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Turning
Around the Least Favorite, Least Valued, but Necessary Process in Your
Organization
By
Jon Clemens
Employee
Performance Management Today: Typically a Burden
For most small to mid-sized companies,
the employee performance management process is one of the least liked and least
valued processes. While nearly every
company conducts performance reviews, and even sees the theoretical value of
doing so, most companies do not unlock that value. With surprisingly small and inexpensive
changes, employee performance management has the potential to radically and
positively impact your business.
For most, the employee performance
management (EPM) process is an administrative burden consisting of lots of
paper or email exchanges. There is
usually a fair amount of time spent trying to understand what needs to happen
and when, as well as simply reconciling versions of various reviews forms. Also, the process is not uniformly executed
within a given company, almost completely focuses on past performance, and does
not contribute in any meaningful way to driving future business results.
Most companies conduct annual or semi-annual performance
reviews primarily to:
v
Provide justification for salary increases or firing.
v
Avoid lawsuits.
v
Identify career growth opportunities for employees.
Missing
an
The EPM process can provide the savvy
business an opportunity to dramatically improve business results. This is especially true given that the
competition is likely still in the “standard practice” camp and not getting
much value from this process.
Even if your company only currently
conducts employee reviews for the reasons given above, it makes sense to get
the most possible value out of it. With
some simple modifications you can make this process easier to accomplish and
more relevant to the business.
Defining a Good Reason to Review
Employees
The first step in optimizing performance reviews
for your company is understanding what you should be getting out of it. These are generally broken into two
categories: Tactical and Strategic.
Figure 1:
Value to the Company of Employee Performance Management
Tactical Benefits
of Performance Management
There
are many tactical benefits you get from having an EPM process, all of which are
valuable to a company. It is these set
of tactical benefits that most companies will generally achieve if they have an
EPM process in place. As shown in Figure
1 above, these include:
v Forced Check In: Providing a standardized time that every
employee knows they are accountable for his or her performance.
v Documentation: Making sure that your documentation is in
order so that you can justify promotions or firings. This is of vital importance in case there is
ever an issue with an employee that turns into lawsuit.
v Pay for Performance: If you culture is a
meritocracy, having a system in place to document why certain individuals get
higher raises than others is a very important benefit that can help you
motivate employees to better productivity in the future and helps you recognize
those individuals that have contributed the most to the success of the business.
v Career Planning: An employee is more likely to stay within
your company if he or she believes that there is a path for them within the
company that helps them achieve personal goals.
Strategic
Benefits of Performance Management
It
is the strategic benefits of EPM that most companies are missing. By making a few small changes to your
process, you can reap the strategic benefits of EPM that will help you improve
business results and better compete in your market. These strategic benefits include:
v Increase Alignment Between Employee Effort and Company
Goals: If you can help guide individual employees
so that what they are working on daily/weekly/monthly is directly accruing to
the benefit of the team/group/division/business then your business as a whole
will become much more effective, efficient, and ultimately profitable.
v Higher Productivity: As employees have a better
understanding of what they need to be working on and as managers have more frequent
insight into the performance of employees, productivity can and will improve.
v Higher Engagement: An employee that is more
aligned with the company’s goals and his or her manager’s goals will be more
engaged. A more engaged employee is much
less likely to leave the organization and is more productive.
v Improve Communication: EPM tools can
be used that provide managers and employees the ability to keep each other
informed of expectations and performance as the year progresses, not just a
once-per-year event that is only backwards looking. This can dramatically improve productivity
as less frequent and less drastic course corrections are needed to keep the
employee on track. Additionally, increased
year-round communication also means less big surprises at the end of the year
so the overall EPM process is less confrontational.
v Improved Staffing Decisions: Having
access to more information on employees’ strengths/weaknesses, as well as
better visibility into what employees are working on will help managers and
executives get the right people on the right projects at the right time. This in turn will reduce churn within your
teams and improve effectiveness.
v Optimized Training and Recruiting: A good EPM
process will give you insight into which employees need help shoring up
specific skills and competencies. Having
access to this information also helps you focus your recruiting efforts in a
more focused, targeted way to get the right candidates in the door.
The
path toward achieving these strategic benefits is not hard, and does not have
to mean a drastic change to your existing EPM process. The rest of this paper explores how you can
transform your current process into one that lets you reap the potential
strategic benefits that are possible.
