Best Practices: Achieving Goals

Kathleen Schienle

• Publisher: HarperCollins e-books
• Year: 2009
• ISBN:
  9780061738913
• Topic: Betriebswirtschaft
• Subtopic: Personalmanagement

Aiming high is essential to success. But by following through and completing what you've set out to do, you can truly outperform your competitors. Achieving Goals, a comprehensive and essential resource for any manager on the run, shows you how.

Learn to:

• Set smart and challenging goals for yourself and your employees
• Create a goal-focused environment
• Help employees meet their objectives
• Anticipate and overcome obstacles
• Measure progress and stay on track to achieve success

The Collins Best Practices guides offer new and seasoned managers the essential information they need to achieve more, both personally and professionally. Designed to provide tried-and-true advice from the world's most influential business minds, they feature practical strategies and tips to help you get ahead.

Evaluating Goal Achievement

“One way to keep momentum going is to have constantly greater goals.”

—Michael Korda,
author of Another Life

In many companies today, honest, formal feedback and true goal-setting are all too rare. It’s not surprising, then, that skeptics—from the rank and file to organizational behavior experts—question the value of performance reviews and call for their reform or elimination.

Still, many human resources executives and consultants believe that well-designed goals, continuing communication, and regular formal evaluations are essential for maximum employee performance and growth.

Unfortunately, many employees and their managers believe structured annual performance reviews are a nuisance at best, if not a complete waste of time. Many managers tend to dislike the annual review process: they believe it takes too long and that the paperwork is complicated, tedious, and redundant. In the end, they feel, nothing concrete comes of it. Often, individual raises are not linked to evaluation results or to company performance. All employees could be rated outstanding in their reviews, yet a company might be 15 percent below its revenue targets.

New managers, in particular, think of the performance reviews as a formidable task. They struggle to balance positive feedback—which helps employees improve their performance and enhance team output—with criticism—which might result in a decrease in morale, energy, and enthusiasm. Moreover, in some companies, performance evaluations are mostly about delivering bad news: about the department or the organization, about raises or the lack thereof, or about an employee’s poor performance. “Get this thing over with,” seems to be the overwhelming mantra on both sides of the desk.

Yet with the right approach, both you and your staff can look forward to the formal review process as an opportunity to advance goals and sharpen performance, recognize accomplishments, take stock, and make a fresh start.

Performance Evaluation Systems

A well-organized performance evaluation process can benefit everyone, from the employee to the manager, and even the customers and shareholders. In general, most companies evaluate all their employees at the same time at least once a year, although some organizations conduct performance reviews on the anniversary of an employee’s hiring date. Twice-yearly or quarterly evaluations are becoming more popular and are especially convenient and effective in fast-paced enterprises, where a more frequent, formal review of objectives is possible—and necessary.

POWER POINTS

KEY PERFORMANCE RATINGS

Typically, the results of an evaluation are recorded on a standardized form. Many companies use the following simple three-point scale to rate an employee’s competency and performance:

• Excelled–Goals and expectations were exceeded.
• Fulfilled expectations–Goals and expectations were met.
• Needs improvement–Goals and expectations were not achieved.

Most companies evaluate their employees using a performance rating system. In this system, the employee is rated on specific and consistent criteria on a scale typically ranging from “excellent” to “poor.” This evaluation system can be easily standardized across the company, but some argue that it does not offer a complete picture of the employee’s performance. Thus, many companies institute a modified rating system, which combines a rating scale with a narrative description of an employee’s performance.

THE BOTTOM LINE

EVALUATIONS CAN BE INDIVIDUAL OR COMPARATIVE

The two main performance evaluation methods rate employees either by a set of standards or by comparison with others. Several options further define each approach:

Individual evaluation methods–These performance evaluations require managers to rate individuals against defined standards, without comparison to other employees. Choice evaluation allows managers to use a set of descriptive statements about an employee. The critical incident method requires managers to keep a log of incidents of effective or ineffective performance for each person on their staff. In essay evaluations, managers write their own assessments of a worker’s strengths and weaknesses. If a company uses a graphic rating scale, the oldest approach to performance evaluations, a manager scores the employee on a specific list of traits, assigning numeric or alphabetic ratings to each one.

Comparative evaluations–In the comparative approach to rating, managers compare all their direct reports to a list of desirable characteristics. One technique uses weighted checklists of objectives or of descriptive statements. Managers check off the item if they think the worker has met an objective or displayed a trait on the list. Otherwise, managers leave it blank. The employee gets a rating ranging from “excellent” to “poor” depending on the number of checks.

