About Performance Reviews
Which is the real purpose of performance reviews in companies and organizations? Some people may think it has something to do with having control over employees –and over their attitudes–. But, the key objectives of these initiatives are far from that. Actually, the main goals are to reflect and evaluate past performance, identify strengths and development areas, give and receive feedback, identify any support help when needed and reward and appreciate a good performance. The objectives are also to spot developmental goals, align personal goals with the ones of the company and to manage employees’ talent by sitting everyone on the correct seat regarding each experience, knowledge, and motivations.
So the main purpose is to reflect and evaluate the past performance of an employee’s to identify strengths and weaknesses and to spot developmental goals. After examining this objective, it becomes clear that performance reviews are win-win initiatives, both for the employee and the organization. For employees, it brings the opportunity of detecting their main strengths and talents, and to guide their career; and for the organization, it brings the chance to increase productivity by having its people well located, in the place where they will add more value, and motivated. For this to happen, sometimes it will be necessary to train the employees for new and different positions.
This initiative helps companies evaluate the human potential of their people in the short, medium and long term, and identify shortcomings in training. They let the organizations know the inventory of competences and make development plans for the future. They also help to stimulate productivity and improve relations.
But, which are the stages of a normal process of performance review? There are different approaches and theories. However, I would like to explain the one that we use at Intraway, which is giving very good results and a great outcome in terms of people and company results:
We consider four main stages: the first one involves the performance review of employees made by themselves, and their self-assessment. This phase gives them the opportunity to evaluate how they believe they have fulfilled their assigned tasks and how those tasks contributed to the company. Besides, it lets them highlight their own qualitative and quantified achievements and identify their own areas of improvement. A second phase has to do with the manager’s evaluation of each employee, and gives the opportunity to score the cycle performance and point out achievements and developmental opportunities.
Talking about the third place, we have a feedback stage, in which both the employee and the manager participate: it provides the opportunity for documentation and formal communication between the employee and the supervisor about the cycle performance. And finally we have the last phase: the development of action plans guided by new goals according to the information collected in the whole process and its appropriate analysis; in this stage the supervisor and the employee can set developmental goals that reinforce the organization’s strategic plan and, if there are areas of problem performance, action plans for improvement.
While defining these new developmental goals, it is important to remember that they have to be aligned with the business unit’s and company’s objectives. These goals may be individual or by group. But in any case, following Peter Druker´s SMART criteria, they should be specific (explaining what wants to be accomplished), measurable (quantifiable, with concrete indicators), attainable (achievable and real), relevant (worthwhile) and time-bound (grounded within a concrete time frame).
In a performance review, we evaluate competences, that is, the group of behaviors, skills and attitudes expected of each employee according to their role and work area. So as to organize these competences, and their importance, we could use the metaphor of the onion: the central layer should be occupied by the shared values of the company, that are key for Intraway employee’s day to day activities. The second layer would have to do with quality and process, and relate to all the competencies oriented to ensure compliance with all the company’s processes and procedure; the third layer would include the behavioral competencies (those based in the attitude and behavior of the employee). Finally, the fourth layer would be dedicated to role related skills (specific competencies for each role and area).
Unfortunately, this sort of processes is not free from mistakes and errors. The most frequent ones came from the evaluators’ miss-judgment. Their mental models, their evaluation self-perceptions, mood or even their relationships frequently influence how they evaluates an individual performance. In fact, it is possible to organize the most common mistakes done by the leaders into different categories. These categories were named by Bohlander and Snell in their book “Human Resources Administration” (Thomson, 2008) as “Common and Consistency Rater Errors:
- Halo effect: The tendency to make inappropriate generalizations from one aspect of a person’s job performance. This is due to being influenced by one or more outstanding characteristics, either positive or negative.
- Leniency: The tendency to evaluate all people as outstanding and to give inflated ratings rather than true assessments of performance.
- Central tendency: The tendency to evaluate every person as average regardless of differences in performance.
- Strictness: The tendency to rate all people at the low end of the scale and are overly critical of the performance.
- Contrast effect: The tendency for a rater to evaluate a person relative to other individuals rather than on-the-job requirements.
- First impression error: The tendency for a manager to make an initial favorable or unfavorable judgment about someone, and then ignore subsequent information that does not support this impression.
- Similar-to-me effect: The tendency to more favorably judge those people perceived as similar to the leader.”
Managers and leaders should be aware and conscious so as to avoid these frequent mistakes that could distort the sense of the whole process.
Besides, in a performance review, reviewers should go over accomplishments/assignments of the assessment period, and take into account both accomplishments and abilities. They should determine where expectations were met or exceeded. And they should also plan the meetings within the time frame given and be open to others opinions and to discussion.
The performance review gives the leaders an opportunity to communicate with their subordinates. To let it happen, they can ask for a self-evaluation (as it’ll allow them to see how the reviewed sees their own performance), invite people to participate, express affection, minimize critic, try to change the wrong attitudes (but not the person). Besides they should focus on the solutions of the problems, support the employees and define clear goals (and follow them regularly).
Jim Collins introduced in his Good to Great bestseller, a very well-known concept about First who – then What, referring that Companies may focus first in hiring, appraising and developing the right people in the roles where they can add more value, coach, guide, and help them in case there are not performing accordingly and to let go those employees that are not contributing the expected level of performance or that are not enjoying or sharing company values.
“Get the right people in the right seats and then they figured out where to drive it. The right people are the most important asset”
Team members would be the ones who will take the more important company decisions, that is why it is so important to manage talent development with great precisions on External Flow (who is going to get on the Bus and who is going to leave it) and Internal Flow (ensuring that the role assignment would seat the best people in the seats where they suits better)
Opportunity to grow
The performance review could be seen by the employees as an opportunity for change and growth. During the meeting with their supervisor, they should listen and seek to understand how others might have perceived their behavior and performance. In fact, performance reviews are the best moment to talk about their concerns, expectations, changes, and any other work-related matter with the supervisor.
On the other hand, evaluations should provide guidance to the employee to start the upcoming semester; from then on, it will be important to commit to the action plan discussed, as it will help them improve. Employees should take into account that salary reviews and position/tiers changes are also done taking into consideration the performance review. So it is important that employees take the entire process very seriously by completing a meticulous, objective and fair self-assessment, since it will determine their long-term career graph and development.
Summarizing, performance review is not an end, but a means to achieve a better level of productivity in the organization. And also to move forward towards new strategic goals.
- Wikipedia,. 2015. ‘Management By Objectives’. Accessed July 29 2015. https://en.wikipedia.org/wiki/Management_by_objectives.
- Dartmouth.edu,. 2015. ‘Common Rater Errors’. Accessed July 29 2015. http://www.dartmouth.edu/~hrs/profldev/performance_management/rater_errors.html.
- Collins, J. (2001). Good to great. New York, NY: HarperBusiness.
- Ulrich, D. (1997). Recursos Humanos Champion. Buenos Aires: Gránica
- Bohlander, G., Sherman, A. and Snell, S. (2002). Administración de recursos humanos. Madrid: Thomson-Paraninfo.