Improving Your Performance Review Process
Eight tips that can help improve your company's performance review process.
Funny how six months or a year ago, we weren't hearing all that much about keeping employees happy. In a down economy, you keep them happy by letting them keep their jobs. We all knew that that shortsightedness would eventually backfire, and that the time would come when employers would be scrambling to regain and retain the talent they treated so shabbily when they knew those talented workers had nowhere else to go. It seems that time as arrived.
In a post last week, Will Evenhanded Compensation Drive Top Talent Away? my colleague Susan Hall wrote about IT workers in the financial services industry being in the driver's seat, and expecting to be rewarded based on their performance. Hall cited a great piece in the Washington Post about Google's across-the-board 10 percent salary increase for all of its employees, which failed to address the differentiation that employees are now demanding:
The company's hardest-working, most irreplaceable people could think all that extra effort is for nothing if their less-talented colleagues see the same uptick in pay they do. ... To keep the best people feeling like they're rewarded for working smarter or harder than the rest, tough calls need to be made about who truly deserves more money, too. When leaders don't make them, their efforts to raise morale could raise the risk of defections.
That's a serious problem, and one I addressed in a post last month, "Management 101: Stop Coddling Your Losers and Ignoring Your Stars." In that post, I quoted author Rick Dacri, who's especially vocal on the issue:
What I find is managers have this egalitarian notion that everyone needs to be treated the same. And by doing that, they turn off the stars, and they in essence reward the people who aren't performing. What I'm trying to emphasize is that you need to differentiate between the people who are making all the difference in your company-the ones who don't give you any headaches-and treat them differently.
Then last week I read another book, "Winning with a Culture of Recognition," in which authors Eric Mosley and Derek Irvine identified the same problem:
Line managers are unwilling to differentiate their people as top performers, average performers, and underperformers [and they] do not address underperformance effectively, even when chronic.
The book is basically a marketing vehicle for Globoforce, a company that provides an online platform for strategic employee recognition, with Mosley and Irvine the CEO and vice president of client strategy, respectively. With that understood, Mosley and Irvine still make a compelling case for how to solve the differentiation problem to keep employees happy.
I spoke with Irvine last week, and he insisted that the idea that nothing says "thank you" like more money is a myth that needs to be debunked:
Organizations are really missing an opportunity if all they rely upon is cash. Of course we all have needs-the food, the shelter that cash buys-but we also have esteem and psychological needs-needs to feel recognized and appreciated for what we do in the workplace. Relying upon cash for those things is a big mistake, because if you rely upon cash for your psychological needs, it gets confused in the employee's mind. They look at cash and say, 'That's what I get for compensation. What I really need is for somebody to recognize and celebrate and thank me for what I do.' Those recognition moments are infinitely more powerful than just giving somebody cash.
More importantly, the set-up that Globoforce enables solves the problem of managers being reluctant or too out-of-touch to differentiate their employees, because the recognition process is turned over to the employees themselves. Irvine explained it this way:
A tremendous opportunity exists to democratize the workplace in terms of who's making the decisions about what is good and bad performance. We talk a lot in the book about the opportunity to have a mass mobilization of your employee base, where you ask your employees to be spotting the good and bad behavior of each other. You set your recognition program behind things that are strategically important to the business, and you say to all of the employees, 'We now want you to really be spotting when these values are being lived, or the strategy is coming to life.' That can be a vastly more powerful, democratizational, mass mobilization, rather than relying upon traditional line managers to make those types of decisions. So the opportunity is for peer-to-peer recognition of when things are being done right.
According to Irvine, it's going to take this sort of system to rebuild the trust that was lost when the recession took its toll:
One of the things that's most damaged at this time is trust. Employee engagement is at a historic low; trust is also at a historic low. If organizations aren't already maximizing all of the tools that they have available in their HR toolkit, they really ought to be getting on with that-putting in place, if you don't already have one, a recognition program where you're recognizing employees for the good work they've done, where you're seeking out opportunities to capture whatever goodwill employees still have and celebrating it, magnifying it, so we feel like we're all together on a winning team. I think relying only on cash, and not having those moments of bolstering people's psychological strength, is really going to lead to a dead end altogether.