My best HR management idea: A performance-review system that really works
March 5, 2009 by Jim GiulianoPosted in: In this week's e-newsletter, Incentives, Latest News & Views, Management, My best management idea, Performance appraisals, Records documentation, policies
When Elizabeth Duffrin got the word from her bosses that the company needed a better way to evaluate performance, she developed one — and got great results.
Her story:
The tough message came down from upper management: We were in a dogfight with our competition, and every part of our operation – including performance reviews – had better contribute to improving our operation.
Our performance-review process had been pretty much by-the-book: once a year, with a raise determined by the rating in the review.
It was clear, however, that the reviews weren’t leading to improvement. We decided that cosmetic changes weren’t going to work. We had to take some bold steps. How bold? How about dumping annual reviews altogether? We did that – and more.
Shorter is better
When we made the decision to get rid of annual reviews, we knew we had to find a results-oriented system to replace it.
Our answer: monthly reviews.
We didn’t call them that; the new name was “monthly goals evaluation.” Yes, monthly. That gave us quicker and better information on when we needed to change and make improvements in any part of our operation.
OK, so we knew how often we were going to do appraisals and why we were doing them that often. But we also had to figure out what to appraise and how to measure it.
Measurement matters
When we analyzed our performance standards under the old system, we realized most of the standards were just too soft – there was little or no way to measure improvement or dropoff. We needed numbers – hard, realistic numbers.
That’s what we told all our supervisors. They:
- had to come up with monthly numerical goals for each employee, and
- involve each employee in setting those numbers, so no one would feel as if the goals were dictated.
One more thing we told them: No one will suffer for not making a numerical goal. Instead, we’ll look at why the goal wasn’t met and what we need to do to meet it. Then we’ll determine raises based on overall progress during the year.
The results
Did it work? Well, after a year under the new system, we increased revenues and surpassed our original goals for profitability.
Further, we didn’t have to lay off anyone. We found our increased productivity allowed us to do more with fewer people, meaning we were able to use attrition to cut employment.
And now, monthly goal evaluations seem as natural to us as the sun rising every day, rather than some big change.
Elizabeth Duffrin, Reno, NV
Tags: appraisals, performance, reviews
March 9th, 2009 at 12:00 pm
This article does not mention what business this company is in or how many employees they have.
March 9th, 2009 at 1:24 pm
Nor does it say how the managers like the process. I guarantee they don’t. I, too, don’t like annual reviews, but if you educate your managers to do things properly and within an easily managed system, it’s not too bad. I encourage managers to keep a tickler file on each employee so that when they have to do the reviews, all they do is go to the file and get the info. That way, it allows them to remember details over the course of a year. Monthly reviews – if you have more than a few employees – would seriously hinder a manager’s job which is to MANAGE a department. Not stick behind a desk doing reviews all the time.
March 9th, 2009 at 1:29 pm
In agreement with both prior comments. This may work in desk-type jobs, but if your managers hands-on, field type supervisory work 85% of the time, the monthly review becomes yet an additional administrative burden. Instead, I have always been a proponent of the one-minute management principle. An annual evaluation with goal setting for new year, and as many as may be necessary quick, one-second type coachings, recognitions, show and tell, or whatever. Only team members that experience significant obstacles or that have been reassigned to a different position then are subject to anything other than a once a year formal appraisal system. My two cents, anyway.
March 9th, 2009 at 3:46 pm
We have a hard enough time getting managers to do annual reviews on time!!! How do you get the buy in from managment to do these monthly? I’m sure they are shorter and more relevant, but the administrative burden on the supervisors seems large. Also – how are salary increases incorporated into this? Still on an annual basis and for an average of the 12 month ratings?
March 9th, 2009 at 5:01 pm
Again it highlites the issue of COMMUNICATION..seems to solve 90% of the problems. This process forced communication. If you have monthly goals and you miss..how do you talk about meeting it? Setting monthly goals is tough(depending on the industry and job type). This seems very short term and not having the ability to acheive and see the big picture, BUT, if it worked because of the process…great!!
COMMUNICATION is wonderful and sois “paying attention” to your employees. It is really so simple!