Transcript: Managing Employee Performance & Conducting Reviews

The following transcript is from an interview between Brandon Laws and Suzi Alligood on the podcast episode entitled: “Managing Employee Performance & Conducting Reviews.”
Brandon: I would like to welcome Suzi Alligood to the program today. Suzi is the director of training and development at Xenium and has 17 years of experience in various aspects of HR. Welcome Suzi.
Suzi: Thank you.
Brandon: Today we are going to discuss a topic on performance management, which Suzi just presented to a group of HR professionals yesterday. Suzi let’s simplify things in a broad sense. What are the purposes of managing performance in the workplace?
Suzi: The main purpose is to align individual and even team contributions with the company’s overall business objective. That involves communicating expectations, setting goals that are linked to those business outcomes that you are trying to achieve, and participating in coaching and activities that motivate and engage employees to be productive and improve their performance.
Brandon: A couple of things I just heard you say: Improve performance, engagement. Are those some of the benefits? On the downside of things, are there any risks involved?
Suzi: There has been research and studies done by Gallup, Watson White and The Work USA study that indicate a direct linkage between engagement and engage-able activities, such as performance management, and that has been linked to productivity and the organizations financial success. If a company has a process in place to ensure that managers are clear on the business objectives and they have the ability to provide line of sight to their employees in terms of clearly communicating what their individual role is in contributing to that larger goal, and then there is ongoing coaching and feedback to help measure and track and guide people to those goals, then businesses have a larger rate of success in meeting their goals and being successful.
On the other hand, as you mentioned, there could be potential risks. If managers are not trained on good performance managements skills, especially some of those coaching and communication skills which are critical, but also just having the insight and knowledge of the company’s vision, business plan and objectives, if the managers don’t have the ability to set those expectations and goals with their employees, then they are less likely to be successful.
Brandon: Conceptually performance management and managing performance throughout makes sense, but is it something that should be completely structured in an organization? Even for a small or midsized company, is it something that you need to develop a system or program around? Or is it something that you just know you have to do.
Suzi: I think that the degree of structure depends on the size of the company. It needs to be something that is practical for the organization and that the employees and managers are going to be able to buy into and really see the value and benefits in. Having a process in place is important, but the depth or degree of detail associated with that process will likely vary. I will say, there should be some process in place for providing frequent feedback, where managers are providing feedback at least monthly, whether it’s positive of constructive, regarding their employee’s performance. Providing the managers with training and tools on how to do that effectively, as well as some structure around measuring performance, setting goals and tracking and following up on employee progress towards those goals.
Brandon: With a performance management system as you’re describing it, developed by HR or maybe the leaders of the group within an organization, have you found any challenges on the manager level that they run across in trying to really live through that development process?
Suzi: It all starts with senior leadership. If the senior leaders of the organization do not value performance management and see the link between engaging the employees and their development and their performance, and having a process to set goals and track and provide feedback on performance, then it is not going to be embraced by managers. I’ve seen a couple of circumstances with clients that we’ve worked with where the managers are not very motivated about doing performance reviews or management with their employees because they themselves have never received a performance review.  Therefore they are not feeling engaged and the message; whether it’s intentional or not, by the senior leaders is that it’s not valued. That’s a potential barrier or challenge for implementing a process. Other barriers or challenges are just having a process that really fits your organization and the positions that the managers manage, and having it be user friendly, simple and easy to use, and really relevant for their business.
When you were asking about what type of process, or to what degree, there should be at least an annual review process- an opportunity for the manager and employee to sit down and discuss how their current performance is in terms of meeting expectations, exceeding or requiring improvement, and then some goals established around those things. Then there should be a discussion at that point around setting goals regarding future development opportunities. Those development opportunities are going to be based on business needs- what skills and talents the business requires now, and also in the future, and considering the employee’s career aspirations. Anytime you can find a marriage between what the individual is passionate about and interested in doing longer term, and what the business needs, that’s a prime opportunity for developing some goals and development plans around that.
Brandon: How much of the performance management process is really about a manager coaching an employee? Is that a huge part of the process?
Suzi: I would say it’s a significant part of the process.
Brandon: What does that look like from a hands-on and coaching standpoint?
