Performance Appraisal – Merit Pay – Pay For Performance and Employee Reviews Advice
Managers and human resource professionals often struggle with the linking of performance management and performance appraisal to performance pay or merit pay. It makes intuitive sense to reward the most valuable employees, but the practice is not a simple one, since it is common to create undesired and unanticipated side effects regardless of how you go about the task of using performance appraisals to determine raises. Here’s some guidance, adapted from Performance Management – A Briefcase Book, by Robert Bacal (McGraw-Hill)
First, there is no “best” way to link pay or salary to employee performance, and no best way to implement merit pay. There is only a “best” way in your situation or company, and what works in one place may not be best in another. So, you need to decide based on what you want to create, your circumstances, and the culture of your company. However, here’s an approach.
Acknowledge that no pay for performance system is perfect. Nor is there a perfect way of accurately assessing the value of employee contributions. So, is there a “best way”?
If you want to tie pay to performance, here’s how to do it. You make it a part of the performance planning process. You establish the criteria for a pay increase when you set objectives and standards. So, at the beginning of the year, each employee should know what he or she needs to achieve in order to receive the pay increase or bonus. You don’t tie pay to ratings or rankings. you make sure the criteria are as objective and measurable as possible to reduce arguments. And, finally, no surprises at the end of the year.
Also, take the position that it is your job (as the manager) to help each employee hit that target, make that extra money, or get the bonus. Make it clear that you’ll do what’s necessary to help every employee succeed.
In this way, you and the employee work together on the same team.
Robert Bacal
(c) 2007, Robert Bacal, Bacal & Associates. You are welcome to “reprint” this article online as long as it remains complete and unaltered (including the “about the author” info below) all links are made live, and this copyright notice and indication of authorship are included.
Bacal is a noted performance management author, consultant and trainer, and is the author of a number of books published by McGraw-Hill including Performance Management – A Briefcase Book, Manager’s Guide to Performance Reviews and Perfect Phrases For Performance Reviews. For more free information and help with performance management, reviews, and appraisals, visit the Performance Management & Appraisal Help Centerhttp://performance-appraisals.org. at
In addition to over 800 articles on performance related subjects, you will find tools to help with diagnosing performance, using progressive discipline, and setting objectives at http://performance-appraisals.org/learnto.
Article Source: http://EzineArticles.com/?expert=Robert_Bacal
Performance Appraisals Start with Job Descriptions
Before you take the leap into performance appraisal with your team, does each role have a clear, current, and effective position description in place? Position descriptions or job descriptions are one of the most useful HR documents you can have.
Like most things, the format of the job description is not as relevant as the material it contains. If you use a standard template, or have someone else write your job description, you may end up with a document that does not reflect the nuances of the role. In my book, managers should be intimately involved in the drafting of each of the job descriptions for their reports.
Yes, you may have a generic set of position descriptions for common roles in the organisation (sales assistants, receptionists etc), but each manager should be involved in discussing with their employees how precisely each of the tasks, duties and deliverables in the generic position description are carried out in their particular part of the world.
So, what should go into a position description? Each job description should clearly spell out what exactly the employee is responsible for doing and the context in which the work is performed. That said, you are not writing “War and Peace” – you want something that is simple, easy to understand and hits the highlights and not dwells in the details.
Job descriptions should not use overinflated language in an attempt to “bump up” the pay scale, or include tasks that are not critical to the outcomes of the role.
One of the most critical elements that is often overlooked are delegation levels, or scope to act. Does the role have complete autonomy over a certain budget, type of decision or project, or do they need to clear things through different levels of hierarchy.
If you have a clear and agreed job description in place, reviewing performance will be a heck of a lot easier.
Until next time
Ingrid Cliff
We put your business into words
Eight Stupid Things Human Resource Departments Do to Screw Up Performance Appraisals
We’ve written an article entitled “The Ten Stupid Things Managers Do To Screw Up Performance Appraisals”, but the truth is that managers don’t do dumb things just to fill up their time. A lotof the time we find that when managers are doing performance appraisals badly, they are getting a lot of “help”from their human resource (HR) or personnel department. Central HR departments can create a situation that virtually destroys any value from the performance appraisal process. Here’s the list of dumb things HR folks do.
