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WHY PERFORMANCE EVALUATIONS DON'T WORK AND WHAT TO DO ABOUT THEM

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The 10 Things Employees Should NOT Focus On To Get A Raise
The 10 Things Employees SHOULD Focus On To Get A Raise
The 10 Ways Bosses Ruin A Performance Evaluation
The 10 Ways Bosses Provide Effective Evaluations

It is a business myth that Annual Performance Reviews enhance performance. More often than not, the opposite is true. Performance evaluations have multiple problems revolving around both what employees focus on and how managers handle the evaluations. In this special report, I outline what employees should and should NOT focus on relevant to their performance reviews, and what makes for a poor evaluation and a good evaluation. This report is based on more than a thousand hours of observing, interviewing, coaching and facilitating executives in a variety of industries and scenarios.

The 10 Things Employees Should NOT Focus On To Get A Raise

Relationship with their boss
The determining factor of whether or not an employee had a successful year has nothing to do with whether or not they were friends with their boss.

The number of activities they do (i.e. the number of meetings they attend, the number of e-mails they get, the number of voicemails they answer.)
The infatuation many employees have with internal activities is not directly related to the value that customers receive.

The number of hours they work.
In many cases, working too many hours can reduce the quality of customer service that is provided. Think of the overworked retail clerk during the holiday season. Some time during that 75^th hour of work in a week they can really lose it.

The difficulties in their personal life.
When employees expect a favorable rating because they had a difficult year personally, they have truly connected two completely unrelated items: their personal life and their work performance.

The difficulties in society.
This is a corollary of the problem mentioned above. September 11th was a horrible day, but it does not constitute giving someone a favorable rating if they don't deserve it.

The number of years they have been with the organization.
Longevity does not equal quality of work. Of course, neither is brevity an excuse for poor performance. Performance needs to be evaluated within the context of the expectations for that person and their individual role within the organization.

The additional activities they do outside of their area of responsibility.
Volunteering for additional activities can sharpen a person's skill level and add value to the organization. However, the employee must take responsibility for not overloading their schedule because "doing too many things" is not a valid reason for poorly performing the main duties required of them.

The idea that everyone should get a bonus.
Giving everyone a bonus hurts an organization in two ways. First, it demotivates the top performing employees who quickly learn that doing higher quality work is meaningless. Second, it reinforces poor efforts from mediocre performers because they will see no reason to improve.

The tradition that everyone has always received a bonus.
Some traditions simply need to die. This is one of them. Giving everyone a bonus is essentially the same as giving no one a bonus except that it is more expensive.

The fact that competing organizations give out bonuses to all their employees.
The poor habits of other organizations should never be used as the impetus for repeating them in your organization.

The 10 Things Employees SHOULD Focus On To Get A Raise

Their impact on the customers' highest priority outcomes.
This is the key to getting a good performance evaluation. At the beginning of the year, boss and employee clarify and agree on the highest priority outcomes. The basis for the performance evaluation and any raise is then based on the employee's contribution to the achievement of these outcomes.

How well their activities align with and support the organization's strategy and priority outcomes.
Again, this is the role of the employee: to proactively support the strategy and generate better results.

Their impact on an internal process that improved efficiency and effectiveness.
The employees who improve efficiency and effectiveness are truly raising the bar. They are taking on the responsibility of improving the future of the organization. They deserve a raise.

How they retained customers or attracted new customers.
Ultimately, the function of a business is to create and retain customers. Every business shares this responsibility. The employees that make it happen deserve recognition and reward.

How they improved revenues.
At the end of the year, a key indicator of corporate success is increased revenue. You cannot cut costs forever in order to grow profits.

How they improved market share.
Even in a very difficult economic situation, one way to get an understanding of success or failure is to measure market share. The employees that help attract business away from competitors are the employees you want to keep.

How they developed other employees to take on greater responsibilities.
Any employee that influences other people to perform at higher levels is a leader and needs to be rewarded.

How they reduced costs while retaining sales.
The truly innovative employee constantly searches for ways to deliver more quality and value with lower and lower investments of time, energy and money.

How they resolved a problem that was hurting a customer relationship.
Employees who can turn a negative customer situation into a positive one actually generate more business than if there had never been a problem to start with. They should be rewarded.

How they reduced the time spent on internal issues and increased the time spent on adding value to customers. (i.e. eliminated an internal meeting and increased the time in the field with the customers.)
"The 90-10 Distribution Formula" says that 90% of an organization's time, talent and energy should be directed toward creating and adding value to customers. Any employee that can increase their organization's percentage of internal efforts directed toward external results should be rewarded.

