According to Gallup’s State of the American Workplace report, a majority of the U.S. workforce (51%) is not engaged with their work. And according to an Engagement Institute study, disengaged employees cost organizations between $450 and $550 billion annually. By contrast, engaged employees make it a point to show up to work and do more work — highly engaged business units realize a 41% reduction in absenteeism and a 17% increase in productivity. It should then come as no shock that employees who are disengaged with their work generally perform below their employers’ expectations. However, effective performance management can often turn around underperforming, disengaged employees.
Recently, one of C2’s long-standing government contracting clients asked for some help addressing an organization-wide performance management concern. The client’s executive team had taken it upon themselves to gather the employee reviews for all company employees from the last two calendar years and organize them into three categories based on those reviews: (a) below expectations, (b) meets expectations, and (c) exceeds expectations. To the client’s surprise, they discovered that almost 18% of their workforce fell into the “below expectations” category. The client wanted C2’s suggestions on how it should begin to address this issue. While organizational solutions take time to implement and realize improvement, the process begins with a commitment from front line managers to train, mentor, and challenge employees on a regular, consistent basis.
A. Frequent Performance Management is Essential
According to research by Saba/WorkplaceTrends.com, 55% of employees feel as though the annual performance management appraisal process is not effective at helping them develop themselves and their abilities at work. The question is then, why wait? If an employee is struggling with performance, it makes little sense to wait several months to address the issue. Conversely, if an employee performs well, telling them they performed well on a project can ring hollow when delivered months after the fact. That’s why the first (and maybe the most important) step in effective performance management is for front line managers to deliver both praise and constructive criticism on a day in, day out basis. Research statistics from Officevibe.com show that 82% of employees appreciate both positive and negative comments about their performance; and 43% of highly engaged employees receive feedback at least once a week. Here are easy ways to give employees regular performance feedback:
- Managers should correct mistakes or problems in employee work as they happen, and not wait until later;
- Create a “carrot”: Challenge employees to meet certain metrics or goals and reward the highest performing employee(s) over a short period of performance (say, one month) with a “bonus” such as additional pay, time off, a gift certificate, etc. This process can engage multiple employees at once and inherently requires regular performance feedback from managers;
- Create a “stick”: Some employees respond better when faced with negative consequences. It is ok to deliver the threat of negative consequences for employees who fail to meet expectations. Obviously, the threat of termination always exists. But smaller, yet meaningful sanctions can sometimes be effective at motivating employees to do better. Detriments such as less desirable schedules or less desirable projects can often serve as motivation to improve;
- Managers should “check in” with all their employees no less than weekly and spend a few minutes discussing with each employee what they have accomplished, and what the employee has yet to complete on his or her “to do” list. Just the act of having the discussion with an employee can motivate them to perform well because they know that someone is watching and is interested in their progress;
- Be sure employees know and understand their assignments. It seems axiomatic, but managers must ensure that they are giving frequent and sufficiently detailed guidance to ensure employees understand their responsibilities; and
- Do not wait six months or a year to engage with new hires. Early and frequent performance management can lay the groundwork for success.
B. The Annual Performance Review is Still a Useful Tool
According to Gallup, 26% of employees say their performance is evaluated less than once a year, while 48% say they are reviewed annually. More frequent performance management is obviously needed, but that does not mean organizations should simply eliminate the once-a-year performance review. Such reviews have developed into a formal, written process where all company employees are generally critiqued using the same set of criteria. The annual review process is an opportunity for organization to provide employees with valuable feedback about their work, an opportunity (perhaps) for an increase in pay, and a chance for the organization to “take the pulse” of how all its employees are performing. However, annual reviews should never be a substitute for more frequent performance management communications.