Stupid Thing #1: Focusing on and stressing the paperwork and forms.
We can understand why human resource people want some sort of paper trail related to performance appraisal. But when the emphasis on the forms and paperwork overshadows the real purpose of doing appraisals, then huge amounts of resources are wasted. When HR departments focus on getting the forms done, that’s exactly what they get. Forms done. If that’s all this is about, hire a monkey to do it. Any fool (no insult to the monkey) can tick off boxes on a form and send it on.
Stupid Thing #2: Believing that a ratings based form of appraisal will serve as protection against lawsuits by employees.
Big mistake. If you are caught speeding, do you think the court is going to accept as evidence a policeman’s statement that “On a scale of 1-5 the driver was a 4?” I don’t think so. But HR departments believe that THEIR form is going to withstand legal scrutiny. It’s not. It’s too subjective and too vague. This desire for false security is one reason HR folks feel they need to pressure managers to get the forms done. At least until their first lawsuit.
Stupid Thing #3: Using an automated system.
This is a new development. You can purchase software that automates the performance appraisal process. What it does is it takes a lousy paper process, then makes it a lousy computerized process, so now we go much faster pretending we are doing something useful.
Performance appraisal is an interpersonal communication process. Even between two people, it’s often not done well. Automating the process is a waste of money and time, and HR departments that go that route are doing charitable work for the vendors of the software.
It’s bad enough we mechanize a human process using paper forms. Now we can take it one step further. Heck, now managers never have to speak to staff. This is progress?
Stupid Thing #4: Undertraining or mis-training managers in the process.
Take some HR folks. They design some new forms, and a new way of doing performance appraisals. They print out some basic instructions, print out some forms, and distribute them to managers. The assumption is managers will know the purpose goes much further than “getting the forms done”.
That’s not going to happen. If the HR folks yell and scream, they probably WILL get the forms back, but not much more. Managers need extensive training, not only regarding the nuts and bolts of the appraisal process, but about the why’s and interpersonal parts of it. Without that, one gets an empty paper chase (while people pretend it is a useful way to expend energy).
Stupid Thing #5: Not training employees
Why would you train employees in their role in the appraisal process. First, because the only way it works is when employee and manager work together, in partnership. Both manager and employee need to hold the same understanding about why they are doing appraisal, how it will be done, and what is expected.
Very few organizations offer anything but a superficial orientation to the appraisal process. That’s because they see it as something done TO employees. It isn’t, except of course when the HR department treats it as something done to employees. Then managers will probably do it that way.
Stupid Thing #6: Thinking pressuring managers to get the forms in is productive.
One reason managers procrastinate with respect to doing appraisals is that they don’t see the point, or see it as a waste of time. There are other reasons, too. Most can be dealt with by using flexible approaches that take into account the needs of managers. Unfortunately, a good many HR departments believe it’s just a question of ordering, yelling, coercing or begging managers to get them done.
That doesn’t address the reasons why managers aren’t doing them. If they felt they were useful, they would do them. The key to getting them done is to make them useful. Unless of course the HR folks want to spend their days ordering, yelling coercing and begging.
Stupid Thing #7: One size fits all fantasy
Imagine the difficulty for HR staff if every manager used a different form, or different method. How would you keep track? How would you file them? We can understand the desire to standardize the forms across a company.
But if you think about it, does it make sense? Can we evaluate a teacher in the same way as we evaluate the school custodian? Do we evaluate a baseball umpire the same way we evaluate a baseball player? Of course not. But still, HR departments expect managers to use a single tool for everyone, often a rating form. This kind of inflexibility addresses a filing problem. Is that why we do appraisals? To make it easier for the HR department? No, we do it to improve performance.
