1. Create a safe environment.
Ideally, you don't want to be interrupted, so if you have an office with a door you can close that's perfect. Most employees have some anxiety about performance reviews, so it's important to create an environment where they feel at ease. For example, if a closed-door meeting with an employee in your office only happens for disciplinary actions, you should consider how using your office for performance reviews, too, might put your employee on edge. If you can't commit the required amount of uninterrupted time for the appraisal, consider rescheduling to a time when you can.
2. People can change behaviors.
Try to focus on the employee's behavior, not their personality.
Unhelpful: "You're unprofessional"
Helpful: "When you chew gum while you answer the phones, it sounds unprofessional."
Being specific about where the problems are allows employees to work on correcting them. The same is true for praise.
Unhelpful: "You're really good at your job,"
Helpful: "I thought you did a really excellent job of managing our inventory so that we never ran out, but never had unnecessary amounts of stock on hand"
Being specific about achievements and good performance lets the employee know what they did well.
3. Let the facts speak.
If you can keep a journal on the behavior of each employee from review to review, you'll have a good deal of anecdotal and analytical information to base your assessment on. Since most of us find it much easier to remember the things other people do badly, rather than the things they do well, if you rely on your memory, the review could turn out to be much more negative than you think. Let the facts speak, instead of fitting facts to a pre-conceived idea of what the employee deserves.
4. No surprises.
When you go through the performance review process with your employee, nothing you say should be new to them. If you've been coaching them through the year, they'll know that you're aware of the things they've done well, and the things that they didn't do quite so well ... there should have been a conversation about those things at the time. If it wasn't important enough to talk about when it happened, it's unlikely to be important enough to document on a performance review.
5. Be prepared.
Any Boy Scout knows the value of preparation. If you have forms to fill out, fill them out before the appraisal. Figure out what you want to get out of the review -- if you're hoping to move someone up in your organization, that might require a specific review score, but be wary of making the review fit the goal. If the employee is at the right stage of their development to move up, their behavior will show it. Promote them too soon, and they may be unprepared for the increased responsibilities and challenges. That can impact your employees' confidence in your ability to manage them, and your employers' confidence in your ability to assess the talent at your disposal.
6. Written goals provide clarity.
As part of your preparation, take a good look at the employee's job description. Before you sit down to score their performance, ask whether it was an expectation that the employee would do specific things. In the day to day running of a business, it's easy to assume that an employee knows that something is part of their everyday duties, when the employee might have no idea at all -- and sometimes that's because the expectation isn't documented anywhere. Be careful that you are assessing whether the employee is doing a good job compared to the job that you offered them, or some unspoken set of tasks that only exist in your head.
7. Employees are more than a job description.
Sadly, for a lot of companies, the majority of employees' skills are never utilized. While these skills and outside interests are explored a little at the hiring interview, they are often ignored once the employee gets settled into their position. If you're looking to fill a new position, it's possible that the skills you're looking for are already in your company in a different role. The person with a former career in commercial real estate, who is now working for you in sales, may be the ideal person to take a lead role in developing new office space for your company. You hired people with an employment history, reveiew time is a great time to ask them if there are other skills they have that they'd like to use more often in their job.
8. Keep them engaged and invested.
In order to keep employees engaged in the growth of the business, the business should be engaged in the growth of each employee. That doesn't mean you have to pay for college tuition, either -- by setting goals and assigning tasks that expand the employee's horizons, and improve their career prospects, you achieve two things: one is that the employee feels respected and invested in, and can see their future career options; the second is that you retain a motivated member of your team who sees their future at your company.
9. Your employees will talk, but you shouldn't.
After the performance review is concluded, your employee is going to leave the safe environment you created for them to talk about their performance -- and go straight to their colleagues and tell them all about it. Understand it and accept it. You can ask them not to talk about it, but you can't actually stop them. It's human nature -- the first thing your newly appraised employee will want to do is celebrate a great review or moan about how you just denied them a pay raise. The best thing you can do is tell them that certain things shouldn't be disclosed -- and if they divulge too much to colleagues, take some time to talk to them about what your expectation was, and how they did not meet it. Then put it in your journal for the next review.
10. Be their champion.
However you think your employee has performed throughout the year, your employee will have a different idea. And, if asked to document it, your employee will probably err on the side of modesty. Ask your employees to fill out their own performance reviews, so you can discuss it with them. This has a couple of advantages: the first is that they will have a better memory of their achievements and disappointments than you do; and secondly, you get to tell them that they're being too hard on themselves -- and give them better performance scores than they gave themselves. Even if you agree with their criticisms, you're agreeing with their assessment of themselves, which will also be perceived as a positive.
The employee will leave the assessment feeling like you built them up and agreed with them, rather than knock them down and point out their flaws -- and wouldn't we all like a boss like that?
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Right-size the Right Way