As we've closed out one year and look forward to the opportunities that the new year promises, managers and business owners take a collective deep breath and sigh as the employee performance evaluation season begins.
Coordinating the logistics of the annual evaluation process is like herding cats. If your enterprise has an experienced management team, then as the owner, most of the hustle and bustle will occur at their level, while you'll only have responsibility for evaluating your senior leaders (which is actually one of the most critical roles); however, for those of you who are the only executives within your organization, get ready to roll up your sleeves.
Talent management, a fancy term for the annual employee performance evaluation, is often met with as much enthusiasm as a deep scaling procedure. But this is a mistake. While you may cringe at the amount of time it takes to develop the right words to say that both inspires staff, while at the same time, provides constrictive criticism for areas of deficiency, don't discount the importance and power of evaluating employee performance. Whether you're reviewing one person or 10, this process is absolutely essential to cultivate a high performance team; and if handled correctly, ultimately increases your profits and reaps other numerous benefits for your organization, including more engaged employees.
Dr. Sherry Nooravi, organizational psychologist and principal of consulting firm Strategy Meets Performance likens the talent management process to a mini-drama saying,
"If talent management were a play, the senior team would be the dramatic protagonists who must experience a difficult event to grow, and we as the organizational development consultants are the antagonists, pushing them to successfully develop their teams through the effective administration of the performance evaluation."
Whether it's the under-performing employee who rates themselves "5s" across the board on the self-evaluation, or the line supervisors who insist their department is the best in the entire company despite evidence to the contrary, Dr. Nooravi says each actor in this workplace drama plays a part until the final act, when employees receive feedback and a growth plan and the company knows "who is on the bus."
What can leaders do to make sure that they implement the best talent management strategy for their operations? Dr. Nooravi recommends that the employer begin by clearly articulating its values,
"If strategy is the what, values are the how. When you articulate the values that have brought the company success and the new behaviors needed to meet the future strategy, employees will be clear on what is, and what is not, acceptable behavior with one another, customers and the community. The foundation for the system should be based on the company's strategy and values; and each person should not only having clarity for their own goals, but also that of the company and the department they are in."
So now that I've hopefully sold you on the importance of conducting regular performance evaluations, here are some tips to help you run a successful talent management campaign:
- Determine the frequency and time-of-year to conduct performance evaluations. A common schedule is to conduct evals up to two times per year, once after the first 90 days of employment, and annually thereafter. For annual reviews, many small businesses conduct evaluations within a 30-day radius of the employee's anniversary date, but if that feels too disruptive for your operations, or if you have over 20 employees, consider conducting all evaluations at one time during the calendar year, regardless of anniversary date.
- Ensure that you train your managers on how to write and administer the performance evaluation. Don't take for granted that they know how to do this effectively. Most do not, even if they are strong writers. There are many books such as 2600 Phrases for Effective Performance Reviews that will help your managers craft their words. Also, Dr. Nooravi advises managers to avoid rating bias and therefore should not let yesterday's goof represent the bulk of the year's evaluation.
- Always have an HR compliance review of completed evaluations. Managers who rate employees down for missing work due to a pregnancy leave lack the proper training to keep you out of legal hot water!
- Determine whether you will tie strong performance to a salary increase. Employers often tell me they cannot afford to give raises and therefore see no purpose in conducting performance evaluations. I can assure you that evaluating performance can and does happen all the time whether the evaluation is tied to an increase in pay, or not. This is an acceptable practice. Everyone likes to know how their doing and where they're going. If your budget doesn't allow for raises, consider a one-time performance bonus for employees who reach a pre-established rating level.
- Have a clear plan for how you will handle high-performing yet difficult employees. Dr. Nooravi refers to them as On Board Terrorists (OBTs) and says employers must determine what behaviors they are willing to tolerate or endure because,
"OBTs are often adored by your customers, but can be abusive to employees and colleagues. These characters bring short-term gain but long term, are bad for your culture. Acknowledging their contributions while providing them with confidential coaching on how they can improve their behaviors is an important step during the performance review process that may allow you to salvage this type of employee."
As you sit down to write your performance reviews, take comfort in knowing that world-class organizations attribute their success to their talent management strategy; so despite the work and potential long hours ahead, providing your team with accurate and effective feedback on their performance is one of the best things you can do for your business. Get comfortable, grab some popcorn, and let the show begin!
This blogger graduated from Goldman Sachs' 10,000 Small Businesses program. Goldman Sachs is a partner of the What Is Working: Small Businesses section.