Stupid Thing #8: Playing the appraisal cop.
Unfortunately, HR and personnel departments get stuck with the responsibility of getting appraisals done by managers. Perhaps it isn’t their fault, but it is a strong indicator that the system being used is or has failed. How come?
In a properly functioning system, each manager is assessed on a number of things, one of which will be their fulfillment of the performance management and appraisal function. The responsibility lies with management. If a manager is not carrying out the responsibility, it is his or her boss that should be evaluating the manager. It’s a cascading process. No appraisal system is going to work until each manager’s boss makes it clear that getting it done is going to be a factor in the manager’s own appraisal.
HR departments shouldn’t be appraisal cops If anyone is to do that, it should be the manager’s boss. Anything less is going to be a waste of time and effort.
Robert Bacal
(c) 2005, Robert Bacal, Bacal & Associates. You are welcome to “reprint” this article online as long as it remains complete and unaltered (including the “about the author” info at the end) all links are made live, and this copyright notice and indication of authorship are included.
Robert Bacal is a noted performance management author, consultant and trainer, and is the author of a number of books published by McGraw-Hill including Performance Management – A Briefcase Book, Manager’s Guide to Performance Reviews and Perfect Phrases For Performance Reviews. For more free information and help with performance management, reviews, and appraisals, visit the Performance Management & Appraisal Help Center at http://performance-appraisals.org.
In addition to over 800 articles on performance related subjects, you will find tools to help with diagnosing performance, using progressive discipline, and setting objectives at http://performance-appraisals.org/learnto.
Article Source: http://EzineArticles.com/?expert=Robert_Bacal
Are you Walking Your Talk on Performance Reviews?
Too many managers see performance reviews as something they “do” to employees and not something that have “done” to them. The hardest people to tie to a chair to discuss their performance are usually the CEO and Executive team – and yet their performance arguably has the greatest effect on the business.
Employees watch how their managers behave. If they say one thing and do another, then employees base their attitude on what was done and not what was said. If you want performance reviews to work within your organisation, then you need to make sure that every manager takes full and enthusiastic part in the process.
A manager’s attitude and approach to performance appraisal can overcome almost any flaws you may have in your performance review system. However, if their approach is negative, you can expect any tiny flaws to be magnified a thousand fold.
You also want your managers to model how to deal with feedback, both good and bad. If your manager gets negative feedback and then promptly leaps into blame mode, looking for the whistleblowers to “weed out the troublemakers”, then expect a culture of blame to build in your business.
Your managers need to be taught how to build a culture of learning, welcoming feedback and correction, reflection and growth. If they can learn to adopt this approach, then you can expect a culture of growth, innovation, and performance to build in your business. Which would you prefer?
Until next time
Ingrid Cliff
We put your business into words
Performance Appraisal in Times of Recession
Recession is defined as an overall slowdown in the economics of a country, region or the world over a continual period of time. It is the time when companies as well as employees experience a low morale on the work and compensation front. Companies may also find it more challenging to appraise, motivate and empower their employees.
Some companies may feel and therefore may decide that performance appraisal is not necessary during these times and if planned for it, they are may be unsure of what message it will communicate to the employees. This is, perhaps, a narrow view of business communication.
During times of slowdown, if employers stop communicating with the employees, it may generate doubt, fear and mistrust among employees. They may fear their stability in the organisation and reduction in remuneration. This could lead to loss of interest in their work and lack of understanding of what is expected of them, which ultimately will affect motivation and results.
During times of recession, it is very important to continue the process of performance appraisals. Yet with this process comes the risk that as a result of feelings of insecurity among the employees, performance appraisals may be seen with hostility. Employees expect the worst in terms of redundancies, increased working hours, reduced or zero incentives.