In recent years, the annual review process has gotten a bad reputation as being a burden for managers who treat the process as rote, administrative paperwork rather than a meaningful opportunity to engage with their employees one-on-one about their performance. That may be why according to Gallup analytics, only 14% of employees strongly agree that the performance reviews they receive inspire them to improve. And the consensus among large employers is that the annual review process costs them millions of dollars each year, due to the time managers spend on the review process and the deminimus returns in increased employee productivity the review process creates. In short, to provide value to both the employee as well as the organization the annual review needs to be a meaningful assessment of performance that is tailored to each employee’s role. Here are a few tips to keep in mind:
- Using a single form for all employees is fine; however, filling out the form with the same descriptive phrases for all employees is not productive. Managers need to meaningfully evaluate employees based their respective strengths and weaknesses;
- Be honest in the feedback to employees – even if the feedback is negative. Many managers want to avoid conflict and tend to “sugar coat” the performance challenges. That helps neither the employee nor the company;
- Do annual reviews on employees’ respective anniversary dates, as opposed to doing them all at the end of each calendar year. Spreading out the reviews will decrease the chances that managers will feel pressure to complete them and rush through them without giving employees meaningful performance feedback;
- Use the review process to deliver both praise and criticism – but be specific. Avoid relying on common adjectives (such as “great”, “poor”, “untimely”, etc.) and instead deliver fact-specific praise and criticism so that employees can clearly understand what they did right and how they can improve; and
- Use the annual review as a guide that both manager and employee can revisit throughout the year to help manage performance and focus expectations.
C. Employee Discipline Compliments the Performance Management Process
Employee discipline also plays a valuable role in the performance management process. Employers typically view “performance management” as encompassing the annual review process, goal setting, coaching, training, mentoring, etc. However, disciplining employees for rules violations, poor performance, behavioral challenges, and the like are an important part of the performance management process. According to a study of more than 80 U.S.-based executives, failing to give poor performers appropriate corrective feedback costs organizations thousands of dollars per day. And according to the research and advisory firm, the Center for Creative Leadership, studies show that employees actually appreciate constructive criticism of their performance – in some cases more so than they appreciate praise. Thus, employers should not shy away from disciplining employees whose performance or behavior needs improvement.
During the disciplinary process the manager should explain to the employee in specific terms what needs to be improved. The manager should also ask the employee what might be causing them to underperform. They may find that the employee does not have access to the tools they need or may need additional training. Not all poor performance is attributable to an employee’s lack of diligence or effort.
The manager and employee should meet regularly to discuss the progress. At the end of each progress meeting the manager should prepare a summary memo or email so that both sides can keep track of progress being made and shortfalls that still need to be addressed. The disciplinary process should also allow a reasonable amount of time for the employee to improve as well as identify the consequences if the employee’s performance does not improve (i.e., written warning, Performance Improvement Plan, suspension, termination, etc.).
At the end of the disciplinary process period, if the employee is meeting expectations, the manager should give them a letter/memo to close out the disciplinary process but make it clear the employee’s performance will need to remain in good standing. In the unfortunate event the employee was not successful in improving their performance and disciplinary action or termination is warranted, the company can feel comfortable that it undertook its best effort to help the employee succeed.
D. The Bottom Line
Performance management is not just a once-a-year activity – it should be part of all managers’ regular responsibilities to his or her employees. As far as C2’s client is concerned, it decided on a two-prong approach to address its survey findings. The first step was to have managers meet with each of the employees in the 18% “below expectations” group and determine a plan of action for each to try and improve their performance within thirty (30) calendar days. The second step was to implement a requirement for front line managers to engage with all of their respective employees on at least a weekly basis to discuss performance issues or answer employee questions about their assignments. To ensure their managers’ compliance with this aspect, the client asked its managers provide a quarterly report about their employees’ performance and progress to the executive team. This process should provide good results for the client moving forward. But there is no one-size-fits-all solution. Your organization’s size and structure will help inform the best type of performance management process to implement. But the only sure way to succeed is to start the performance process now and not wait until you realize (as C2’s client did) that a large chunk of your workforce is underperforming.
C2 provides strategic HR outsourcing to clients who want to develop optimal workforce strategies and solutions to allow them to be more competitive and profitable. C2 blog posts are intended for educational and informational purposes only.