It's Performance Review time again. Managers are ducking for cover and employees are building up steam heading towards the performance review, where the volcano finally erupts. This may sound melodramatic but most research revolves around these themes.

Employees say their manager doesn't pay any attention to them or they don't really know what their job is so how can they get such a poor review, or the manager doesn't understand their aspirations or they don't get paid as much as someone they know doing the same job somewhere else. And they are right.

Managers say they don't have time for the review and what's the point anyway, or they already explained what the employee needs to do so why can't they just do what they get paid for ?

Managers say they did the performance review at the water cooler yesterday. Employees say they had a quick chat at the water cooler but they are no clearer on what their manager really wants.

Problem 1 : Managers Need to Drive Employee Engagement and Commitment

Without an understanding of the relationship of the performance review and employee commitment, managers see the review as "another thing I have to do". Managers need to be very clear on the consequences of conducting or not conducting the performance review, the associated expenses and the long term impacts on the business unit. When conducted correctly using Performance Management principles, the review helps to increase employee commitment, reduces Employee Turnover and drives outcomes for the organisation.

Solution :

The senior management or executive or HR team can educate managers as part of a performance management Training program. Very few managers have been formally trained on the importance of how to conduct the performance review and the link between performance management, employee engagement and employee turnover. No Australian business school teaches this subject.

Problem 2 : Managers Need to Link to the Strategy

Often, managers fail to provide the employee with context for the mission, the "Why do we need to do this work ?".

In this scenario, managers set goals and targets but do not link these objectives to the business unit strategy or the organisational strategy. Employees are not clear on how their mission (goals or objectives) is important to the organisation, therefore engagement is still low and the problems associated with low employee commitment still exist. They don't have any context or meaning for their daily contribution of effort.

Solution :

Provide Managers with a methodology to set objectives linked to the business unit plan and the organisational plan and teach managers how to cascade these objectives to their employees.

Problem 3 : Managers Need Help to Draft Reliable KPI's

Managers set objectives that have no observable or measurable outcomes. This is different to creating activity, which managers are usually good at. They can keep teams of employees busy for years yet often this is to no observable benefit or final goal. Activity is an input but outcomes are an output.

This is because managers are not taught to set objectives that are tied to strategic and operational outputs. Managers are not clear on how to connect employees to the business unit objectives. This is generally an education issue but also requires a framework to address the lack of business context. Managers need a framework to set objectives and a way to connect employees to the organisation plan, directly. Poor objectives without any framework include:

  • Get Sales working better with Dispatch
  • Improve moral between Sales and Dispatch departments

In these examples there may be a business outcome but the employee is left wondering how they will achieve this objective – "How will I know when I have achieved this?". In this instance, there can not be an outcome as no measure of success has been provided.

Solution :

By providing an objective setting methodology and a Strategy map for the business unit, the manager can explain to the employee :

"Notice in the strategy map that we have to reduce the error rate of subscribers as the error rate is costing us a lot in terms of lost customers and rework. Your part of the strategy is to ensure that the recording of customer details is more accurate so that we can reduce the number of products incorrectly dispatched to customers. Your objective therefore is to Reduce the number of incorrect customer records from 18% to 5% by the end of 30th June 2008, without an increase in your labor budget so that we can increase customer satisfaction and the relationship between the Sales and Dispatch Departments".

Conclusion :

A lot of the ambiguity concerning the managers own goals and and aspirations can be removed from the performance review and this in turn allows the manager to engage each employee by better explaining what needs to be done.

Managers must :

  1. Have the importance of the performance review explained to them by a senior manager or executive
  2. Directly link or cascade the performance review back to the strategy or plan so that every employee understands their own part in it
  3. Explain to every employee, what the desired outcome is, not the inputs. Employees already what their job is and don't need it explained again. They need to know the big picture instead.

    Performance Management