Recently, I have been thinking a lot about how companies do performance evaluations and performance management. Drawing from my experiences, and listening to the stories of others, formal performance management and evaluations range from no formal process at all to very complex and subjective processes. This week I decided I’d write about the importance of performance management, and how to use it effectively to grow your business and career!
Is Your Performance Management System Effective?
The next time I meet a manager that likes doing performance evaluations, it will be the first time. In most companies, performance management is something that is thrown on managers at the end of the year, as well as a last-minute push to close the yearly books. I was meeting with a vice president large bank in Chicago over the weekend. She and I were talking about how they do performance evaluations. One of the frustrations she mentioned was a lack of transparency. At the end of the year people are evaluated, scores and feedback are entered into a system, then a select few review the data to compare one employee to another for promotions and rankings. From my experience, this is common in large organizations. Smaller organizations tend to have a lot less formality. The boss may know everyone, and a formal process was never in place. Performance evaluations are based on what he boss sees, and maybe hallway conversations.
Performance management and performance reviews are a tool to help performance. Companies need people to perform to grow, and should utilize any and all tools available to facilitate that growth. Here are some ideas to help your performance management tools become more effective.
Evaluations are NOT Management
First and foremost, most performance management is often associated with performance evaluations. You set goals at the beginning of the year, and evaluate employees against those goals at the end of the year. This would be like taking a class and on the first day the teacher gives you the syllabus, and skips to the test without teaching the material! More and more companies are moving towards a continuous management system, but the large majority are still stuck in the old paradigms. I can see why. Performance management takes time. It can require difficult conversations between managers and direct reports, and it holds people accountable.
I recommend a shift in thinking. Successful business owners are looking at their performance on a monthly basis or more often. They review P&L statements, income statements and projections, and balance sheets. This is done to give leaders up to date metrics on a company’s performance so they can adjust real time. Companies cannot be successful if they just looked at the statements at the end of the year. So, why would you manage employees only on an annual basis?
Where do I fit?
I used to be told that as a manager it was my responsibility to make sure each employee understands how their job impacts the company. The trouble was, nobody explained it to me! It wasn’t until I began reading business books, like “The E-Myth” and “The Great Game of Business”, that I understood what this meant.
Every employee needs to have a clear understanding of their job role and function. They need to have an unambiguous expectation of their responsibilities. And, they need to understand how it helps make the company money and probably more importantly, how it impacts them personally. Ultimately helping a company grow and increase cash flow helps everyone have a more secure job and future. How do you communicate expectations and impact to your employees? How often do you do it? Do you tell them or show them?
Coaching could be an underappreciated aspect of leadership. In my opinion, this is the most important. In every job I ever had, when I moved into a leadership position, it was my focus to help others become better. I believe that the more successful the team is, the more successful the leader is. Coaching is how your team grows.
Great leaders are great coaches. One of the characteristics of a great coach/leader is the ability to see greatness in others that they may not see in themselves. More importantly they help others bring that greatness to the surface. To be great, you have to lead your team to greatness, and this is done through coaching. By having more frequent performance management discussions, focused on performance improvement, you can have an opportunity to identify greatness and have tangible measurable results. You and your team can see improvements, as well as areas that need attention, and can target those areas. Does your performance management tool allow you to provide a meaningful discussion for coaching and improvement?
This Week’s Challenge
If you are still working within the annual performance management system, consider changing it. If you are unable to change company policy on the performance management system, create your own. I used to use MS Word and Excel. When you and your team are continuously measuring yourself against growth based metrics, a small investment in your time to coach will pay large dividends!
If you would like to discuss more ways to help your business grow or if you feel you have a specific problem that needs to be addressed, please reach out to me.