Listed below are some simple yet very valid reasons for maintaining the performance appraisal process during times of recession:
Open Communication
During recession, usually employees have doubts and fears about the health of the company and its consequences for their future. This affects their motivation and work and therefore their output. One way to deal with this problem is an effective performance appraisal. If a performance appraisal could be used to do more than take the stock of the employees’ performances only, if it could also be used as a form of open communication about the situation of the company so that there are no rumors or complaints of information being held back, this could have the positive effect of promoting trust in the employee, which ultimately leads to greater commitment and performance.
Employees often feel insecure during such times, it is important for the company to be honest and transparent. This then gives the employees the knowledge and therefore the choice to realise that for the company to progress and be competitive during such times of crisis, it is important for all of them to work together. Therefore, this can only lead to a win-win scenario.
Division of the Smaller Pie
A company is responsible for finding ways to bring the employees awareness to the realisation that the profit pie is smaller during recession times and so the division of income will be reflected accordingly, without implying threats of job losses where this can be avoided. Where possible, alternatives such as non-cash incentives for senior employees, health benefits or education benefits for their children can be used to motivate them. Some companies also use the strategy of performance based pay to support their employees. This promotes learning, creativity, innovation and problem-solving in them. An atmosphere of encouragement and positive feedback is much more inspiration for the employees.
Remind Them of Good Times
This is a very old time tested method. When the employees are called for appraisal during slowdown, it is very inspiring to them to be reminded of the times when the company was at the peak of success. It generates a confidence which might have wavered during the slowdown. Reminding them of what they are capable of doing is something that will affect their way of working and the outcome. It will help the employees steer the company through the hard times.
Positive Aspects of Recession
During times of recession, employees expect major changes in the company in terms of working hours, payments, number of personnel, policies and strategies. On the other hand, this is a good time to implement innovative changes in the company due to such a state of mind of the employees. An appraisal can become a platform for the employees to discuss imaginative ideas about new policies, new strategies, new services and products to be applied in the company.
Reducing Appraisal Cost
Another way of performance appraisal is to keep it simple. Companies may cut down the budget on appraisals. Some companies go for online appraisal to reduce costs and save resources.
Use Appraisals for Improvements
Performance appraisals can become a platform for employers to take ideas from employees on how to stabilise the company during such crisis. It will generate great ideas as well as help involve employees to give them a sense of belonging.
Companies have better chances of surviving the recession when the employers and employees work towards its betterment. This can be done when employers and employees work towards a common goal of sustaining their company in the competition during recession. Effective appraisals should be able to guide a company through the tough times of recession.
All the best,
Natalie Dee
Life Coach & Business Coach
Natalie Dee is a specialist in life coaching and business coaching with clients throughout the UK and worldwide. To find out more, visit http://www.natalie-dee.com.
Coaching promotes confidence, fulfillment and success in peoples’ lives. Life coaching and business coaching creates change in communication skills and self confidence.
In her business capacity, Natalie offers a range of coaching services including one-to-one coaching and professional workshops.
Natalie Dee is also the co-author of an ebook on self confidence, for more details visit her website (as above).
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How to Conduct a Performance Review on Jobs That Have Changed
Many people complain that their annual performance review is not relevant as their duties and responsibilities have substantially changed since they set their last goals and objectives. This is a real challenge for many businesses. While some jobs stay fundamentally the same from year to year, other jobs flow and change almost like an amoeba. What should managers do to review performance in those situations?
Ideally, each time your employee changes roles, or takes on new responsibilities, you need to set new performance goals and objectives.
If you work on the basis of projects, each project should have its own mini-review built into it – to help people reflect and learn. You can also set up mini-reviews every quarter for fast moving jobs, just to keep things on track. These don’t have to be the full “song and dance” routine, but more in the line of a half hour discussion that is distilled down into a maximum one-page of agreed objectives, “riding instructions”, and agreement on delegated authority.
What you are really doing is setting out a one-page project plan, just to ensure both of you are working from the same page and have a shared understanding.
But what if you haven’t done this, and you only realise it when the review rolls around? In those cases admit you stuffed up, that the objectives are no longer valid, and focus on the learnings for both of you. It is better to use the review as a way to work out how to move forward than look backwards than try and force a review on something that is no longer meaningful.
