The Art of Effective Performance Reviews

Conducting a great performance review is a bit of an art.

Managers who are just learning this art often ask us what they should be talking about—other than specific performance targets—with their people during reviews. In addition to the fine details (specific performance goals, noteworthy achievements, critical skill gaps, “reach” projects, future potential roles, etc.), we advise managers to ask questions that will help them understand the “big picture” where each individual is concerned.

This is where the “art” of performance reviews enters.

Managers need to ask the right questions and use the right probing techniques to learn the truth about crucial performance-related issues—for example, how employees feel regarding their own performance, the appropriateness of their responsibilities, their interactions with coworkers, their contributions to the department, their commitment to the company itself, and their feelings about the future, among other things.

Interestingly, Forbes recently published an article, 9 Things You Should Tell Your Boss At Your Next Performance Review, which is obviously written as advice for workers. But managers should read the article as well, and consider using a number of its key points to guide their performance review conversations. For instance, the first four items on the list are: 1) what makes you happy; 2) how you want to grow; 3) what you’d really like to work on; and 4) how you envision the future.

These are actually perfect examples of the issues managers should be talking about during reviews (in addition to the more prosaic performance matters noted above). In other words, don’t wait for employees to bring up these topics. Bring them up first by asking your reports about them. Doing so will help you dial into their perspectives, needs and interests—all of which are crucial to effectively managing their performance and developing them. Plus, you’ll send a clear signal that you care about how employees are feeling, not just trying to squeeze the most work out of them. That’s the kind of manager people want to work for.

Address some of the issues covered in the Forbes article and you’ll not only create an artful performance review … but you’ll also go a long way toward creating a meaningful one.

Rethink Employee Engagement -- Already?

Employee engagement continues to be a hot-button issue for employers and HR professionals worldwide.

Some of the questions swirling around this issue include: How, exactly, should we define employee engagement? Does engagement really drive productivity? Are employee satisfaction and happiness part of employee engagement? And, of course, how can we improve our engagement levels?

Last year, Forbes published an article with the provocative title, “It’s Time To Rethink Employee Engagement.” While many organizations had just begun seriously thinking about engagement, the article declared that we already needed to rethink it. To be fair, the author makes a number of points worth considering. For instance, for companies conducting employee engagement surveys: “Don’t treat every opinion the same. Listen to what your top performers tell you. They’ve proved their value and earned their credibility, so go ahead: play favorites.”

Naturally, whether to think (or rethink) about employee engagement is something each organization must evaluate on its own. And there’s plenty of research available to help. (Just cruise through some of our past posts for links to a variety of helpful reports and sources.) But as we all give thought to engagement, here’s a summary of specific items that have the greatest impact on employee engagement, as ranked by 6,000 HR professionals who participated in a 2013 SHRM/Globoforce survey.

• Appreciation by direct supervisor – 71% 
• Opportunity to advance – 41% 
• Salary and bonus – 36% 
• Ability to be effective in one’s job – 35% 
• Company’s care for employees’ well-being – 30% 
• Confidence in executive leadership – 29% 
• Relationship with peers – 22% 
• Belief in company’s mission – 18% 
• Appreciation by peers – 11% 
• Job title – 4% 
• Other – 2%

Again, it’s your decision whether to rethink your organization’s employee engagement. But here’s an interesting quote from William Werhane of Hay Group, the global management consulting firm: “In the current economic environment, high performing organizations have remained focused on employee feedback, and as a result, have achieved significant business results through enhanced levels of employee engagement and enablement.”

That’s something worth thinking about.

Employee Learning and Training—No Retreat, No Surrender!

How much do employers spend on learning and training?

According to the American Society of Training and Development’s 2013 State of the Industry Report, U.S. organizations spent more than $164 billion on employee learning in 2012. (In this case, “learning” encompasses a wide array of educational initiatives including training.)

Training magazine’s 2013 Training Industry Report, on the other hand, offers a narrower focus on training initiatives and the dollars spent. The report indicates that U.S. training expenditures, which totaled $55.4 billion in 2013:

·       increased among large companies (from $11.3 million in 2012 to $17.6 million in 2013);

·       increased very slightly among small companies (from $294,532 in 2012 to $301,082 in 2013);

·       and fell among midsize companies (from $2 million in 2012 to $1.2 million in 2013).

No matter how you slice and dice the definitions or the numbers, it appears that employers’ commitment to training and learning remains strong overall—especially considering the state of the economy during the past few years, the increasing challenge of global competition, and the ongoing turmoil around employers’ healthcare costs, among a host of other ongoing competitive hurdles.

Make no mistake, no matter what our other business challenges are, we need a no-retreat, no-surrender commitment to training and learning for one simple reason: organizations that are dedicated to learning crush their competition.

