We all know that a performance evaluation provides important information to executives and managers about the health of the company's workforce—who is doing what, and how well? But, the real question is, how can you make the performance evaluation a meaningful experience for everyone involved, including the employee sitting in the hot seat?
Collect information from various sources
A performance evaluation should be a team exercise, not something done to an employee in a vacuum, by a manager or small business owner who may not even be located on-site or be well-informed about the performance being evaluated.
The manager should begin with having an employee submit a self-review as part of the performance evaluation. Self-reviews give employees a feeling of control—it offers them the ability to have their point of view heard by management. Sometimes, the manager may forget early accomplishments by an employee if they have a large team to supervise. Other times, there may be a change in the organizational structure and a new manager may be unaware of all of the employee's projects during the year—the self-review will give the employee the opportunity to inform or remind management of earlier accomplishments.
When submitting a self-review, the manager should have the employee include a list of task-related action items. This list may give the manager an insight into previously unknown employee interests and talents. An employee who enjoys what he or she is doing is much more apt to continue doing it—leading to a higher rate of employee retention.
Additionally, the manager should seek out other's opinions regarding the employee's performance. This is called a 360-review. This is helpful because sometimes a peer, co-worker, or even a client may provide additional insight into the performance picture beyond that of the immediate supervisor.
Communicate, communicate, communicate
Employees need clear and consistent communication from their managers to know how their goals are connected to the organization's vision, strategy and corporate goals.
Coaching is very important mode of employee communication as well as being considered a form of employee training and development. Managers should develop skills such as listening, observing, giving constructive feedback, providing recognition and teaching or developing new skills in order to get the most out of their employees. Effective coaching embodies these skills and reduces the revolving door phenomenon seen in many companies. Coaching must be tailored to each individual with specific learning styles and backgrounds taken into consideration. Whenever possible, the message should be adjusted to fit the individual employee and situation.
The process of coaching involves asking questions rather than simply giving instructions or pat answers. The intention is not to put the employee on the spot or highlight incompetence but to assist them by learning the process of problem-solving. An effective method of coaching involves asking open-ended questions such as: What does this data suggest to you? And, what are your recommended solutions? Asking questions, as well as pointing out other resources, is an essential part of coaching. It helps managers teach employees critical thinking, creativity, cost-benefit analysis and consequences of actions resulting in autonomous and more effective employees. The final piece of coaching involves feedback—generally speaking, letting the employee know what they have successfully learned and what they still need to learn.
Create a plan for the future
Once the previous year's goals and have been reviewed and evaluated, it is time to move on to the future — establishing employee goals for the upcoming year, identifying learning development opportunities and creating a career path within the department or organization.
Goal alignment is critical for your business' success. It ensures that each person within your organization can see the direction for the business and know how their job ties in to that direction. By aligning the corporate strategy and its execution to individual performance goals, your entire company becomes uniformly focused on moving toward the same vision of success.
The process of identifying learning development opportunities begins with an understanding of where your organization is now, in terms of employee skills, and where it needs to be in the future. At the same time, management is reviewing employees' current skill levels and identifying any gaps that exist between current abilities and what they need to be able to do, now and in the future. This can be an important factor not only in the employee's growth, but in the health of the entire organization because it allows for strategic succession planning.
Leadership and management training can be an important base component of succession planning. Additionally, providing employees with training on technical applications can enable companies to automate various aspects of production and delivery processes increasing efficiency.
By encouraging necessary employee skill development training, you are playing an important role in fulfilling your company's long term staffing needs. Companies that are committed to providing employees with training opportunities enjoy the benefits of improved employee satisfaction and retention and this can help your organization continue to move forward and become increasingly successful over the long term.
It is important for the employee to know that if work performance meets or exceeds expectations that he or she will be rewarded for the hard work appropriately through pay raises, bonuses or other non-financial rewards (additional paid time off, flexible schedule, training, positive feedback, recognition through awards, etc.) Pay for performance compensation structures not only account for individual, but also account for the working environment and performance of the team as well, encouraging the employees to band together in order to reach the common goal.
When holding pay-for-performance reviews to determine compensation, you must ensure that you can consistently and accurately measure performance for all employees. If a reward seems unfair or discriminating, the opposite result may occur—demotivation.
Case study: Mitsubishi Electronics Information Technology Co. Ltd. (MDIT)
MDIT is an information technology company, headquartered in Japan, whose goal was to integrate its performance review process with a career development process to track employee competencies including certifications and skill data. Their previous system was home-grown in three separate disconnected systems and the challenge was to incorporate all the information into a central location to provide an environment where managers had more visibility into employee performance and employees would be able to take the reins and manage their own careers.
MDIT worked with SAP SuccessFactors to implement a centralized Goal Management, Performance Management, Employee Profile solution with robust analytics and reporting capabilities providing an integrated solution for evaluation, development and talent allocation.
By incorporating the development plan within a centralized program with a goal management framework, MDIT managers and employees were able to optimize the performance review process, adding value and making it more efficient. The performance management solution included job descriptions, competencies and a certification list specific to MDIT in its online Coaching Adviser creating an environment in which managers were easily able to provide effective feedback to their employees. Additionally, the employees were able to see company-wide job requirements to make career planning decisions.
By taking the opportunity during the performance evaluation to review the employee's full work experience beyond the basic job description, including goals, career aspirations and the coaching and training necessary to fulfill them—the manager can make it a productive and therefore, very valuable experience for everyone involved.