By Myrna Penny, Managing Director, PrintLink Canada January 30, 2006 -- Employee performance is a key to business success. When you hire an employee to fill any given job, you choose the candidate who offers the best potential to succeed. But just as you maintain your capital equipment to keep it running in top condition, your staff’s success is another component of your capital investment that requires a maintenance plan as well. And the best way to put that plan into action is by doing performance appraisals. They provide the necessary feedback and coaching to help employees be motivated, do better, and accomplish more toward making your company thrive. But just like any other tools, performance appraisals work best after you read the instructions and master their operation. With similar care and practice, you can transform the process of conducting them from a daunting task that many managers and supervisors would rather avoid into a versatile expedient for building and maintaining your company’s success. Be prepared Before you can even think about assessing an individual employee’s performance, several key components should already be in place: 1. Define the nuts and bolts. The best way to accomplish this is by providing a written job description or position profile to each employee. 2. Communicate expectations for job performance to employees, including any defined company or customer standards. 3. Be sure to understand each employee’s qualifications and ability to ensure your expectations are realistic. 4. Review and understand any legal or regulatory requirements. 5. As an evaluator, observe employees’ work execution and performance against established criteria frequently. Consider maintaining a “critical incident” log to track significant events and behavior. 6. Provide continual feedback to employees as appropriate to any given situation. It is much better to deal with a problem when it happens than to let it become a more serious concern. And although good performance is often overlooked, it is equally important to recognize it. When delivering feedback, both negative and positive, use specific examples to support your comments. The performance appraisal About 75% of North American companies conduct some type of regular review of their employees’ performance. Such appraisals work best as a reinforcement of—but never a substitute for—your ongoing efforts to manage staff performance. After all, helping your team grow is not a once-a-year task: it is a full-time proposition. However, there are many positive reasons to go one step further by formalizing your regular initiatives into a formal review, including: * Find out in more depth how people are doing in their jobs * Reinforce feedback to employees about how they are doing * Motivate staff * Create or revise job and personal objectives * Encourage employee feedback and dialogue * Strengthen the relationship between managers or supervisors and their direct reports * Determine training needs * Evaluate employees for promotion * Review employee compliance with government health, safety, and environmental regulations (essential in a regulated industry like printing.) * Identify areas that need improvement and what needs to be done to fix them There are many methods for conducting performance appraisals. At PrintLink we recommend the more structured approach of arranging a one-on-one meeting for each employee. As preparation, we encourage you to review the many excellent resources in the business section of your local bookstore—many with strategies, organizational plans, and sample forms that can save you hours of time in “re-inventing the wheel.” Briefly stated, here are some helpful guidelines: For each meeting, chose a place and schedule that are most conducive to constructive dialogue. Allow enough time for meaningful discussion. Respect your time together and don’t let anything intrude on your private meeting. Keep a positive spin on the exercise. Do everything possible to reinforce the two overall aims of: (1) providing motivational feedback and (2) finding ways to help both the employee and the company achieve their goals and make improvements. Use the opportunity to raise staff morale. Since job security is a concern for most employees, this is a good time to reaffirm their strengths and tell them how much you value their contributions to your business. A respected leader’s appreciation is a powerful motivator. However, you must also let them know when they are not performing to acceptable standards. Relaying criticism constructively is essential to an open, trusting communication dynamic. Avoid surprises! Significant events or behaviors, especially negative ones, should already have been discussed with the employee beforehand. Encourage two-way dialogue. An effective performance appraisal requires interactive conversation. Give employees the message that their opinions matter and will get a fair hearing. To stimulate discussion, ask open-ended questions such as: “What achievements are you most proud of this year?”, “Could you give me some details on …?”, “In your opinion what is the best way …?”, “Are there obstacles to your success on the job?” Coach people. When discussing problems, talk empathetically with employees in a way that helps them understand the situation and develop a plan to improve it. Your support will have a long-term impact on them personally as well as increasing their effectiveness to the organization. Identify and agree on goals for the coming year. The goals should be measurable and/or observable. They should be a stretch but also achievable. Tie these goals in with both: (1) corporate goals, and (2) personal value to the employee. Be prepared to sell your suggestions to staff who may not be receptive to your ideas or to listen to alternatives proposed by employees. It makes sense to develop a collaborative plan that works for both of you. Allowing employees to be part of the planning and problem-solving process aids their development and motivates them. People who take part in the process assume ownership of it. They acquire a personal interest in achieving the goals they help to develop. Summarize the results in writing, including your observations, the employee’s comments during the meeting, and any resulting action plans. Make two copies—one for the employee’s file and one for the employee. This documentation becomes a valuable tool for decision-making about such matters as salary increases, training budgets, and promotions. And in the event that it becomes necessary to demote or terminate an employee based on inadequate performance, you have the necessary documentation in place to support your decision. Always keep communication channels open Remember, in building effective working relationships and staff commitment to the company, formal performance appraisals are no substitute for regular, interactive communication with employees. At PrintLink, when we ask candidates who register with us why they want move from their present place of employment, many do not cite the salary they earn or the number of hours they work. Rather, the cause is often lack of communication. Employees express frustration because not only do they not know how they are doing, but they also don’t know how the company is doing or what changes are occurring in the company—and what they hear is not coming from their supervisors. We believe this pattern underscores the importance of “Management By Walking Around” to achieve spontaneous interaction with employees on the job. By talking face-to-face with people, you demonstrate that you are a visible and accessible manager and illustrate your commitment to engage in two-way dialogue. (The opposite is the “Seagull Manger,” who seldom interacts with employees and exhibits no desire to hear from them about what is really happening in the workplace. Instead, he or she occasionally swoops down to dump work or pronouncements on everybody, then quickly flies away.) Employee recognition programs and incentive-based compensation After the discipline of structured performance appraisals is completed, a strategically timed opportunity exists to recognize and reward employees for the value they have already brought to your company over the past year. The beauty of this timing is that it establishes a results-first sequence—plus there are practically an infinite number of ways to express tangible appreciation to employees within your budget. Now is the time to get creative with rewards. Here are just a few ideas: * Monetary bonus * Framed certificate of acknowledgement * Gifts bearing the company logo * Gift certificates for activities or products that include families or significant others * Use of a reserved parking spot for Employee of the Year * Tickets to industry-related events * Perks like a car allowance, cell phone, or hand-held organizer * Anything else you can think of. Just don’t forget to publicize loud and clear to all your employees that you do measure, recognize, and reward excellence. It’s never too late A company can adopt a system of annual performance appraisals any time—even businesses that have gone a number of years without formal and consistent performance reviews. The trick is to plan and conduct the appraisals with professionalism and care—and to be sure to review everyone in the company. The main thing to remember is that implementing and maintaining effective performance-appraisal and recognition programs yields far greater rewards than the effort and expense consumed by the process. If your company already has such programs in place, do you recognize some of the following benefits? Or if you company doesn’t have formal programs in place, can you envision operational enhancement through some of the following potential benefits? * More clearly defined job functions and expectations * An effective monitoring and measuring system for job performance * Increased productivity since employees do better, accomplish more, and are motivated to work toward making your company more successful * Results first, if your performance-appraisal system is tied to recognition and incentives * Improved staff retention due to better employee motivation * Supervisors and managers are more focused on staff performance * Increased customer satisfaction as a result of higher service levels from staff * Potential for improved profits The list can go on, depending on your company’s goals and direction, but to sum it up succinctly: Motivated employees are valuable assets, and performance appraisals help keep them motivated.