Bersin by Deloitte’s Corporate Learning Factbook 2013 contains several persuasive proof points based on years of study. They show that organizations with “strong learning cultures:”

·      Are 42% more likely to innovate (i.e., be first to foster ideation and implement change initiatives) than their peers.

·      Are 37% more productive.

·      Are 35% more responsive to customers’ needs.

·      And have a 26% greater capacity to deliver quality products.

It’s hard to ignore numbers like those, which clearly show why our investment in employee learning must be unwavering. Obviously, how we allocate our investment is equally important. The Training magazine report shows that employers’ top three priorities in allocating training resources in 2013 were: 1) increasing the effectiveness of training programs (32%); 2) reducing costs/improving efficiency (20%); and 3) increasing learner usage of training programs (14%).

When it comes to training and learning, our bottom line costs matter. But the greater bottom line is this: if our commitment to learning weakens so will our companies.

One Bad Reason Good Employees Jump Ship

LinkedIn’s Talent Blog recently offered a highly educational infographic, Why More Employees Are Considering Leaving Their Companies.

The infographic contains a variety of useful insights and data—but one of the key story lines is this:

LinkedIn surveyed employed individuals worldwide, asking what would convince them to leave their employer; their top response was “better compensation and benefits.” LinkedIn also surveyed employees who had actually changed jobs recently, asking what convinced them to change employers; their top response was “greater opportunities for advancement.”

Given the reality of why people left their employers, LinkedIn wondered whether organizations have failed to create sufficient internal mobility programs—programs that would have kept people from jumping ship. But further research showed the existence of “well-defined internal mobility programs” throughout a large majority of companies in the U.S., Canada, India, Britain and Australia.

So what’s behind this discrepancy? The LinkedIn infographic states, “According to our Exit Survey, HR and talent acquisition professionals overestimate employee awareness of their internal mobility programs by more than 2X … Plus, 69% of British and Indian, 68% of American and Canadian and 60% of Australian Exit Survey respondents said it was easier to find an open position outside rather than inside their previous company.”

That’s utterly terrible news.

Yes, “preventable turnover” happens. But it shouldn’t happen because employees aren’t aware of internal mobility options. What makes this situation especially deplorable is that we have a mechanism in place to continually remind employees about internal mobility and job openings: our performance review process.

Sadly, too many performance reviews skip right past internal career pathing. Reviews focus on performance gaps and targets—and little else. This has to change.

The cost of employees jumping ship (especially good employees) is far too great. As the LinkedIn infographic shows, the annual savings from a mere 1% reduction in preventable turnover would be $7.5 million for an employer in the U.S.

Bottom line, our performance reviews should be one more tool we use to prevent good people from jumping ship needlessly.

Goal Setting Works. But Avoid Those Goals Gone Wild.

Helping employees set achievable performance goals delivers substantial benefits.

Goal setting helps employees prioritize their work and focus their day-to-day efforts effectively. It lets them know exactly what they’ll be measured on (in part) during performance reviews. It can facilitate their communication and interaction with managers. And it shows them how important their personal contributions are to department, functional and overall company targets. In short, it’s astounding how much impact goal setting can have on our bottom line and competitive strength.

Done well, goal setting also is a tremendous tool for motivating our people and fostering greater levels of engagement—especially when managers and employees create goals together and work collaboratively to set expectations.

The Human Resources function at MIT does a great job of reminding us how this is possible. The Performance Development page of its website not only instructs readers on the basics of goal setting but it also shows how to tie goal setting to employee development plans.

One of the truly insightful things MIT offers is a set of best practices for bolstering basic goal-setting strategies. These best practices include (and we’re paraphrasing):

·      Ensure there is alignment among an individual’s goals, her/his actual job responsibilities and the department’s targets. (You’d be surprised how easily these components can slip out of alignment without ongoing attention.)

·      Consider an employee’s needs—not just the department’s needs—when setting goals.

·      Communicate department goals to the entire group as a whole, not just individuals. This helps foster clarity and cohesion among the team.

·      Incorporate special projects, committee assignments and mentoring relationships into goal setting.

·      Once achieved, use goals as stepping-stones to new goals and assignments.

While some of these practices might seem rudimentary to more sophisticated organizations, many small to medium employers will benefit significantly from these suggestions.

Interestingly, there have been a few studies showing how poor and/or overblown goal setting can actually be dangerous. A few years ago, Forbes published an article featuring a report by Wharton operations and a team of researchers titled, “Goals Gone Wild: The Systematic Side Effects of Over-Prescribing Goal Setting.” Essentially, the bulk of the research showed that “overly ambitious targets” have profoundly negative consequences. Just goes to show you that too much of anything—even a good thing—can be bad.

Bottom line, help your employees set limited, realistic goals … and be sure to avoid those nasty goals gone wild.