3 Simple Steps for Conducting Performance Reviews

Posted by Kristen Terpstra

July 7, 2015 at 10:00 AM

conducting performance reviewsYour staff represents your company to everyone you do business with. To be sure, they're one of your most important assets. And like any important asset—your car, your physical health, and your finances—it's important to conduct regular checkups to ensure that everything is on track.

In a post last week, my colleague discussed the importance of having an employee performance management program. One key element of that program, conducting performance reviews on a regular basis, gives you the opportunity to develop good staff and to reinforce good behavior. On the flip side, it also allows you to catch poor performance and take action to correct it before it develops further.

Like many independent financial advisors, perhaps you've put off conducting performance reviews because you think it will take too much time or your employees won't be receptive to constructive criticism. In truth, however, good employees usually welcome feedback if it is helpful, and performance reviews don't need to be time consuming. So, to simplify the process and get you started down the right path, I recommend these three steps for conducting performance reviews.

Step 1: Gather Data

The first step in conducting a performance review is to gather data on your staff's performance. Although this task may seem daunting, you most likely have sufficient information at your fingertips. For example:

  • If your employee helps with your office operations, consider tracking how frequently your office's paperwork is not in good order.
  • If your employee's primary responsibility is customer service, save any e-mails or positive comments you receive from clients.

But remember, whatever data you collect—even if it's behavior you've observed—be sure it's job related.

Be specific. To help ensure that the feedback you provide is constructive, gather specific data rather than general information. If you think your employee needs to "pay more attention to detail" (which is a vague statement, at best), gather specific examples of missed opportunities. For example, you might locate forms that were submitted to your broker/dealer with signatures in the incorrect places. An instance such as this would significantly delay a transaction for a client. But by providing this specific example, you can show your employee exactly where he or she needs to pay more attention in the future.

Step 2: Write It Down

It's easy to get hung up on the written part of a performance review. In truth, simply having a performance review in writing is more important than the format. Below are several tips to help you with the written portion of your performance review.

Give a fair score to your employees. Giving numbers that aren't appropriate doesn't help anyone. For example, one of your employees is tasked with setting up appointments with clients. The employee is excellent at the task, but he has a bad attitude and is constantly arguing with the rest of your staff. Although the employee handles his main responsibility well, it doesn't make sense to give him high marks on an area that involves working well with the team. This would:

  • Reinforce bad behaviors
  • Set you up for potential problems in the future

If a bigger problem should arise, the employee can claim that you never had a problem with his behavior before. And what about the rest of your team? It's certainly not fair to them to give great scores to an employee such as this.

Be consistent. Use the same standard to evaluate one employee as you would use to evaluate all. This is important both from a legal standpoint and for the development of your staff.

Solicit written feedback from your employee. A good written performance review involves the employer and the employee. With this in mind, consider providing your employees with a self-evaluation form. This allows them to provide input regarding their goals, and it gives you the opportunity to solicit ideas from your employees.

Step 3: Have a Two-Way Conversation

The most important piece of the performance review is your actual discussion with your employee. Most people experience anxiety at the thought of a performance review. In order for a review to be effective, feedback needs to be delivered in a manner that's constructive to both parties. If feedback is not delivered in a way the employee can "hear," the performance review loses a lot of its value.

To make a performance review more comfortable:

  • Treat it exactly as if it were any important meeting.
  • Schedule time for it.
  • Hold it in a private location where you won't be interrupted.

Remember, listening to your employees' feedback is just as important as giving feedback. Performance reviews are your opportunity to develop and retain good staff. Allowing your employees to have input on their goals helps grow the company, as well as the employees.

Think Art, Not Science

By spending a couple of hours a few times a year to check up with your staff, you can save time in the long run by retaining good staff or correcting poor performance. But managing staff is an art, not a science. Every situation is different. In each case, treat performance review time with respect. If you do this, and deliver feedback in a constructive manner, the performance review will have more value for you and your employees.

What other steps do you take when conducting performance reviews? What do you find the most valuable about the process? The most challenging? Please share your thoughts with us below.

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