Suzi: Performance management requires planning and goal setting and setting expectations, but the real piece that actually gets missed, often because many managers are working managers and struggle with finding time to do those proactive coaching activities (which again are those engageable moments we talked about) it’s that ongoing check in’s whether they are informal or structured, one-on-one meetings- once a month or at minimum once a quarter. It’s that ongoing feedback and tracking that often gets pushed aside because of other competing priorities that managers have. That’s really, next to planning and goal setting, one of the most important aspects of performance management because we know that performance management is an ongoing cycle and its not isolated to just an annual review.
Brandon: I imagine a big part of this is the feedback, the constant feedback to employees from a manager. What kind of feedback can you give, if there are any specific types?
Suzi: Feedback generally falls into two buckets- it’s either positive- and intended to reinforce good performance and behavior, and that could include recognition or even potential reward, but basically that’s that positive reinforcement, that praise, that appreciation that is going to influence and motivate continued positive performance.
The second piece is equally important- constructive feedback. Constructive feedback is providing recommendations regarding behavior that may not be meeting expectations or is undesired, and clarifying what is the desired behavior and what changes need to be made, offering resources and support for that individual and of course holding them accountable.
Brandon: When thinking about performance management, I’m thinking you build the system, and then roll it out to everybody, but your performance level amongst employees is probably a little different. As an example, a top performing employee and a low performing employee- what is performance management like for those two groups?
Suzi: You want to find opportunities to give all employees both positive and constructive feedback. In the case of a high achiever or your top percentage of performers who are performing at a very high level, you want to make sure that you are still providing them with consistent feedback and you’re not forgetting to challenge them with some constructive feedback or helping identify some opportunities to help them hone or further develop their skills. Generally those types of people who are self-motivated, driven, high achievers- they like to be challenged. If they don’t feel challenge present in their job anymore or they don’t know what the next step is, then they are likely to look for it elsewhere. Make sure that you are clear on what motivates those individuals; what’s important to them, continuously challenge them, provide them with a little more aggressive compensation than your at-target or below-target performing employees, so that you retain that talent.
With those that are meeting expectations, I would continue to provide ongoing feedback. Make sure that you are clarifying expectations, asking questions and understanding the motivation or root behind their performance. For example, if they are having challenges or are not strong in certain areas of their performance, really delving into it and finding out if it’s an issue of them not being motivated or committed, or is it an issue of them not feeling confident, or needing more resources, so you can really address those specific concerns and provide them with the coaching and tools and support they need to increase their performance.
Brandon: Let’s switch gears to the performance review. This is one piece of the performance management process- how much of the development process with an employee is achieved through the performance review?
Suzi: I would compare the performance, the annual review process, to the annual or strategic planning that you do in your business. Hopefully you have been focused on and tracking your goals and initiatives throughout the year ensuring that you are successful, but it’s an opportunity to reflect on the past year- what went well, what lessons were learned—and do that planning for the next year or the next review period in terms of what are the opportunities for improvement with regard to current performance, what are the opportunities for development with regard to options for promotion, what that individual aspires to do with the company, and really setting a formal plan or goals around what the business needs and what that employee hopes to accomplish.
Brandon: Is the performance review, as you mentioned the annual review, is it typical amongst employers that it’s an annual review, not a 6 months or 90 days upon first employment- what do you find employers doing?
Suzi: Most employers when looking at a formal review, an overall assessment that may include peer feedback as well as development goals; that it is very frequently annually. Often companies will do, especially if they have an introductory or training period around 90 days, they will do a review that’s less formal than an annual review, but it is an opportunity to sit down and check-in with the individual and ensure that they are at a place that they should be at that stage in their employment. Other companies have quarterly goals that they set with their employees that are tied to incentives, compensation incentives so they may set quarterly goals and review those more frequently. It depends on what the business outcomes are that they are trying to achieve and how they might be tied to compensation.
Brandon: One of the things we were talking about earlier was positive and constructive feedback, and I’m curious. Let’s say, as a manger, I’m working with an employee, and, over time, I’ve figured out what sort of feedback I need to give to them. Is this something that at the annual review I can just say “Here you go, here’s a bunch of feedback,” or is it something that needs to be throughout the year as it happens?
