Is Your Performance Review System Outdated?
By Doug Staneart

Summary: "Old" systems of performance reviews tend to be based on paternalism and criticism, and that's one reason they fail so miserably. They are outdated. New systems of performance review can be created by focusing on constructive and useful feedback to help employees improve in the future, rather than focusing on errors in the past. Read how.

One of the most common complaints we hear from interviewing employees in the construction industry is, “I never get useful feedback about how I am doing my job.”

Most companies today use a performance appraisal system or a performance review system that was invented decades ago in a much slower business economy. So data that is given to employees in annual, semi-annual, or even quarterly reviews tends to be outdated by the time it is received by the person who could benefit most from the information—the employee.

In addition, the measurements that are in place in these appraisals are typically arbitrary and subjective. When I was in college, I had an internship with a major Fortune 500 company. At the end of the 3-month internship, my performance was reviewed by the other members of my department. All of these people thought that I was an exceptional intern, but they had to judge my performance based on the same five-point scale that they were judged on. I still remember the ache in the pit of my stomach when I saw all of the threes and fours on the document. My boss explained to me that very few people ever received fives, as that would leave little room for improvement. After reading and re-reading the document, I was left with the same question that many employees today are asking: Did I or did I not do my job well?

In today’s fast-paced economy, these traditional systems just don’t work. Performance appraisals should be short, no more than ten-minutes, and should focus on the results expected from the employee’s current position, and how effectively the employee’s current goals are being met. For example, a Project Manager may have a number of different results that are expect from his or her performance. Is the project on schedule? Is it under budget? Are the company quality standards being met? Is the customer satisfied? Are employee expenses in line?

All of these results can and should be measured consistently. Intangibles can also be measured such as morale (through employee surveys, workplace absenteeism, and turnover,) leadership (productivity, development of people, and problem-solving skills,) and work ethic (are goals consistently met, are goals challenging, and are project completed timely.)

With this system, a manager can schedule monthly “mini-interviews” taking just minutes. These sessions are valuable because they open lines of communication and they give the manager a chance to update the progress of the employee in different result areas. If the employee is performing above expectations, then this is an opportunity to shine and set new goals, and if the employee is performing below expectations, then corrective actions can be taken.

These “mini interviews” make annual appraisals a piece of cake, because the employee and the manager now have as many as 12 separate measured checkpoints along the way that show how the employee has performed over the last year. This annual review now has documented facts to base an appraisal on. The employee sees that he or she was on budget 95% of the time versus receiving a four out of five, or that he or she is ranked in the 90th percentile of managers within the company based on leadership.

This system, although not foolproof, can greatly reduce the stress and tension associated with Performance Appraisals. Companies using this type of system show dramatically higher productivity within months of implementation.

Doug Staneart, doug@leaderinstitute.com is CEO of The Leader’s Institute, www.leadersinstitute.com, specializing in leadership, public speaking, and team building training for individuals and groups. He can be reached toll-free at 1-800-872-7830.

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