Singing the praises of performance appraisals
By Jenny C. McCune • Bankrate.com

Performance reviews used to be the Rodney Dangerfield of HR tools. They got no respect.

Employees were graded, paperwork was completed and the document generally went "down a black hole never to be mentioned again," says Leslie McKeown, author of The Complete Guide to Mentoring and Coaching.

A funny thing happened, though, when the economy soured and companies were no longer fearful of a worker shortage. Performance measurement came back in vogue. Employers began using worker evaluation as a tool for deciding who to lay off and who to keep.

In less dramatic circumstances, regular worker reviews can improve a company's productivity.

"Performance appraisals are the single best way that a small business can move from Mom and Pop to a serious enterprise," says Dick Grote, author of The Complete Guide to Performance Appraisal.

Keeping communication going
Assessments are more important to small companies than major corporations, adds Grote, who also is president of Grote Consulting in Dallas. Smaller concerns are dependent on a smaller pool of employees and the performance of each worker matters more.

"When you're running a business with 12 employees, each one represents one-twelfth of the entire organization and each one better be doing a good job," he says.

Regular reviews can help boost each worker's critical performance because the process increases communication. The boss tells the worker what's expected and the employee then gets graded on how well the agreed-upon job parameters are met.

Everything's out in the open. Open communication leads to better operations.

"You can use performance appraisals to enhance the people you've already got so people understand what they could do better," says McKeown whose San Francisco consulting firm Deliver the Promise advises companies on employee development.

"It also keeps good people and gives good people the feedback they need to do their jobs better."

Perfecting performance reviews
That's the theory. When it doesn't happen as planned, it's usually because companies don't lay the appropriate groundwork.

Before you can review an employee's performance, you need to have a description of what constitutes good performance, McKeown says.

Two other mistakes companies make:

1. Not taking time to explain the process to employees, including the managers who do the appraisals, and
2. Not considering performance reviews a continuous process.

Grote likens the cycle of performance appraisals to a clock. High noon is performance planning when a supervisor meets with a worker and plots goals, objectives and development plans for the year. Three o'clock is execution, putting those plans in place. Six o'clock is the actual assessment by the employer of the worker's progress. Nine p.m. is when the boss and employee discuss the assessment face to face.

"The biggest problem is that most people think about six and nine and nothing else," Grote says.

Other than keeping to the clock, the biggest thing that small-business owners need when instituting performance reviews is courage, Grote says.

"It's the courage to tell people the truth," he says. That's the hardest part of the whole process, but if you do it, both you and your employees will be better off, the HR consultant says.

A working example
Bastien Architects, a 14-member architectural firm based in Tustin, Calif., began employee appraisals a little over a year ago when Jim Kier joined the staff as director of architecture.

First, an employee rates himself based on eight questions, such as "What were your goals for last year?" "Did you achieve them?" "Do you have the support and resources that you need?" "Describe what improved or needed resources that you need to do your job?"

After the employee fills out the questionnaire, the worker meets the supervisor and they fill out a similar set of questions together. They then sit down and compare their answers and come to an agreement over past performance as well as future expectations.

"One of the important benefits is that it allows an opportunity for employees to communicate in a more comprehensive manner about their needs and wants," Kier says. "In return, employee development advice can be given and a career path mapped out in a productive dialogue with the employees."

McKeown recommends companies "start simply and start small." Too many employers plunge in full speed ahead and screw up. The best way to get the most out of performance reviews is to roll them out over time and adjust your approach as you learn more, in much the same way that employees can learn from their performance appraisals.

When's the best time to start working on performance appraisals? According to Grote, "Right after you finish reading this story."

Jenny C. McCune is a contributing editor based in Montana.

-- Posted: July 31, 2002