When in doubt, come back to the reason you are doing the review. Are you doing the reviews to boost productivity, enhance communication, and build your team, or are you doing reviews to tick off boxes and keep your HR people happy? Go with the approach that gives you the best possible team outcome.
Until next time
Ingrid Cliff
We put your business into words
10 Traps to Avoid in Performance Appraisal For Small-Medium Sized Businesses
1. Lack Of Focus On Performance
You’re measuring how well an employee has achieved job goals: how well the employee has performed at work. It’s not a measure of “dress” or “demeanour” or “attitude” or “relationships” or any of those fuzzy, waffly, social and emotional attributes that some managers love to include, inappropriately, in performance appraisal.
2. Lack of Clear Performance Standards
You must establish crystal clear performance standards for the employee to meet. The employees must know the standards exactly. They must also know how their performance will be measured against them. Without clear performance standards you can’t have truly effective appraisal.
3. “Behaviour” Gets In The Way
This is a very common trap. We forget about how well an employee has performed because he’s “untidy” or she’s “messy”. Small incidents of slightly inadequate behaviour are magnified into major problems. A salesperson achieves 175% of budget but receives a poor appraisal because his or her paperwork’s “a bit sloppy” or he or she’s “outspoken”. This sort of demotivating nonsense is all too common.
4. Forms Are Just A Record
“The person who spends most time on performance appraisal in our company is me, trying to get the forms filled in”. The gentleman who said this was Head of Human Resources for a major multinational. His company was renowned for its appraisal scheme. If you use a performance appraisal form, make sure that measuring performance is far more important than filling out the form.
5. Opinions Endanger Good Appraisal
Don’t let opinions interfere with appraisal. “The girls in dispatch tell me that you don’t respect them”. “The accounts people complain about the clarity of your expense claims”. “I’m told you’ve been late for some appointments recently”. All these statements are hearsay. And mostly, they’re not about performance. Opinions aren’t facts. Unless they’re substantial and can be shown to have a negative influence on job performance, they have no place in performance appraisal.
6. Ignoring Team Effectiveness
All employees are members of at least one team. Most are members of more than one. Their performance will be a direct reflection of their effectiveness as a team member. Include team effectiveness when measuring performance.
7. Overlooking The Business
It seems incredible but lots of managers don’t consider employee contribution to the business when assessing performance. An employee can appear to do well. But if what they do doesn’t help make a positive contribution to business effectiveness and development, their contribution may not be particularly valuable. Use performance appraisal as an opportunity to remind employees that effective business contribution is essential.
8. Performance Muddling
This is another common trap. Performance appraisal is about measuring performance. But we decide to extend it. We use it as an opportunity to assess training needs, promotion prospects, undertake career counselling, decide on wage or salary increases and a whole lot of stuff, most of which has almost nothing to do with measuring performance. And these “muddles” often assume far greater importance than the performance measurement itself.
9. Ignoring The Future
Performance appraisal whether formal, informal or even casual is a great time to explain to employees what you expect of them in the future. We spend lots of time discussing past performance but too little setting the parameters for future performance. The past is history. It can’t be undone. Concentrate on the future.
10. Missing Employee Input
Whether your appraisal is brief or lengthy it’s a great time to get suggestion for improvement from employees. “What do you think?” is a question that should be asked frequently by managers during performance appraisal. It’s a great opportunity to gain employee input. If you don’t ask, you won’t know.
Conclusion
Sound performance appraisal is essential in any business. But it’s hard to do well when we, as managers, include so many obstacles to success. Form filling and intense interviews don’t constitute performance appraisal. But absolutely unambiguous and measurable performance standards are the key. If you’re serious about measuring employee performance, start there.
Leon Noone
Leon Noone helps managers in small-medium business to improve on-job staff performance without training courses. Some say his ideas are too unconventional. Find out for yourself by reading his free Special Report “49 Practical Tips For Better People Management In Small-Medium Business”. Simply visit http://www.leons7secrets.com and download your free copy now.
