Why don’t appraisals get done?

Since setting up FeMan Consulting in September 2005, I have often been asked about appraisal / performance review processes.  Having worked in larger organisations, I have seen a lot of unwieldy complex systems that take vast amounts of time whilst not delivering a direct or even indirect benefit to the bottom line.  In this article I hope that I will give some direction to businesses who may be struggling with an existing system or wanting to decide whether introduce one.

 

Before starting to decide on your performance review process, there should be one over-arching question to be asked – why are you doing performance reviews?

 

There is no (direct) legal requirement to do so.  If it is only to meet FSA competency standards then you probably don’t need a performance review system.  Are you doing it because you just think you should because it was done at other places you worked?

 

The best reasons to do performance reviews are because you want to ensure that everyone is focused on how they are performing against their own objectives and how this feeds into meeting the wider company objectives to improve the bottom line.  It is fairly obvious to say, but people perform better when they know what is expected of them.

 

Having answered the first and most important question, the next three that should be asked before you go any further are:

 

  1. Does your business have a clear set of objectives?
  2. Do all employees in the company know what all of these objectives are?
  3. Are all of the objectives either very specific (eg a financial target) or detailed enough to avoid ambiguity (eg ‘increase revenue by X%’)

 

If the answer to any of these three questions is not a clear ‘yes’, then I would suggest your business is not ready for a performance review process.  If question 1 is no, then how can anyone have personal objectives which will help drive the business?  Question 2 highlights the importance of everyone in the business understanding what they are supposed to be doing and why they are supposed to be doing it.  Question 3 ensures that the business objectives are clearly targeted rather than a more woolly ‘mission statement’ or vague set of ‘business principles’.

 

Most businesses can only increase their profitability in four ways; charge more for what they do, improve the output / performance, increase the revenues or reduce the costs.  Everything else is a derivation of these.

 

If you have a clear set of objectives for your business how do you then want to measure employees’ performance?

 

I described earlier my experience of complex and unwieldy systems for performance processes.  Even if your end result may be seen by some as ‘a bit too simple’ I believe this will work better than one which is seen as ‘a bit too complex’.  The process should be developed along these four guidelines:

 

  1. Each team / department / division to have objectives all of which are linked to company objectives;
  2. Every employee has objectives which are linked to their team / department / division objectives (and if the above has been followed this will link to the company objectives);
  3. Every employee is shown their objectives by their manager / supervisor / team leader at the start of the review period (usually a year) and any discussions about them can take place upfront;
  4. Every employee and every manager /supervisor / team leader have an equal responsibility to look at these objectives through the year, to discuss them on an ongoing basis and to keep examples of where objectives where met or where missed.

 

If these guidelines are followed, then the more formal review at the end of the year should be a confirmation of the discussions (formal or informal) that have taken place throughout the year, there should be no surprises for either reviewer or reviewee and each objective will have a list of examples next to it which illustrate the employee’s performance against that particular objective.

 

I do not propose enforcing a quarterly or mid-year review meeting but you may think differently.  Before you impose this step, once again ask yourself why you are doing so and unless there are concrete reasons in favour, then don’t make it compulsory or overly formal.

 

Anyone who manages other employees should probably be conducting performance reviews as an objective (which should link to company objectives because if you aren’t measuring employee performance against company objectives how can you tell if they are being met?) but again, I would steer clear of making it a tick box exercise that people undertake and then ignore for a year.

 

When you have constructed your process, answer four more questions:

 

  1. Look again at all of the personal objectives.  Are they directly linked to company objectives so the individual will know what they are doing and why?
  2. Does the list of personal objectives really clarify what the employee is supposed to do on a day to day, week to week basis?
  3. Is it simple?  Could it be a little simpler?  Could you do with a couple less objectives?  Edit it a bit more before going further;
  4. Does the whole thing hang together?

 

It is likely that if you have got this far, you may decide there are other nuances to your own process that will work for your business.  As long as you are ruthlessly self-critical about not over complicating the process this is fine BUT you should be aiming for a process which ‘seems too short’ for all involved.  It should be an affirmation of the discussions throughout the year between employee and manager.  If these are unlikely to take place, then even the best performance review process won’t rectify the situation.

 

You will also need to decide what constitutes good performance, whether you need to set any benchmarks and the old favourite, how do you handle poor performance?  There is also the debate to be had about whether you want to force rank employees doing a similar role, will this be linear or a bell curve etc etc.  All of these issues are secondary to the main process and once again, in many cases will be too making the core aims too complex.

 

Throughout this article I have repeatedly emphasised making the process simple.  This will be an anathema to many HR types who will espouse 360 feedback loops, online questionnaires that take an hour to complete, global programmes designed by ‘experts’ and output reports that run to 20 or more pages.  I have never known a performance review process that is fully completed by all involved – and even if they were, I doubt I would ever have heard someone say “that process was too simple”.  If you find that every performance review has been completed, the individual employees all know their objectives and every manager / supervisor / team leader can assess the performance of their team based on detail and evidence; yet the participants all say this it was too simple, then maybe you can reassess your design.

 

In my opinion, discussions about personal development and future prospects for the employee are best handled outside of this process.  These discussions may well refer to the matters that arose in the process but keep the two matters separate.

 

When making all of the above decisions, remember that management is about giving direction to employees, ensuring they are motivated and getting the best from their team.  If they aren’t doing this, what are they doing?

 

One final thought – if the document which records a performance review is longer than two sides of paper, chances are it is too long.

 

If you would like to talk more about how a performance review process may help your business achieve its objectives, please let me know.  Additionally, if you have any comments about this article I would be interested to hear them.