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THE REAL VALUE OF PERFORMANCE REVIEWS

September 29, 2018

 

One of the Renaissance CEO Peer-to-Peer Advisory Groups recently had their monthly meetings and featured an Educational Component on Employee Performance Reviews. Roundtable members took time to share the format and documents used at each of their companies, then learned best practices from each other.

 

During this particular meeting a lot of questions were asked about each other’s processes. Seeing other companies’ methods opened everyone’s eyes to new ideas and concepts they hadn’t previously considered.

 

If you hate doing employee performance reviews (and who doesn’t?), consider some of the great ideas that came out of this particular conversation:

 

1.) No Surprises

Take time to talk with your team all year long and give them clear feedback so they can make improvements along the way. If the info in your performance review is a surprise to them, you are not leading well.

 

2.) Separate Performance Reviews from Salary Increases

When money is tied to these reviews, things get off-track. Supervisors feel frustrated that they can’t give an increase for excellent performance when money is tight, and employees feel it’s unfair to have performed so well and not be rewarded. Most meeting attendees agreed that merit pay increases should be annually based on the profitability of the company, and that bonuses were better than salary increases.

 

3.) Visit Regularly

Annual reviews are a great way to align employee goals for the year with the company’s goals. They’re also a wonderful time to talk about professional development and update overall career objectives. Quarterly reviews help each employee assess progress against goals, while allowing leaders to give timely redirection and encouragement.

 

This is why Robert Hunt, our partner in Dallas/Fort Worth, has used a “Top 5” sheet for years to help his team know what activities matter most each week against quarterly goals. He suggests this be supplemented with a short meeting each Monday to review last week’s performance, and to set activities for the coming week. According to Robert, this approach allows employees to stay self-directed and add the most value to the progress of overall goals.

 

4.) Do Peer Reviews

A Peer Review allows you to see how well an employee works with others. After all, they may be hitting their goals…but leaving a trail of bodies along the way.

 

When you do a Peer Review it should include assessments from the employee, their direct supervisor, and at least two peers;

  • One from their department; and

  • One or more from other departments they regularly interact with

All the assessments need to be numerical answers that can be combined to determine an average score.

 

And while you don’t want the employee to see the answers from other people’s comments, you can use this feedback to plan future personal and professional development programs for the employee.

 

5.) Create a Benefit Statement sheet

This was reportedly one of the best items shared, and it applies to merit pay increase situations. When you meet with the employee to talk about a possible raise, start by showing them how much the company pays (in total) for them to work there. Most employees don’t recognize that costs associated with their job include employment taxes, healthcare fees, PTO, Holidays, Bonuses, 401k and more.

 

Meaning if the employee has a yearly salary of $90,000, the company could easily be paying $150,000 or more in total annual expenses.

 

So the idea is to let employees see the actual numbers to impress upon them just how much is being invested in them; then reward great performance as it is deserved. Your review might also include showing the amount of profit the company makes. This helps employees understand that, though annual sales are $15 Million, net profit may be only $900,000.

 

FINALLY…

The last thing to remember is the importance of having a good attitude throughout the process. If you complain, drag your feet, or hurry to get it over with, your employee will have the same attitude. These reviews are a powerful tool to help staffers understand how much they matter to the company’s success. The reviews are a great part of keeping great employees and increasing employee engagement. They also help you learn what your team needs from you to get better results and build leaders worth following.

 

Your Next Step
Getting started or learning more is as easy as admitting you don’t want to be doing it all yourself.

If you are passionate about helping leaders with their personal and professional evolution, visit www.executiveforums.com to learn how to join us! There are Renaissance Executive Forums roundtables meeting all over the map, and there’s sure to be one very close to you.

 

Or if you want a faster response, contact Amber Grundahl at 858-551-6600 and she’ll connect you with a roundtable in your neighborhood.

 

 

#CEOpeerGroups #CEOs #PeerToPeer #PeerGroups @RenExecForumsHQ #businessowner #leadership #ceo

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