The first step is to have clearly defined job descriptions that specify the tasks, functions, and responsibilities of each job. What does it take to do this job right? What are the success indicators? What are the derailers? Answers to these questions form the foundation for deciding behavior-based competencies for the particular job, the area of the organization, or the company as a whole.
Usually competencies relate to one of four areas: ability to get results, capacity to form relationships, decision making, and leadership. Specifically defined competencies might also include business acumen, customer focus, coaching, integrity, vision, communication, teamwork, flexibility, technical skills, and innovation. Once the company decides on 8-10 competencies, the next step is to establish the rating scale.
The most basic scale is three points: exceeds expectations, meets expectations, or fails to meet expectations. However, a four-point scale gives more options for evaluation and forces the evaluator to avoid a middle of the road review.
In short, the year begins with goal setting, continues with ongoing feedback, and concludes with the end of the year evaluation that is often tied to raises and bonuses. This sort of schedule avoids surprises and the “once a year” mentality that dooms most performance appraisal systems. Also, the periodic reviews give the employee a chance to take corrective action when there are still opportunities to make a difference.
In general, four meetings per year work well. The first is a goal setting meeting; the second addressees progress on the goals; the third surfaces any problems that might interfere with the end of the year appraisal; and the final one is a formality that ties the progress to rewards.
The purpose of goal setting is to tie individual performance to the organization’s mission, vision, and values and to link short-term objectives to long-term targets. People most often commit to goals they’ve helped construct.
Often direct reports don’t understand their parameters for accountability and decision making. They either overstep when boundaries are not clear, or they err on the side of caution and risk-avoidance. Working together, the boss and direct report need to clarify which decisions the employee will make alone, which ones will require notification of the boss, and which ones need to be cleared with the boss.
Bosses frequently do not support the efforts of their direct reports. The research suggests, and multi-rater feedback reports confirm, that mentoring, giving feedback, and developing others are usually the boss’s lowest ratings, primarily because “getting the job done” seems more important. Support from the boss is an inexpensive but effective way to improve performance and show a commitment to excellence.
Scheduled conversations offer another way to build trust and reduce anxiety. Obviously, feedback about performance should occur when it can do the most good—when it is immediate and focused. When a direct report makes a mistake, addressing the problem right away is the surest way to take corrective action. Similarly, when a person excels at a task, complimenting and praising the efforts immediately will show appreciation and encourage more of the same.
The performance appraisal should be an opportunity for both the boss and the employee to learn. Listening to the other person first shows a willingness to consider new information, and if necessary, to change the nature of the review. Similarly, hearing the other person sets the tone for the give-and-take that will be necessary to create understanding and commitment between the two.
The action plan is a fluid document that should change with new information, accomplishments, unexpected events, and learning. Therefore, at the beginning of the year and at each subsequent meeting, the boss and direct report need to prioritize goals and objectives to identify the current most important two. This does not imply that writing the action plan is optional. A written action plan is the tangible agreement among the stakeholders. It serves as a kind of report card for tracking results and re-directing efforts. Therefore, both the boss and the direct report should keep a copy of the original agreement and the subsequent notes and changes. When this happens, the end of the year evaluation brings no surprises.