October 2, 2012

Management 101: How to use Performance Reviews to Boost Your Profits

In many Companies, performance feedback is pretty rare or inconsistent; neither is good.  Managers may even avoid confronting employee performance problems for reasons like…
  • Assuming that employees know the expectations, and they are willfully not meeting the standard (poor attitude).
  • No expectation of support from top management.
  • No knowledge of standard expectations.
  • No standard expectations to manage to.
Any reason given for not addressing sub-par performance quickly is not a good reason.  Performance problems cost real money, otherwise known ashr solutions avoidable losses.  Overstaffing, excess overtime, higher turnover, production errors and rework are some symptoms of deficient performance feedback.  Because written performance reviews are also part of the (should-be) ongoing documentation process, long-term costs can include high unemployment compensation rates, legal fees, fines, penalties and other hr problems.
Here are a few tips to keep in mind when it comes to performance reviews:
  1. Get the employees to buy into their performance goals.  Since they do the job on the regular, your employees should have great improvement ideas.  Ask them how they think they should be measured, and use at least some part of their feedback.  This will get you buy-in, extra effort and more profits.
  2. Explain how the employees’ goals are relevant to the Company’s success.  If they see the connection, they will trust you more for giving them meaningful work.  Trust is a key factor in reducing turnover, a clear drain on profitability.
  3. Employees tend to assume things are fine unless you tell them otherwise.  No news may feel like good news; giving an employee a chance to improve is real good news.
  4. Review everyone, regardless of their position.  In high performing organizations, no one is above receiving feedback, delivered in a respectful manner.  Having standard processes for all keeps employees’ attention on production, not grievances, complaints and other activities that don’t produce profits.
Any employee who is good enough to hire should be given every opportunity to do his/her best work.  Best work = best profits, if the job and performance criteria are well designed.  Maximize your profits; talk about performance with your employees.  Performance reviews are invaluable hr solutions.

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