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Most managers see performance appraisals as an exercise of benevolence and compliance. "I know I've got to do this for the employee's sake -- I'm already a month behind the deadline for my team, but I just don't have the time to get to it right now" is a fairly common management response to filling in the circles on the form and writing a narrative that sums up 12 months of work.
So much for the Golden Cycle of Performance Management, which is:
Under the current way of handling appraisals, the first two steps rarely get addressed, leaving the culmination in the third step more theory than reality. Hence the mandatory paper chase at annual review time rather than a system built on implementation, planned feedback and ongoing communication.
Now picture it this way. A senior executive says, "OK, in three months, performance reviews will be due. That means that I'll need to meet with my senior team now to determine where our SWOT (strengths, weaknesses, opportunities and threats) analysis lies and where our division's overall score should come in so that I have an accurate reflection of my individual performance on my own report card."
A slightly different focus, isn't it? Once you can tie a senior leader's overall performance score (and therefore his merit increase and bonus payout) to the appraisal score that his team receives, then "strategic" performance appraisal will be achieved.
Here's how it might work in your organization. Let's say that you follow a scoring system where a "5" means you exceed expectations and a "3" means you meet expectations. Your first question as a senior executive is, "What score accurately reflects my division's or department's overall performance?"
As an example, let's say you are head of sales for your organization. You have a young team of account executives, but your product is selling very well right now, both in terms of volume and margin. You're fortunate enough to be in a niche without tremendous competition, but you know that won't last long. You believe that a 4.2 overall rating for your team would adequately reflect your SWOT score: "Young team with training potential, little turnover, high current profit margins, but competition looming around the corner..."
You will need to discuss this 4.2 evaluation with your senior sales staff and make sure that everyone agrees with the assessment. At that point, your senior managers can go about drafting reviews of their staff members, keeping an eye on the fact that the overall score of each individual team within the sales group should average 4.2 -- the targeted score for the entire sales division.
In essence, these advance discussions and agreements as to the team's overall score have a unifying and harmonizing effect on the process. Senior managers must draft their reviews with the overall 4.2 concept in mind, be able to defend their recommendations and push that critical thinking mind -- set down to their managers.
Once a first draft of reviews is completed, your managers can meet with you to review the narratives and scores of individuals in their groups. You and your managers can then look at each review in isolation, going over individual category scores, narrative comments, development plans and the most critical piece of the review itself: the overall score at the end of the document.
While doing that, you will be able to discuss opportunities to reward top performers, develop training plans as well as stretch exercises for those in the middle of the bell curve, and construct performance improvement plans for those not meeting expectations. More important, you'll ensure that this particular manager's group averages the 4.2 divisional goal you're looking to achieve -- or at least know that any deviation will need to be balanced out by some other team's overall average score in your division.
The 9-Box Roll-Up
With these numbers clearly where they need to be to accurately reflect your assessment of the sales team's general performance, you're now ready to prepare your own performance review for your boss, the CEO.
Let's assume your company uses something similar to a "9-box" succession planning model to assess the performance and potential of its senior executive team. The 9-box model is a simple graph that shows "performance" on the x-axis and "potential" on the y-axis. Your goal in this exercise will be to place the sales function of your company in the appropriate box on the grid. (Note that the nine boxes on the grid consist of three sets of three boxes stacked on top of one another. The ideal scenario would be in the top right quadrant-highest performance and highest potential. The worst scenario would be in the bottom left quadrant-lowest performance and lowest potential.)
Although "potential" is a bit more arbitrary to score and somewhat out of your control, the "performance" score is clearly more concrete. In essence, your responsibility will be to grade the sales function with an appropriate overall score, which makes up a critical part of your own performance evaluation.
Your goal now will be to justify the x-axis performance score on your own review, which matches your sales group's overall rating. You will discuss why you rated your division a 4.2 and account for the "gap analysis" indicating what you will need to do in the future to become a 5.
In short, you will be able to demonstrate that you made an accurate assessment of your team's strengths and areas for development, know by name the key players who stand out among their peers, and have an action plan for dealing with those sales execs who are "struggling to the minimums." In addition, your conversation with the CEO may turn to your potential successors, their scores and the timeline necessary to get them up to speed.
Congratulations, Ms. Head of Sales, you have just demonstrated the proper amount of leadership and career introspection that will ensure the highest merit rating and bonus for yourself, at least from a talent management perspective. For an added bonus, let the CEO know that you're expecting your direct reports to meet with their staff members quarterly to assess their progress in terms of achieving the "measurable outcomes" that you have developed in this exercise.
You'll likewise be able to commit to keeping the CEO abreast of the change in performance appraisal over time, a true "human capital metrics" trending indicator. And voila, the Golden Cycle of Performance Management is back working right as it should!
Paul Falcone is a human resource executive and a best-selling author of five AMACOM books, including 2,600 Phrases for Effective Performance Reviews, The Hiring and Firing Question and Answer Book, 96 Great Interview Questions to Ask Before You Hire, and 101 Sample Write-Ups for Documenting Employee Performance Problems: A Guide to Progressive Discipline and Termination.
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