How to conduct an effective performance evaluation
- Posted by J. Nirdosh Reddy
- On September 25, 2017
- Leadership
We need to, and we can, make performance evaluations an experience that both supervisors as well as employees find beneficial and therefore an event that they don’t dread. Profitability and competitiveness of an enterprise depends, among other things, on how well its employees are encouraged to utilize their potential. Conducting proper performance evaluations plays a crucial role in motivating employees and thus unleashing their untapped potential.
Performance appraisals in conventionally managed enterprises are, in general, one of the least enjoyable tasks of supervisors, and one that most employees don’t believe to be fair. They tend to be put off as long as possible. Human resources personnel find it necessary to follow-up, nudge and, if necessary, threaten the supervisors to conduct them. Eventually supervisors do them, reluctantly.
Why? The company policies – which reflect the mindset of the top management – force supervisors to grade their employees and rank them. The ratings that are given to employees are used in calculating their annual increases. In some organization, supervisors are told to get rid of the bottom 10%. The vast majority of supervisors are not comfortable grading their employees. Rightly so.
Evaluations
Encouraging or discouraging? motivating or demotivating?
Consider whether performance evaluations in your enterprise are motivating or demotivating employees. In many organizations, supervisors generally feel – whether they are explicitly told is irrelevant – that their job is to control their subordinates and to take them to task if something goes wrong – blame and reprimand; maintain law and order. Supervisors generally tend to focus on missed targets, what their subordinates have not done well, and criticize them. As we know, criticism helps, but only marginally! Praise is a rare commodity. Supervisors seem to be afraid that if they praise an employee, he / she will turn around and ask for more money.
This type of thinking has been entrenched for a long time and is in need of overhaul.
The Root Cause
The lack of understanding of variation and process-thinking
The above practices stem from a lack of understanding that variation is inherent in every process. We, in management, were doing our best with what we knew. We thought people produce output, so we managed people. We set some targets for them to meet, and if they didn’t (for whatever reason), we told them they failed (we conveniently forget that the targets were arbitrary to begin with). If something went wrong, we asked ‘who did it?’ and blamed somebody. We thought we should let people know how they are doing. So we did, based on our flawed assumptions. We did not know any better.
We now know that results come from processes and that when things go wrong, we should first ask where processes are breaking down, not who did it. There were very few enlightened bosses who understood variation and the limitations of the old system. They guided their subordinates instead of controlling them. The vast majority of supervisors did not know that processes, not people produce output, so they did not think about separating the contribution of processes from people. Mechanically, they rated their employees – because they had to – and demotivated them in doing so.
In many organizations, like at Ford Motor Company, there were as many as 9 levels of performance ratings – Outstanding High, Outstanding, Excellent High, Excellent, Excellent Low, Satisfactory Plus, Satisfactory, Satisfactory Minus, and Not Satisfactory. Dr. Deming was astonished at so many levels and asked the executives “How are you separating the contribution of the system from the contributions of individuals? May I see the measuring instrument with which you are able to so precisely rate an individual’s performance?” There was no measuring instrument with that kind of accuracy!
Moving forward
Our job is to manage processes. We do that by involving every employee in controlling and improving their processes. Employees are happier because they are empowered to improve what is in their control and supervisors are happier because results are better. So, at your enterprise, consider doing the following four things to make supervisors’ and their subordinates’ jobs and lives much better:
1. Shrink performance categories
The thought Dr. Deming provoked had a gigantic effect on Ford’s management. They recognized the existence and importance of variation in every process; that there are special and common causes of variation; that the variation in a stable process can be very large and that we tend to wrongly attribute the causes to individuals.
Ford streamlined the performance evaluation to four categories:
- Exceeding expectations
- Fully meeting expectations
- Partially meeting expectations
- Not meeting expectations
Performance of the vast majority of employees (roughly 85%) falls in ‘fully or partially meeting expectations’ category; about 10% in ‘exceeding expectations’ and 0 to 5% in ‘not meeting expectations’. The category of partially meeting is intended for employees new to an assignment and still in the learning curve.
Those consistently ‘exceeding expectations’ are candidates for more challenging assignments and responsibilities.
Those ‘not meeting expectations’ are, most likely, misfits for their assignments. If so, they are candidates for reassignment to more suitable jobs. Consider adopting these 4 levels for your enterprise.
2. Clarify expectations
Make it clear to all your employees that their job is to first control and then improve the processes they are working in. This applies to all kinds of jobs, especially in service industries. Keep in mind that results come from processes. When the processes are stable (in control), results will be consistent within a certain range. If the range is too broad, then, the process needs to be improved.
Let your employees know that their primary objective is to try to meet the expectations of management and of internal customers of their processes. In most cases, the prevailing processes may not be capable of meeting these expectations. Instead of accepting the status quo, their job is to improve the performance of those processes.
Be crystal clear in communicating to your employees that you expect them to be team players, help others where they can, think of the enterprise as a whole, respect established processes, think about what is good for the company as a whole, not what is good for oneself / one’s section.
3. Change the focus of performance evaluations – build self-esteem in your employees
The end result of performance evaluation should be an energized employee. The means to achieve that result is through coaching and guiding. When you invest your time and energy for the betterment of your subordinates, they sense it immediately. So:
- Recognize them for what they have done well – give them a sincere pat on the back
- Identify what they can do better and provide the inputs they need (training, exposure, mentoring, etc.)
As your subordinates improve their processes, give them heartfelt appreciation. Take pleasure in their successes. You end up putting a spring in their step; creating a hunger in them for better performance and continued approbations. The desire kindled to do better leads one toward self-actualization – using one’s potential to its limits. In this state one utilizes more of one’s potential, thus benefitting the enterprise financially and oneself emotionally and intellectually.
The enterprise would receive the maximum possible contribution from its employees.
View yourself as a leader, not a controller
Many things change as you adopt process focus. First, your role changes from being a supervisor controlling your subordinates to being a leader guiding them to improve their processes. You no longer need to be a taskmaster. Your subordinates would be knocking on your door with suggestions to improve their processes (remember that you made it a part of their job). Review their suggestions; guide; and coach. Empower them to make improvements in an organized manner. Watch your employees grow.
What can be more satisfying for a leader than to see his people grow and succeed?
So, what can you do to conduct an effective performance evaluation?
- Adopt the 4 categories of performance – exceeding expectations, fully meeting expectations, partially meeting expectations and not meeting expectations.
- Clarify expectations – bring in process and internal customer focus.
- Build self-esteem of your subordinates – Let employees know what they are doing well – throughout the year, not just once a year. Keep building on their strengths.
- Enjoy guiding your subordinates – watch them grow.
Relish the successes of your subordinates!
I welcome your views.
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Over the past 30 years, it has been a great privilege to work with over 100 businesses in over 10 countries in such diverse fields as manufacturing, engineering, textiles, chemicals, information and communication technology, government agencies and banking.
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