Suzi: Feedback that is timely is more meaningful, especially when you are talking about feedback regarding behavior, as opposed to maybe more objective data such as production or sales data, for example. When you are trying to communicate expectations around behavior, it’s really important to provide specific examples and being timely with that communication is critical so the employee can really understand, “Here is what I’ve been doing that I understand is not effective and how that impacts the business,” as opposed to, “Here is another way to approach the situation or modify my behavior.” That is a really important reason to be timely and specific with your feedback.
Brandon: I can speak personally to that. I have had many performance reviews over the course of my career. When you get the annual feedback it’s broader and not necessarily specific. I could either get peer feedback from co-workers or manager feedback, and it just tends to be broad and it’s not specific to any situation. It’s hard for me to relate that specific feedback to a situation. The timeliness of feedback is so important because it’s tied to a situation that is fresh in your mind and something you can work on; I think that’s your point.
Suzi: Right, it increases the chances of that person being able to change their behavior because there’s more awareness around it at the time. The more frequently the manager can proactively find those opportunities when they see them, and then provide the feedback, the greater the opportunity to change behavior.
Back to your point about saving up feedback until the formal annual review period, if you are doing performance management correctly and effectively, there’s really no surprises, there shouldn’t be any surprises for the employee at the annual review because these are conversations that you’ve been having all along. Not only is it just an opportunity to look forward and do that planning as I talked about before, and development, but its less work for the manager too because they have been doing it all along and they don’t have to sit and think, “Okay I’ve got to do my reviews, I have to think back about how the year went and what this person did and what are their strengths and where can they improve,” and try to think up, “What’s an example I can offer?” for that feedback.
Brandon: It seems to me that the main component of performance reviews should be looking back at past goals and maybe some specific examples of how they achieved that goal, or didn’t achieve, and planning some new goals. That way it’s really the high level strategic part of planning the year for that employee.
In your mind, what are the main components of a performance review?
Suzi: Usually what I see and what I feel is effective is to have some kind of performance criteria that is vital to that particular job; and it should be job specific. If you boil it down to no more than 5- the top 5 competencies or performance factors that are critical to that particular position- the top 5 things that you can describe what success looks like for that position. That’s what you are really going to be measuring that person’s performance against. Having some job competencies that are specific, it is more and more frequent for companies to have a values behavior piece to their review where, for example, they have core competencies that apply to all positions within the organization that are aligned with the organizations values. What are the behaviors that ideally people are performing that contribute to that company’s values- because we know that just positing a piece of paper about the company’s values on the wall is not necessarily going to develop that culture. You need to make sure that your HR program, such as your hiring, onboarding and performance management is designed to measure and hold individuals accountable to those value behaviors that you are trying to achieve.
Brandon: The other pieces that I’ve also heard with performance reviews are: Self-review, a manager review and a peer review. Are those pretty common amongst other employers?
Suzi: It really depends. Typically when we see peer reviews, or 360, which is the traditional term where feedback is obtained from all levels of the organization including customers; that is more common, at least that we have seen here, with higher level positions such as management leadership or executive leadership, because it’s a detailed and lengthy process to gather all of that feedback and compile it and put it into a format that can be presented well in a review. Often times, a third party is brought in to help facilitate that process based on the objectivity and experience.
Typically, a review involves some review of goals from the past review period, some evaluation of current performance as it relates to the competencies or the performance expectations for that particular position, and some future goal setting. The length and detail can obviously vary by company or position.
Brandon: Where does compensation play a role in all of this? Is compensation reviewed at the annual performance review? Or is it completely separate review?
Suzi: It varies, but typically compensation reviews are conducted annually for companies who have a process in place, and while there is a link from performance to compensation, in other words, how an employee performed in terms of meeting or exceeding expectations, has bearing on merit increases. That is common; however the compensation review discussion is not necessarily conducted during the performance review period because the performance review period is really meant to be more focused on engaging that person in their development and performance as opposed to an opportunity to talk about their wage or compensation. Typically they are both conducted annually and around the same period of time- often sometimes because of the fiscal year, and the budget and the planning, merit increases are given out at a certain time of year, so they may have a focal point of conducting performance reviews shortly before that, but it just depends on the organization.
Brandon: Our guest today has been Suzi Alligood of Xenium, thanks for being a part of the program.
Suzi: Sure, thank you!
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