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Performance reviews: power tool or pain in the neck?

November 14, 2014
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Now that we are close to the end of the year, people are thinking about budgets, bonuses and benefits elections. There is also the issue of assessing the performance of the organization.

One practice that comes into play is the individual performance review. Most organizations profess this is an important aspect of managing people. However, a brief analysis often tells another story.

Many people profess to look forward to getting a review, hoping a really good review will lead to a substantial pay increase. But if it is just more of the same, many say, “Just give me the 3 percent increase and let’s save the time and effort.”

Many supervisors feel the same. No one likes the confrontation that most performance reviews set up. When there is a haphazard approach to reviews, they can be misleading and even undermine the organization, especially when the person is rated above average but then gets fired. In an unemployment benefits or grievance hearing, the arbitrator or a magistrate frequently points to the inconsistency of the performance rating and the associated termination notes.

When decisions are being made around a “pay for performance” compensation plan, the stakes are a bit higher. Some organizations try to minimize the tension by separating the review from the money distribution. They make a performance assessment vague so employees disregard the connection. In fact, many may think of it as a way to delay payment and save the organization money.

Another strategy is to have employees and supervisors do self-reviews and then compare. The expectation is that where there are differences, there will be good discussion. My cynical side says it just leads to a negotiation situation. I don’t ever remember the employee rating themselves lower than the supervisor.

When should you have a performance review? Certainly at the end of the orientation period for a new hire, but what about after that? One strategy is to have all pay adjustments at a single point in time. In a department of 15 or 20 employees, many of the reviews may look alike. It is a burden the supervisor has to get through, probably at the same time they are trying to get a budget prepared. Spreading them out has a number of advantages for improving quality and giving individual considerations. It also allows for better cash flow.

So, how do you link performance to organization focus? Let’s first decide whether you can manage performance. The answer stems from a couple of simple thoughts. Are people in a position to make decisions about their performance, and is it in their interest to do so? If the answer is yes, then you have a shot at it. So it depends on the job and whether performance rewards are related, both good and bad.

Managing performance is about aligning individual actions with organization objectives. So the starting point is a clear game plan about organization strategy and objectives. If you don’t have this, the rest is a bit of a crapshoot.

The next step is to establish who has what kind of impact on the goals. Some people have maintenance-type jobs. They are task oriented and to some degree routine. This is not to say they are unimportant; in fact, they can be critical to outcomes and the degree of technical expertise can be very demanding. Timing of the performance review for these people is effective if associated with their time in the position.

Other employees have work that is more closely linked to organization strategies and goals. These people should have their performance reviews linked to key measurement periods, whether that is when key milestones are expected to be met or when certain events take place.

Consequently, when the organization falls short of established goals, the composite performance scores should shift downward — and upward when you blow the socks off the objectives. It is a notable mismanagement issue when nearly all performance ratings are superior or outstanding and the organization is not meeting its goals or the objectives. It often stems from poor guidelines, culture, lack of training and conflict avoidance.

Regardless of which type of position a person holds, the outcome of the review process should reinforce the desired behavior, be timely and based on individual assessment. The standard, regardless of scale, should have a rating system where those who are performing to expectations are expressed as being an important part of the team and it is what the majority of the employees are rated. Those who are rated higher should demonstrate exceptional skills, and those who don’t support team goals should be rated lower and receive notably lower, if any, pay increase.

Performance systems are designed to communicate how employees are doing, and shifting that responsibility from the supervisor is a big mistake. That doesn’t mean the employee has to take a passive role. In fact, a notable aspect of performance management is development. This is clearly where employees need to focus their attention. Prior to the assessment process and associated discussion, employees should be expected to review their skills as they relate to the current position as well as their future career objectives. Then a joint discussion of that analysis can be very productive when it is integrated into the performance assessment.

Performance management can be a powerful tool to drive the organization, but it takes effort to manage, to provide the right reinforcement mechanisms and to establish links to organization directions. It should not be designed to assist supervisors who are not able to fulfill a significant part of their role.

Ardon Schambers is president and principal of P3HR Consulting and Services LLC in Grand Rapids.

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