.RETURN ON YOUR INVESTMENT

You invest a considerable amount of money in people, including salaries, benefits and all the other direct and indirect costs of people. Force yourself to make the time to review what return you're getting for that investment and consider what you and your employees can do to increase it. Remember that old saying, "work smarter, not harder". Unfortunately, you'll never "get around to it" unless you schedule the time to do it.

Use the Performance Review Meeting to make the time for both you and your employees to think about these questions:

Satisfying Client/Customer Expectations

A very significant element in every employee's role is the set of expectations which customers or clients have of the employee.Satisfying customers expectations is the raison d'être of every employee's job and what keeps you in business.

Both our internal and external customers expect us to meet their expectations. Satisfying these expectations is the responsibility of every employee. Therefore, an important part of the Performance Review process is to assess how well employees have identified and satisfied client expectations.

To encourage accountability and individual responsibility, employees should be asked to present, either verbally or in writing, a summary of their success at satisfying their clients' expectations. To prepare for this, the following directions are suggested (as a minimum):

Instruct your employees to speak with their clients/customers on a regular basis and to ask;

The employees' analysis and summary of the results of this exercise, as well as their plans to improve their ability to satisfy customer needs, is presented to you at their Performance Review Meeting.

Symbolism

Although the Performance Review Meeting should contain no surprises for the employee, this "year end" meeting with "the boss" can create some mild anxiety for the employee. This is, after all, the annual formal meeting and it can strongly symbolize the "value" you place on the employee.

As a result, the meeting should be conducted in a formal and serious manner. Should you trivialize this "performance" meeting or its documentation by your choice of words, conduct or apparent lack of preparation (as perceived by the employee!) you will inadvertently trivialize "performance". For example, brushing aside the meeting or continually postponing it lets the employee know that "how well he or she has performed is really of little consequence to you or to the organization." Making the annual Performance Review a "big deal" helps to reinforce that performance in your organization is a big deal!

Pay for Performance - More Pain Than Gain?

The results of the Performance Review can be used to award bonuses, special merit pay or to justify any sort of pay for performance scheme. Theoretically, this is an effective means to recognize and reinforce your highest performers. However, in practice, merit pay and pay for performance can be very complex and cause more problems than the benefits seem worth. Complicated compensation formulae related to some measure of comparative employee performance, competencies or skills do not guarantee equity among your employees, and may reinforce the opposite. How do you compensate for the impact of the work group on the individual's performance, or the local economy, or the actions of the competition, or the bad luck of having an incompetent supervisor, or a host of other elements in the employee's work environment?

Instead, why not spend all that time, money and effort to protect the jobs you've got by servicing your customers better. But if you are considering pay for performance, I recommend that you get professional assistance to develop appropriate policies and procedures.

Employee Review of the Supervisor's Performance

A growing practice in many organizations is inviting employees to give performance feedback to their supervisor. Although initially viewed as high risk by many people, this can be a valuable learning experience for the supervisor, if it's done carefully and correctly.

Most of us, from supervisors to senior executives think we're pretty effective people managers. We sincerely believe we are doing a good job at directing our employees. But a "halo effect", wherein our strengths can blind us to our weaknesses, and self-delusion typically lead most of us to think we're much better at managing our employees than we are. What is required is the experienced opinion of those we manage - our employees. It's analogous to customer service. Our own supervisor, even if we have one, can't tell us whether our customer service is acceptable. Only the customer can.

Objective feedback about your performance from your employees (and also from your peers) can be invaluable information for self-improvement and growth. But it can also be dangerous. Throwing open the doors for "totally honest" performance feedback may entrap employees into saying things you don't care to hear, or things which aren't appropriate, such as personality assessments or critiques of your work activity that the employee is not fully informed about.

The safe way and a very practical way not only to discover how good you are as a supervisor but also to identify specific ways to improve yourself, is to ask your employees these two questions (and use these exact words):

[1] "In order to help us both perform our jobs effectively, would you please identify some specific things that I do, which help you to do your job. If I am more aware of these things, I will be able to ensure that they continue."