The 10 Ways Bosses Ruin A Performance Evaluation

Lack of seriousness.
They constantly change the date of the evaluation, they show up unprepared and they listen to the radio while the employee talks.

Being inconsistent.
Telling an employee he or she is great, and then giving a "satisfactory" rating.

Providing no rationale for their rating.
Telling an employee they are a "Good Worker" is pointless if there is no context that describes why they were not "Outstanding" or "Poor." A person needs to know their strengths and their opportunities for improvement.

Neglecting to have a follow-up conversation within 60 days of the evaluation to see what has been improved.
The only point of an evaluation is to improve performance. Stating what needs to be done and never following up on these things demonstrates that the evaluation is not important to the boss.

Not implementing positive or negative consequences for a change or lack of change in behavior.
If there are no consequences, then the boss reinforces to the employee that the evaluation was a waste of time. The goal is supposed to be to change behavior that leads to better results. No consequences mean no change in behavior.

Being too subjective in their rating.
Performance evaluations need to be based on observed performance and results, not on emotions.

Focusing on personal styles rather than on results.
This one connects to the one above. Bosses who have the same or opposite personality styles from their employees should never base their rating on this topic. Look beyond personality similarities or differences and focus on actual performance.

Providing vague feedback rather than actionable recommendations.
Saying to an employee, "This year I want to see you smile more often," is vague and meaningless. However, saying, "This year I'm looking for you to build value-added relationships with your co-workers focused on improving customer service with our top three customers" is a step closer to what is desired.

Making the rating a complete surprise.
An employee only has a certain amount of time, talent and energy to contribute to an organization's success. Consequently, when a person is completely caught off guard by their rating, they can spend days or even weeks worrying about what they did wrong. An effective performance review is merely the summation of an on-going series of evaluations, both formal and informal, throughout the year.

Seeing the person in action so rarely that their evaluation has no credibility.
Making statements about an employees behavior based on hearsay will frustrate the employee and ruin relationships between the employee and their co-workers.

The 10 Ways Bosses Provide Effective Evaluations

Take the evaluation very seriously.
They conduct interviews with the person's peers, subordinates and customers. They identify clear strengths and areas for improvement that are consistently demonstrated.

Provide consistent feedback in terms of off-the-cuff comments and brief written evaluations throughout the year.
This steady, consistent stream of observations and suggestions provide far greater impact on improving performance and results than the three-hour meeting once a year.

Clear and specific reasons are given for each rating and comment. These include anecdotal and statistical information.
For the most part, employees want to know WHERE TO improve and WHY THEY NEED to improve. The effective evaluation provides clarity in both of these areas.

Provide timely follow-up and feedback.
Within 30 days of the formal evaluation, sitting down with the person and identifying what they have done, what has been achieved, what worked well, what did not work well, what they learned and what they will do differently in the future.

Repeat the evaluation within a reasonable time frame.
Within 60 days of the evaluation, a follow-up evaluation is done and the consequences that were discussed at the beginning are now implemented.

The rating is based on a set of clearly defined objective criteria that are established before the year in question begins.
Effectiveness means continually achieving better results in the organization's highest priority outcomes. An employee is only effective or not effective relative to the outcomes they were supposed to achieve. A good evaluation determines the impact the employee made on these highest priority outcomes.

Find an appropriate area on which to discuss their communication style.
The personal style of this individual is only discussed in terms of how it relates to impacting results on a positive or negative basis. Otherwise, the discussion revolves around the results, not the style to get there.

Specific action steps are recommended for every area designated for improvement.
Telling an employee to improve in a specific area without giving them any practical suggestions or recommending any resources is a very frustrating experience for the employee.

Providing informal ratings every 30 days allows the formal evaluation to be a summation of what the other person already knows rather than a surprise event.
As mentioned earlier, the goal is NOT to complete the Annual Performance Review. The goal is to improve performance. Revisiting the individual's key strengths and how they are applying them to achieve better results and their key areas for improvement and what they are doing to improve them is a steady, consistent method for influencing behavior and generating better results.

Making sure that the evaluation is based on observed behavior and not on hearsay.
Again, the evaluator has to base comments about behavior on behavior that was observed by them. Otherwise, they will cause the employee to spend more time focused on who is talking about them rather than on the specific behavior that needs to be improved. Effective evaluations are critical to improving performance in every organization. Unfortunately, ineffective evaluations hurt performance more than if they were not done at all.

Dan Coughlin is president of The Coughlin Company, Inc., a firm specializing in enhancing the effectiveness of top performing executives, groups and organizations.

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