Conducting Employee Reviews

In recent study published in Forbes magazine, 57% of CEO’s/Owners believe their people are “regularly recognized” for their hard work and contributions. Employees who agree: 9%.  While 61% of employees say they would welcome immediate, on-the spot feedback from bosses and peers about how they’re doing, only 24% say they get it.   Pretty scary when considering Generation X and Millennials are two groups that demand constant feedback and recognition to drive maximum performance.

Many managers believe the purpose of a formal, standardized review process is to create a “paper trail” that documents discussions about performance problems, in case a terminated employee later decides to sue.  They also think that it can be quite a time consuming and cumbersome process.  But, with the technology currently available, there’s no logical reason why managers couldn’t track and report the same information in real-time instead of once every 12 months.  

The good news is 56% of flooring companies reported that they do formal reviews.  The bad news is that all reported that they do this only once a year.  A far more productive way of giving feedback is having “coaching conversations” every day, instead of once a year.  One of the reasons reported by flooring owners to conducting only annual reviews is they feel all it creates is the opportunity for employees to stick their hand out and ask for more money; a conversation that many do their best to avoid.  However, when done right the more common words you hear are “thank you” instead of “pay me”.

One of the many strange quirks in the current labor market is that people who have jobs are not hesitating to ditch them for a better offer. A study from PricewaterhouseCoopers says voluntary turnover has increased by 14% since 2010 and is still rising. The No. 1 reason people give for quitting, according to the U.S. Department of Labor: They don’t feel that their efforts are recognized or appreciated by their direct bosses.  Today’s employees want to know how they are doing and what they can do to improve. 

Now I understand you have a business to run and customers to service and providing constant formal feedback can be both cumbersome and at times quite impossible.  However, one minute praises and reprimands, in addition to frequent formal reviews, will help.  Think about a football team. During a game, the coach and the quarterback are in constant communication, play by play. What if they only talked once a year? Would they ever win a game?

According to data gathered from a substantiated survey conducted by Benchmarkinc, in which several hundred flooring owners participated over a three year period ending in 2013, those flooring companies that completed annual employee reviews experienced:

  • Sales productivity that was 5.2% greater
  • Employee productivity that was 4.8% greater
  • Sales volume that was 19% higher than those who do not conduct annual employee reviews

I get a constant barrage of online blogs sent to me by my wife regarding business strategies and people management. She says it is for inspiration but I am convinced she sends them as a way to push me toward being a better leader for my team; something I hope these article do for you as well.  A few of the more recent ones she sent were directly related to this topic and I though it would be beneficial, for those of you that would like more detail on how to conduct effective reviews, to share some of the strategies. 

AVOID BEING TOO VAGUE

The 10-minute performance review really doesn’t work. When employers wait until the last minute to put together a performance review, they are usually short and salty. There is no substance because they are usually as brief as possible and don’t provide enough specific examples about what was good or bad about an employee’s performance.  Performance reviews can only work when you use specific examples that will improve an employee’s job performance.

PREPARE

Employers need to spend time preparing for a performance review in order for it to be effective. If you have 10 employees that you need to give reviews to, spread them out based on hire dates and don’t wait until the end of the year. Throughout their work life, keep a file or jot down on your iPad specific instances of both good and bad performances and job habits. This will allow you to reflect on the specifics and conduct a review that matters to the employee. If you don’t prepare, they’re usually not going to take you seriously, and the review won’t work. 

FOLLOW UP

As part of the review, you should be setting goals for the coming year. The worst bosses forget about these goals as soon as they’ve completed the review. There’s no quarterly review of the goals to see if the employee is on track, and there is no constant stream of feedback. Performance reviews only work if there is follow-up throughout the entire year and not just for an hour (or less for some) once a year. To be effective, the goals of the coming year have to be kept in the forefront for both employee and employer.

USE EMPLOYEE SELF-REVIEWS

Self-reviews are extremely helpful because they give employees a way to reflect on their own performance. Most employees tend to be harder on themselves then their boss would be when reviewing their performance.  These reviews will now become a discussion on how you both feel about the performance and the employee will not feel as if the conversation is coming from one direction.

When done effectively, consistently, and frequently employee performance evaluations can be helpful to both employer and employee. For the employer it provides that opportunity to coach each employee to their true potential or for some it also creates assurance that if an employee is performing in a subpar way, they will have the information necessary to take the proper steps of reprimanding or terminating. For the employee, it provides feedback on how they can improve, what areas they shine in, and most importantly it gives them the sense of recognition, good or bad, they desire so they don’t bolt for what they believe is greener grass.  If you think about it, the cost in time is far less than the cost of turnover and unproductivity. And quite simply it is the right way to treat people who now have many options when it comes to working for someone who will take the time to let them know they are appreciated or provide feedback and coaching on how to get better.