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This podcast is for small to medium business owners. You've got a lot to gain, a lot to lose, and business is tough; there's a lot at stake. Business acumen is what every business owner needs, it will make a profound difference to your business.
This podcast will cover marketing, positioning, branding, lead generation, selling, negotiating, customer service, managing staff, managing finances and accounts and much more.
https://www.businessveteran.com.au/
mark@businessveteran.com.au
Employee performance reviews - should you bother?
Yes you should bother! They are really important and let me explain why.
We all know the reputation of the performance review everybody hates them they nerve wracking for both manager and employee. No one's quite sure what to put in them. Everyone's terrified of stepping on some toes. The whole thing turns into a box checking exercise that everyone hates, is glad when is over, and it doesn't add any value to anyone or the business.
However done properly they are an essential leadership and management tool. Everybody wants to know how they're doing. Now feedback either via metrics or some other way needs to be done weekly. Everyone needs to know how they're doing on some keep metrics such as hours billed, sales made, leads generated, customer happiness etc So the six monthly, or annual performance review is not the only feedback.
I had a client who had only one employee that they sat right next to. They felt that a formal performance review would be kind of weird given they talk to them every day. But I encouraged him to press ahead and it turned out to be most worthwhile.
So why would you do this annual review when you are already providing so much feedback to the employee and talking to them regularly anyway? Well simply because the feedback that your employees are getting weekly is narrowly focused and really only applies to the previous week at best. At some point we need to step back and look at the big picture. You know you only really see change happening when you look back at least six months, otherwise you can feel like you're not moving very fast at all.
So we need that big picture feedback that looks back six months or a year.
Next let me dispel some myths. Many employees think that the performance review is tied to their pay review. Let me ask you a question, if you paid your employee twice as much, would they achieve twice as much? I suspect not. So performance is not attached to pay. So what do you pay for? Well remember employees are in a market for their services and skills, so you pay a market rate, or at least a band, for that employee's particular set of skills and experience. So I would recommend you pay a good rate in that band and expect good performance. The review is purely about their performance. If the employee wants to be paid more, then the conversation becomes about what other roles you might have, or what skills they might gain to add more value to the business.
One tip I would offer you is to have your performance reviews a month or two before your pay reviews. Even though I've just said they're not connected, a performance review done well will help the employees understand if they are performing adequately in the role they have now, and prospects of promotion. Not giving employees feedback creates a vacuum and the employee will fill that with all sorts of nonsense.
The next tip I would offer you is to make sure these reviews are scheduled well in advance. The message to employees is that they are simply a scheduled process, and have nothing to do with anything that was going on in the business at the time. Especially if these reviews and/or employees are new to your business, it can be a stressful process for some employees and if they've recently dropped the ball in some minor way and then suddenly get a performance review sprung on them, they could get the wrong message.
Now, the performance review agenda has three parts. Part one you tell them how they're doing. Part 2 they tell you what they need in terms of resources and environment to achieve the outcomes there responsible for. And Part 3 you talk about the employees career, and what opportunities there are for the employee to advance within the business.
Some organisations, often government departments, have this crazy idea that the employee rate their own performance, the employer rates the employee's performance, and they get together and compare. I think this is a thunderously dumb idea for two reasons. Firstly there are some people who think they're legend in their own lunch box, and will rate themselves very highly. Still others will think that this is somehow tied to pay, want a pay rise (and hey, who wouldn't want a pay rise), and so push their rating as high as possible in the hope that it works. Now you may not rate their performance quite so highly, in fact there may be a number of areas of concern. So you get these two different scores together and now you have an awkward conversation about just how you don't see their performance quite the same way and the employee is forced into a humiliating backdown.
So let's get real here - this is not a symmetrical relationship this is not two buddies peer reviewing. The money flows one way, from you to them. You, the boss, are telling them what needs to be done for the business in terms of an outcome - that's the role of the boss. You the boss are responsible for defining the outcome and making sure that it's measured and then communicating that measurement to the employee who's responsible for achieving the outcome. So it's very simple, you tell the employee how they're doing.
This doesn't mean it's a one way conversation by any means. In an employer/employee relationship, not only do you give the employee a wage and a required outcome, you also give them the tools, equipment, resources and working environment to achieve that outcome. So in Part 2 of the meeting, you want to hear feedback on whether the resources and environment is working for them, and what could be improved. An obvious example of a resources there are given is how much time they're given to do the job. You both want to succeed and collaboration is the best way.
Now, you, are building a business, but on the other hand, your employee is building a career. You have different long term visions. The magic happens when these things can align.
Which brings us to part three of the meeting. This is your opportunity to be updated on the employee's thinking around how their career is going and looking for opportunities, such as training, which will help both the business achieve its vision, and the employee advance their career.
So there you have it. The performance review is a wonderful and powerful opportunity to have an authentic conversation with your employee. I have done the man I have trained managers to do them and when they are done properly, the employees love it. They might go in with some trepidation but most of them come out delighted to have had the full and frank assessment of their performance - to have their good areas recognised, and areas for improvement flagged and supported.
What I haven't covered is just how to measure their performance in a full spectrum way and feed it back to them which will be a topic for a future podcast. As always if you'd like to discuss anything or need help with improving your own performance reviews make contact, my contact details are in the podcast notes.
Speak to you next time.