Getting
the Most from Employee Performance Management
Embracing
best practices to turn this process around does not need to be a monumental
task. If you address the six steps listed
below, you will be well on your way.
The
6 Steps to Optimizing Employee Performance Management
|
|
2. Link Personal
Goals to Team Goals & Team Goals to Company Goals |
Many well thought out EPM initiatives have failed
because the HR team or managers have tried to create the perfect process. In their well-intentioned efforts to make
sure nothing is left out, they end up designing an overly complex, confusing
system that is too time consuming, and cumbersome to execute.
It’s important to keep EPM in perspective
relative to the rest of the business.
Any process that ends up confusing employees and managers isn’t going to
be embraced or highly valued. While, it
is a tool that can yield tremendous value for a company, you can get these
benefits without significant time required by participants. A good EPM system has three characteristics:
1.
It should fit into employee and manager’s workflow.
2.
The required steps from participants should be intuitive and
administratively easy to complete.
3.
The result should provide direct and tangible benefit to participating
employees, Managers, and Executives.
A process that is easy to understand, easy to
execute, and intuitive is more likely to be embraced within your organization.
Here
are some best practice ways to keep Employee Performance Management simple:
Automate the process: There are many tools
out there, such as the Employee Performance Management Solution from Jakoba
Software (www.jakoba.com), which can help
you achieve your EPM goals. These tools
provide a way to proactively notify people when action is required, have an
easy/intuitive workflow, include a central electronic location for all relevant
forms and documents, and offer a ready-to-use best practice framework for
executing this process.
Standardize the process: Have a common set of expectations and
standardized steps to complete reviews.
This helps people know exactly what the next steps in the process are at
any one time. It also enables managers
to be the first line of defense with employees who ask questions about
completing reviews.
Have ideally 5, but no more than 10, ways in
which any employee is evaluated: Evaluate
all employees in the company against a similar set of high-level competencies,
but vary the expected behaviors under each competency based on role. This enables you to evaluate each person in
the organization against job-specific criteria and helps keep the total number
of evaluation criteria manageable for each person. Again, a good automated tool can help manage
this so that this is simple to maintain and execute.
As a quick example, one of the categories of
evaluation might be Customer Satisfaction.
Each role in the company would have specific behaviors/traits that
relate to Customer Satisfaction, and each employee would be given an overall
score for Customer Satisfaction based on how they exhibited those
behaviors/traits relative to what is expected for their role. This provides flexibility for managers to
give each employee a good or bad score that can really carry weight with the
person’s overall review score.
Also consider that if you are going to
increase the overall emphasis on the definition of goals and how those goals
link within the organization, you might have Goal Attainment or Accomplishment
of Objectives as one of the evaluation categories.
Conduct all reviews at the same time within
the organization: This provides a single time
when the organization can focus on EPM.
This is important so that executives can offer meaningful support and so
that the organization can collectively see the value when reviews are
complete. Additionally, it provides a
single point in time when training and corporate communications can be
delivered related to EPM. By contrast,
companies that conduct reviews on employees’ anniversary dates continually
train employees since most people do not tend to remember the EPM process from
year to year.
Link Personal Goals to Team Goals & Team
Goals to Company Goals
Recent studies published in the Wall Street
Journal[1]
have shown that most employees today are not “engaged” in their work. In fact, upwards of 70% of employees are
typically disengaged. 
This has a huge, negative impact on worker productivity, employee
turn-over, and bottom line results.
When the question is posed to executives,
“What is your company’s most important asset?” – The answer is invariably “Our employees”. However, with the high level of employee disengagement
most of the company’s “most important asset” is ready to walk out the door
given the chance.
Employee Performance Management is a key tool
to help better engage employees. If
goals are directly linked throughout the organization, employees clearly see
how their daily activities directly impact the company’s ability to achieve its
overall goals. One of the most important
factors in engaging employees is to directly link their work and overall company
strategy. This is closely followed in
importance by an employee’s understanding of how important his or her job is
relative to overall organizational success.[2] Therefore, it is absolutely critical to make
sure goals are linked throughout the entire company.
One important aspect of creating a linkage
between an employee’s efforts and corporate goals is to increase the level of
transparency so that an employee or manager can drill up or down to see how
each layer of goals relates to one another.
