Performance Reviews
It seems like few employees receive an impactful performance review in the first 10 years of their employment. They go through role after role, job after job without really knowing if they are doing well or how they can improve. Management teams don't encourage the time to be set aside for it and those that do often pay lip-service to the process so little meaningful output is produced. Even worse, many companies never formalize a review process at all until they've grown too big to do so effectively -- when they finally do, it's like laying hammers down when the first reviews come around. Building a team to pursue a path of excellence requires time investments in this critical HR area from the very first day the Company starts. Let's jump to 10,000 feet and look at the relevant issues.
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The term Performance Review or Performance Management can have a negative connotation. Just like when ‘unemployment insurance’ changed to ‘employment insurance’, the negative stigma of being on UI was reduced when it was called EI (the power of positive thinking at play). As such, the term Success Management is starting to surface as a more positive connotation to this important ingredient in the success formula for a Company. It speaks more towards how an individual contributor can be successful in their role, defines the path they should take to stay on track in their role and how the achievement of success will result in career mobility (presumably upwards). Performance Review tends to conjure impressions of negativity, looking for reasons to criticize, focusing on what did not get done or did not work.
Effective Success Management starts with:
- a clear corporate vision or mission statement (CEO)
- a business and role value proposition for all team members (CEO and HR)
- a way to report back periodically in a manner that the whole team can buy into, comprehend and translate into their own individualized thinking patterns (HR)
Corporate Vision/Mission Statement - The corporate vision or mission statement is communicated by the CEO. It represents the long term direction of the business and should be something everyone in the Company is exposed to (and ideally recite at some level). It can also refer to shorter term goals which sometimes makes it easier to relate to. A team member should be able to map their role to how it can impact the mission statement. As an example, a mission statement for an up-and-coming beverage company might be "We want to build the worlds fastest growing thirst quenching drink company that addresses the varying health needs of highly athletic consumers". Everyone in the Company should be able to look at the vision statement and decide if they are working on the product aspects of it, the business growth aspects, the market reach, the quality, etc. No one should feel left out. The vision or mission statement tends to remain intact year over year as an outgrowth of a sound business plan. If it changes too often it can create a sense of drift within the team. The mission statement should appear at the top of all documents presented to employees as part of their success management package (which starts with the job offer).
Role Value Proposition - Every team member should be presented with a proper description of their role in the Company. It should include defined, achievable and quantifiably measurable objectives along with some well-defined challenges (stretch objectives) that encourage the team member to step up to the next level of performance. All team members should also be able to see the role definitions of everyone else in the Company to better understand the responsibilities the people around them have. This helps to align expectations and promotes a team culture where people can work together to address the challenges of excellence. Establishing an internal web site for this type of information makes it easy to access and keep up to date.
Reporting Process - Probably the hardest and most time consuming aspect of success management -- communicating results to the team member. Whether you formalize around one or two sessions per year, the way in which the information is communicated is of most importance. Some common best practices include: allowing the team member to first assess themselves and their manager (the latter sometimes in confidence), a first review where the managers assessment is presented for consideration, a follow up session to discuss comments and set objectives for the following term. The whole process must be documented and acknowledged in a formal way by a representative from HR, the manager and the team member. In some cases, the CEO may also want to show support of the process and be involved in targeted assessments (for both strong and weak team members).
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It should be no surprise that the benefits of any success management plan are directly related to how much effort your organization is willing to put into it. Managers who keep regular performance notes tend to have greater impact during the presentation of an assessment, those that wait until the end of the period to 'remember' the key achievements, examples and results tend to present superficial assessments (little value to all parties involved). The CEO should be working hand-in-hand with HR to make sure that everyone understands the importance of the process, the leadership team should themselves be accountable for how it is implemented in each of their departments. The path to excellence is easier to find this way.
Retention
Staff retention is often a key metric the Board tracks to determine if there are critical gaps in the leadership teams ability to attract and retain great talent. It's too expensive to be constantly rehiring key positions. Successful startups can expect to have near 100% year-over-year retention given that the excitement that comes from working for new businesses tends to over-ride many of the negatives people find working in established businesses. If you take your eye off the ball though, key people leave even in the most promising of startups -- in small organizations this is often crippling to core operations.
How can I influence and contribute directly to the vision of the Company? This important question, if not addressed, can lead employees over time to feel lost or demotivated when performing their day-to-day duties. Managers need to be trained properly on how to provide meaningful, measurable feedback to their employees, taking into account the corporate mission and results that are expected so they feel positive about their contributions overall.
Non-professional managers (promoted to management for reasons of technical skill) tend to need the most training to become effective at success management. With the help of HR, the CEO has to create and support a climate of results-oriented, rewards-based actions for successful behavior. Both have to work together to make sure time is allotted to make a success management system work. The payout is measurable in productivity improvement, high retention rates and the long term excellence the Company achieves.
Employees leave companies when they deem that their career mobility is no longer visible to them or they are not confident it can be addressed by their managers. Recruiters pray specifically on this kind of issue to attract top performers away from existing roles. Managers should be the first held accountable for paying attention to success management, performance recognition and overall career progression. It's a core part of their job and should be visible as a measurable objective. The CEO should regularly engage key employees to both foster open communication but also to maintain a sense for their commitment to the Company.
Overall, your retention plan may determine that it is better to have semi-annual success reviews as opposed to annual reviews. Semi-annual fosters more timely face-to-face communication between manager (now in a coaching role) and employee. One of the success review sessions would be a lengthy more full-some process (including compensation and equity) and the other just a ‘touch base’ to discuss changes or progress towards objectives. Identifying progress for key objectives and expectations early in the planning year also keeps everyone on track for the year. Some companies attempt to issue quarterly success statements to their employees, but that might be too much effort in your particular case.