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Performance Appraisals: Measure Results Not Personality During Reviews
As I have mentioned before, conducting performance appraisals is not an exact science. You will always look at an employee through the eyes of your biases and personal values.
In performance reviews, you need to measure the results and the performance of the individual or team, and not the personality of the person. Reviews based on personality traits or characteristics are by their very nature flawed, biased and a total waste of time.
If you personally believe in being in the office at the crack of dawn and not leaving until late in the evening, you will judge your employees on whether or not they do the same. The problem is that there is always more than one way to get a job done. Just because you do it your way, doesn’t mean that it is the perfect way, or there isn’t another way that will generate the same results.
The bottom line is you need to focus on observable, job-related behaviours and their outcomes and not what you interpret the employee’s personality to be.
Until next time
Ingrid Cliff
We put your business into words
Why annual performance evaluations make a difference to performance
Following on from previous posts, I thought I would share why I believe annual performance reviews are useful.
Human beings are hard wired in for reflection and goal setting – think about New Year’s Resolutions. They are the most common form of goal setting on the planet – and yet no one forces people to do them. There is no pay rise attached to them and there is no piece of paper that has to be sent back to HR with them written down. People just do them because they feel that they need to grow and develop.
With annual employee evaluations, we create space for people to take time out and reflect on what they have accomplished in the past twelve months. Often we are so busy going onto the next project – the next big thing, that we don’t stop and celebrate what we have achieved. This is a recipe for burnout and poor self-esteem. Performance reviews help give people the chance to review and celebrate their successes. By regularly celebrating our successes, we see that we do make a difference, that we can succeed and that we are worthwhile human beings.
Regular reflection time also allows space to look at what didn’t work so well – and to think about ways we could do things differently. Futility is doing the same thing over and over and expecting different results, yet we don’t give space to breath and work out how we could do things differently. We don’t get “Eureka moments” when we are stressed and under the pump – we get them in quiet spaces of time. Allowing time to reflect and review creates a quiet space of time – which allows learning and growth.
Performance reviews with trained managers to help coach people through the performance review process, helps people to feel great about their successes and to find other ways to do areas they find difficult. When used correctly they are not a “score card” or school report – but a way to help achieve better productivity and greater results. It is all in how you look at them. How do you view your performance review process?
Until next time
Ingrid Cliff
We put your business into words
Are annual performance reviews just a waste of time?
One of the most regular comments I have heard over the years is that annual performance reviews are just a waste of time. The reasons they give are that people hate doing them, they are just a crutch for poor managers to be seen to be doing something, there is no link to pay so why bother, they take too long, and people don’t really say what they think.
Employee performance evaluations in my mind are just tools to aid discussion, and like all tools, they can be used in a positive or negative way. In the right hands tools can help create some pretty spectacular results – in unskilled hands the results can be clumsy or damaging.
That’s why I am a fervent believer that telling managers to “go do performance appraisals” without any training, support or coaching is the same as telling a teenager to “go drive a car” without any training, support or coaching. You just know that the results will not be pretty.
Without proper training, you will get bad review results – people won’t say what they think, they will just go through the motions, managers will be stilted and follow process rather than initiate a deep dialogue and they will take a heck of a lot of time.
With proper training, managers will be able to put the employee evaluations in the context of their management during the year. They will use them as a tool to aid double loop learning – where people can stop, reflect and learn from their experiences and then build that learning into their new work challenges. They do become motivational, exciting and something to look forward to.
So are they a waste of time? It all depends on how you approach them and use them. I know the power of great employee performance reviews – I also know the downside. I believe all managers need to be set up for success – and trained in their proper use to give them the maximum chance of succeeding with their team. After all, isn’t that why we want to implement performance reviews in the first place – to get great results? Take the time to train your managers and you will get great outcomes from your reviews.
Until next time
Ingrid Cliff
We put your business into words
HR Copywriter