This is a necessary step to ensure the benefit of having employee and
team goals link throughout the company.
Additional benefits of added transparency include:
·
Increased motivation for managers to enter team goals in a timely
fashion.
·
It helps solidify the importance of setting and sticking to goals.
Track Skills of Existing Employees
For the mid-sized firm, there is tremendous
value from tracking skills within the company.
Smaller firms can keep track of who in the organization have what
skills. But as firms grow larger (generally
larger than 100 
employees) this becomes very difficult to track. Having immediate access to information such
as which employees speak French, which have healthcare industry experience,
which know Java programming, or other hard skills can yield tremendous benefits
and can directly impact a company’s profits.
In addition, not many companies mine this information, so having this
insight can provide a competitive advantage.
In the 1990’s there was a big push in
corporate
Embedding a quick assessment of skills within
performance reviews provides the organization this knowledge. However, keeping in mind the goal of keeping
reviews simple it’s not generally necessary to force assessments/ratings on
skills. Since performance reviews must
be done anyway, it is a great way to reap the benefits of tracking skills
without undue burden. This approach also
helps to guarantee that skill proficiency levels are updated regularly.
Provide Additional, Useful
Insight to Managers and HR
As the 
right person on the
right project at the right time.
Additionally, understanding both the strengths
and weaknesses from a skills and competencies perspective helps companies
optimize training budgets and finely tune recruiting activities. Providing this level of insight will:
·
Help tap the right individuals for specific work.
·
Ensure that organizational strengths and development activities align
with critical skills needed to accomplish overall goals.
·
Better inform hiring and firing activities when necessary.
The employee performance review effort is traditionally a time to
evaluate how an employee has done over the past year. However, to get the most out of this effort
it is critical to focus on the year ahead as well. It is a key time to make sure the employee
has a good understanding of what they will need to do to make themselves, the
team, the group, the division, the company most successful.
Many companies include a career development
component during employee reviews. This
is important, and should not be overlooked.
However, careful attention should be paid to employee goals for the
upcoming year, why these goals are set, and how they accrue to helping the
company as a whole. As goals change due
to shifts in areas of responsibility or shifts in business needs, the employee
and manager should have a way to quickly modify planned goals so that they are
always reflective of the work to be performed.
Additionally, it’s advisable to help employees set concrete targets for
skills and competency proficiency levels relative to their current job or
future career aspirations within the company.
Increase Communication between Managers
and Employees
This section could have been titled: Make it a Year Round Process. However, that is a scary concept for companies
coming from a mindset where EPM is universally disliked. However, once 
this process is easy-to-use and obviously valuable for all involved,
then it is important to adopt frequent check ups throughout the year to review
employee progress.
With
a year-round approach there is still a need for a once-per-year (at a minimum)
performance review as employees and managers alike need a forcing event that
can be the target date for goal completion or demonstrated progress. However, if employees and managers are
routinely able to synch on progress throughout the year, the year-end review is
less burdensome, less prone to surprises, and more focused and valuable for all
involved.
Summary
The employee performance management process
should be viewed as an opportunity to help you fine tune, identify, deploy, and
develop the talent in your organization in an optimized way to achieve your
strategic objectives. However, in most
companies the structure and administrative overhead of the reviews get in the
way of achieving these goals. With some
slight changes, and by using automated tools that build on a best practice
framework, the effort expended in this area can yield tremendous business
results.
About
Jakoba Software
Jakoba Software’s Employee Performance
Management Solution replaces paper and e-mail based employee review processes
with a simple, but powerful application.
Automatic reminders and electronic document routing help managers and
employees complete evaluations on time.
And, at the end of the review cycle, all of the employee review ratings
are automatically calculated and aggregated eliminating the additional work and
potential mistakes from re-keying scores into another application. In addition, beyond automation the Jakoba
Solution also includes a best practice framework that enables companies to link
individual goals to team and corporate goals, track skill proficiencies of
employees, and other valuable tools so that companies can get the most out of
any EPM effort.
For more information on the concepts outlined
in this whitepaper or how Jakoba Software can help you transform your Employee
Performance Management process please visit us at www.jakoba.com or contact us at info@jakoba.com.
This
whitepaper is for informational purposes only.
Jakoba Software MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS
PAPER.
Copyright
2007 Jakoba Software Inc. All rights
reserved.