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Evaluate Your Evaluations

Does your annual employee performance review process meet your expectations?

From the Executive Editor, Jim Thomas

For much of corporate America, and perhaps your practice, the first quarter of the year means it's time for the annal employee performance review. Many managers dread giving performance appraisals, and they have a passionate voice in Samuel A. Culbert, a business professor at U.C.L.A., who claims the performance review is “a pretentious, bogus practice that produces absolutely nothing.” And if you read these statements in his book, Get Rid of the Performance Review: How Companies Can Stop Intimidating, Start Managing — and Focus on What Really Matters (Business Plus 2010), written with Lawrence Rout, you'll see that Dr. Culbert is just beginning his rant.

Critics either applaud Dr. Culbert or give him a big thumbs down. But all agree that he does make some valid points, such as, why would you wait for an annual review to correct poor performance instead of addressing it immediately? And at the very least, his work does provide us with an opportunity to rethink how we measure performance.

Inspiring or discouraging?

A key questions business leaders ponder when examining performance evaluations is this: Does the evaluation process inspire employees to achieve, or does it leave them unmotivated? One of the key “unmotivators” is the five-point scale used to evaluate goals, where five equals “always exceeds expectations,” and one equals “never meets expectations.” Many employees will strive for fives across the board, but how do you always exceed expectations? (If you did, this would be your expected performance, leaving you with a grade of three.)

One solution is to replace vague measures (“exceeds expectations”) with quantifiable ones. So if an optician's goal is to increase sales of prescription sunwear, a score of one would equal a 0% increase, and five might equal an increase of 50% or more. Such goals don't rely on the reviewer's subjectivity, and they make it easy to link compensation with performance, which can be a powerful motivator.

The real test

True, not all goals are as straightforward as sales, and this is where your analytical skills enter the evaluation process. For example, how would you set goals for implementing electronic health records in a way that motivates employees? On this — and any other employee evaluation issue — I'd love to hear about your challenges and successes. Drop me an e-mail at james.thomas@wolterskluwer.com. OM