Performance Management Goes Beyond the Annual Form

When it comes to managing employee performance, the phrase “an ounce of prevention is worth a pound of cure” certainly rings true, according to David Goldman, an attorney with the law firm Littler Mendelson. He says managers should start by simply telling employees what they are supposed to do.

Speaking during a July 17, 2008, Society for Human Resource Management webcast on how to manage employee performance, Goldman said employees often say they didn’t know what they were supposed to do because no one told them.

This failure to set expectations can be costly for employers who have to defend a wrongful termination claim. The average cost of a wrongful termination lawsuit is $1.8 million, he said.

That’s why performance management systems make lawyers happy, according to Goldman.

But a better motivation for effective performance management—according to Goldman’s co-facilitator of the session, Leila Bulling Towne, president and CEO of The Bulling Towne Group, a leadership coaching firm—should be the increase in productivity an employer can generate when performance is managed effectively.

“Organizations where employees are engaged are 50 percent more likely to achieve a high level of customer retention and 44 percent more likely to achieve above-average profitability,” she said, citing Gallup data. “This is why performance management is so crucial.”

“Companies that do it right simply have higher stock prices,” Goldman added, citing Gallup data that found that companies with highly engaged workforces can outpace the earnings of their competitors by 18 percent. “It simply is a bottom-line issue,” he said.

How To Keep Performance on Track

Goldman said employers should follow a few basic steps to make sure employee performance stays on track:

• Set expectations.
• Provide and ask for feedback.
• Tie it to the big picture.
• Be clear about consequences.
• Tie to quarterly and yearly performance evaluation systems.

Bulling Towne said managers often believe employees should just know what they are supposed to do. Furthermore, she said managers might feel that they talk about goals and expectations too much, but she says that is almost never the case. She encouraged participants to set, and communicate, employee expectations in the form of “SMART goals”, goals which are specific, measurable, action-oriented, realistic and time bound.

Managers should not be afraid to provide constructive criticism, Goldman said, because the goal is to be constructive, meaning that the feedback should lead to a good result for the employee and the company. The feedback loop is what makes expectations come alive, Goldman said. “It gives people the information they need to do their job better.”

“The goal is to make sure that your feedback reflects what the employee is actually doing,” Goldman said.

But that doesn’t mean criticism should be delivered in the form of a “feedback sandwich,” in which criticism is layered between praise. “I have found, in general, that people will believe what they want to hear,” Goldman said, meaning that employees will typically hear only the praise and ignore the criticism the manager meant to deliver.

A better approach, according to Bulling Towne, is to separate the praise from the criticism by using two sentences with a pause in between. Avoid saying “but” and “however,” she said, because everything said before such connecting words tends to be ignored.

Above all, managers should “provide a context for how the behavior or action affects the business,” she said. Goals, tasks and expectations should be funneled down to an employee so he or she can understand a personal connection to the work of the organization.

But managers must be clear about what will happen if an employee fails to meet expectations. “At some point you’ve got to let people know the benefit and consequences of their continued behavior,” Goldman said. “If you soft-pedal because you don’t want to discourage them, who is it going to benefit?”

Regular feedback given by managers should be documented on formal performance evaluation forms, Goldman said. “There is a real big disconnect between regular feedback and the annual review; a lot of the detail gets lost,” he said.

That detail is important, Bulling Towne noted, when it comes to dealing with so-called “difficult employees.” Everyone wants to manage employees who know what they are doing, how to do it and how it connects to the big picture, she said, but in some cases employees go months or years with no expectation, no consistent feedback and no accountability. When it comes time to address a serious issue with such workers, therefore, it’s no wonder they may be perceived as “difficult.”

Managers should be prepared to deal with employees who might respond with aggression, anger, excuses or resistance to change, Bulling Towne said.

Goldman said managers need to do a better job of providing praise. Telling an employee he or she is doing a great job is not enough, he said. “We give praise in such a general way we don’t teach people what they are doing right.”

Rebecca R. Hastings, SPHR, is an online editor/manager for SHRM.