REVIEW PROCESS
Recently I was chatting with an old colleague of mine about his most recent performance review. As he shared his company’s current system and process, I realized there are still a lot of companies using antiquated methods for conducting one of the most important activities of the year. Here are five avoidable mistakes in your performance review process.
SILENCE IS NOT GOLDEN: If you are not conducting yearly performance reviews, you are missing out on one of the most important activities of the year (this is also a great way of promoting employee turnover within your company). Every employee expects an annual performance review, this is just the entry fee of employing people. Every team member is looking for feedback, guidance, and coaching. Without a performance review, employees will be left to wonder how they are performing, and that’s never a good thing. I know for most managers; performance reviews can be your least favorite activity of the year. If you are in this boat, I encourage you to find new perspective regarding performance reviews (or a new position not leading others). You owe your people a solid and constructive review of their performance. Your team members are your greatest asset, treat them as such.
NO SURPRISES: The best time to give an employee performance feedback is in the moment or directly after. Not addressing issues as they arise is counterproductive. Do not hold feedback until you blow up because you are having a bad day or revisit an issue that is five months old during their performance review. If you are surprising a team member with an issue, you as the manager have failed to achieve your basic duty, managing your people. One of the more difficult, if not the most difficult responsibility of being a manager is having the “tough” conversations. But it’s part of the job. When you address issues as they arise, it gives your team member a chance to recognize what has happened and take corrective actions going forward. If they do that correctly, then recognize it in their review! If they are unable to make the necessary changes, address it again. But remember, don’t make it personal, don’t attack your team member, COACH them.
THE OL’ RATING SYSTEM: If you still employ some sort of 1-5 rating system (1 being ‘Unacceptable’ and 5 being ‘Outstanding’) for specific tasks or abilities, please throw it away. This method is destructive and leads to unengaged employees. Also, it does not accomplish what you are ultimately seeking; continued improvement of your people. The two basic objectives of a constructive performance review are to affirm or encourage certain behaviors/results, AND to address undesired behaviors/results. Giving your team members a three-page review with ten items listed as “2-Below Expectations” will not get you closer to your desired result. If anything, you have just sucked the little motivation left out of that team member. People will only be able to move the needle on a handful of items each year, remember that.
Also, I have found most managers can only remember the last few months of an employee’s performance. Unless a team member has made some critical mistake, managers remember those events into perpetuity. Keep a log on each team member throughout the year; what they did well and why, where they stumbled and how they picked themselves back up. (Trust me, this will be a life saver come review time). Do not make your people relive the sins of their past. If you have properly addressed the issue and your team member has made the necessary corrective actions, move on. As a manager, you are a coach, as a coach your goal is to help your team members improve. Coach them up does not mean we are handing out participation trophies here, this is a business, there are results we all need to achieve. The key to any good performance review is open communication. There are several 3rd party performance review systems out there that will lead you down the right path. But going with a simple start/stop/continue structure will get you much further than some outdated rating system.
THEY DON’T GO HAND IN HAND: Many companies still link the performance review process with compensation reviews. These are two separate processes. Are they related? Yes, which means they should never be married. By linking them within the same process, your team members will be less receptive to receive necessary feedback if they think every critique is subtracting from their potential comp increase. Performance reviews and compensation reviews should be separated by at least one month. The timing for both activities should be published and known by all.
SHOW ME THE MONEY: Money is always a touchy topic. Everyone wants more money and sometimes employees are not receptive to hearing, “no”. First, do not treat an employee who asks for an out of cycle compensation review like they have just committed a cardinal sin. Those companies who get in front of compensation issues do a much better job of retaining their top talent. Once an employee asks for a comp review you, are already arriving late to the party. Something has convinced your team member that they are undervalued and being underpaid. This is not a feeling you want any of your people to have. Also, do not allow more than a week to pass from the moment an employee asks for a compensation review and conducting a comp review. I have seen more damage done from managers not following up with an employee for weeks or even months after an employee’s request. No news is worse than bad news. And if you are currently unable to increase an employee’s comp, never leave it as a hard no. If they are looking for a comp increase formulate a path that leads them there. More responsibility usually leads to more money. If you fail to properly address this issue, one of your competitors sure will. And you’ll wish you had given that request the attention it deserved when your employee is handing you their resignation letter.
Throw away those antiquated process and move forward with a sense of urgency. Making the necessary changes are sometimes hard and time consuming. But there will never be a right time, the time will only be right because you are making it the right time. In today’s job market the war for talent is real, and most companies are losing the battle. This is not a battle you want to lose. The most painful wounds are the ones that are self-inflicted, today is the day to fix it.
CEO & Chief Problem Solver