[2] "Please identify some specific things that I do, which prevent you from doing your job. If I am more aware of these things, I will be able to do something about them."

Don't do this as part of the employee's Performance Review. Instead, ask your employees to answer these questions in writing or at an informal face-to-face meeting with you. Initially, you may not get much response, but when you do, reinforce their efforts and follow-up with some activity of your own. At the very least, you will have shown that giving this sort of feedback to one's supervisor is a legitimate activity in your business. Make it a regular activity every six months for all your management team. And follow-up to see that they do it with all their employees.

Peer Reviews

As the saying goes, the jury is still out on this one. Performance "feedback" from those we work with can be very useful since our interactions with peers impact our own performance and that of other employees. Our peers may see us in a different light than our supervisor or our employees. Perhaps the two questions just noted regarding subordinate reviews could be used in a feedback process you initiate.

But formalizing your peers' assessment of your performance as part of your Performance Review (a component of the so-called 360° approach to performance appraisal) is questionable. The limited research that has been done on the validity of peer assessments shows little added value (see #1 below). The research warns that peer ratings can be too susceptible to judgmental biases influenced by many factors such as race, individual popularity, age, competition, and trust, and recommends peer ratings not be used as performance measures(see #2 below).

#1 Hoffman, C. C., Nathan, B.R., Holden, L.M. "A comparison of validation criteria: objective versus subjective performance measures and self- versus supervisor-ratings" Personnel Psychology, 1991, 44(3), pp. 601-619.

#2 Oppler, S.H., Campbell, J.P., Pulakos, E.D., Borman, W.C. "Three approaches to the investigation of subgroup bias in performance measurement: review, results, and conclusions" Journal of Applied Psychology, 1992, 77(2) pp. 201-217.

Probationary Performance Review

One of the most important uses of the Performance Review is to make a decision near the end of an employee's probationary period whether or not to accept the person as a permanent employee.

You must have a policy and a procedure regarding a probationary period for all jobs in your organization. Before you hire, you should inform prospective employees in writing about the length of their probation and that the decision to accept the employee as a member of permanent staff will be made by the end of that time, or sooner, unless a decision is made to extend the probationary period further.

It is impossible to predict whether a new employee will "fit in" to your organization. Hopefully, you make informed decisions when you hire, based on the criteria required (skills, experience, etc.) for success in the job as well as other information such as reference checks. But knowing whether the new employee's interpersonal/ temperamental characteristics will be appropriate is difficult to foresee. And so a probationary period of typically three to six months is used to see how well the new employee works out.

During the probationary period you and the employee can sever the employment contract fairly easily if either party wishes. However, once the probationary period is over, it becomes very difficult to dismiss an employee without well documented cause.

So the time spent with the employee from when he or she is hired to the end of probation is the most important time you'll spend with most employees. Train, coach, direct and motivate all you can. Then make sure you assess the results and make an informed decision before the probation is over. Is the employee "fitting in?" Is he or she progressing at an acceptable rate? Can he or she perform the way you expect, at this time and with the coaching that's been given?

Don't let the "calendar" make the decision to put the employee on permanent staff ("Oops, her probation period ended last week!") You should make the decision based upon a careful Performance Review.

The probationary period and the Performance Review at the end are also very important to your organization for a psychological reason. Knowing that to join your organization, potential employees have to pass tests and meet certain challenges, will raise the value of membership in your organization to current and prospective employees. This usually results in increased loyalty, increased productivity, decreased turnover and it helps to attract better employees in the future.

However, if the word is out that "anyone off the street who can walk and breath can get a job from you" then employment in your organization isn't really worth that much. The result is typically little loyalty to the organization, little pride in workmanship, higher turnover and only the "dregs" are attracted to work for you.

From: Robert H. Kent, The Mansis System: Common Sense Management For Everyone, Winnipeg: Pragma Press, 1996, pp. 11.3-11.9.

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