The BIG Picture

FORCED DISTRIBUTION AND LEGAL PROBLEMS

Forced performance rankings, or forced distribution—a brainchild of Jack Welch, former CEO of General Electric—gained momentum as a performance evaluation tool in the late 1990s. Forced distribution requires managers to assign a fixed percentage of their employees into distinct categories, such as “excellent,” “acceptable,” and “needs improvement.” Those in the top category received the highest compensation and promotions. Those in the bottom ranking were likely to be denied increased compensation or promotion and were first in line to be laid off.

During its heyday, one in five large companies adopted forced distribution. Within this system, formerly valued employees who had never had a questionable performance review found themselves at the bottom of departmental rankings—or out the door. Many in that situation were older, experienced workers who had built solid reputations in progressively more responsible roles. As a result, several large corporations ended up settling class-action claims in which former workers charged that disproportionate numbers of employees of a particular gender, age group, or racial designation had been fired.

SOURCE: “Forced Ranking and Age-Related Employment Discrimination” by Tom Osborne and Laurie A. McCann, Human Rights Magazine (Spring 2004).

Still, even those who accept the need for performance evaluations are wary of subjectivity or unfairness. As a result, some companies have devised alternative systems, some based on ranking or comparison, and others on assessments of the employee from many sources.

Paired comparison ranking systems involve pairing each employee with every other person on the team and designating the better performer in each pairing. Forced distribution, also known as “the curve” or “rank and yank,” rates employees on the same type of curve used in classroom-grading systems. Many companies who climbed enthusiastically onto the forced-distribution bandwagon have jumped off, most notably Microsoft, where managers now put fixed percentages of individuals into categories that rate their potential to advance.

In the Roundtable method, members of one department or division discuss the employees in the group and their performance for the past evaluation period. They apply a curve and distribute the salary, bonuses, and promotions on the basis of the discussion.

Far more revealing are 360-degree reviews, which require observations from everyone who works with the individual, including supervisors, peers, direct reports, and even customers. This method helps the employees understand how others perceive their performance.

Plan B

360 DEGREES

Many employees believe the “360-degree feedback” method of evaluation paints a more accurate picture of their performance than feedback from their manager alone. A well-planned, well-managed 360-degree feedback process can be effective, but be aware of the pros and cons:

Pros

• Information is supplied by multiple sources and perspectives rather than from a single individual.
• Personal and organizational performance are integrated.
• Risk of discrimination is reduced, since feedback comes from varied sources.
• Customer service improves when feedback is solicited from internal or external customers.

Cons

• Compensation, promotions, and job longevity may be based on amateurs’ assessments.
• Many supervisors have unrealistic expectations of 360-degree feedback.
• Because 360-degree reviews are often anonymous, there is no way to follow up for more information.
• Reviewers are not always objective and may focus on negatives or boost ratings to make someone look good.
• Paperwork increases when the number of participants escalates.

In short, while performance evaluation systems may vary from organization to organization, they should all aim to measure an employee’s ability to reach their goals in a consistent and fair way.

Red Flags

WHY PERFORMANCE EVALUATIONS SKEW

Certain standard problems tend to occur in evaluating the performance of a department or group of individuals. Be wary of making these judgment errors:

Central tendency error–The tendency to find all employees average and to assign average ratings to all areas of the evaluation form.

Contrast effect–The tendency to give lower ratings to an average employee who is evaluated right after an outstanding employee is.

Halo effect–An unconscious attempt to give an employee ratings that match an overall impression or preconception you have of that person.

Leniency or harshness error–The tendency to view everyone as either good or bad.

Personal bias error–The tendency to give higher ratings to employees you like, or to employees who are generally well liked by others.

Recency of events error–The tendency to focus on more recent behavior and overlook past situations, whether positive or negative.

Evaluation Pitfalls

Clarity, simplicity, and objectivity in performance review systems are the ideal, but putting theory into practice can be a challenge. Be aware of potential obstacles to effective goal-setting and performance evaluation.

The inherent flaw in any evaluation system is that ratings are typically based on opinions, and opinions are subjective. Some managers are generous in interpreting evaluation criteria, while others may be rigid and even stingy. Specialized training in observation and reporting methods can improve a manager’s ability to rate employees objectively.

The design and procedures of a company’s rating system affect its success. If evaluation criteria are difficult to apply, if the procedures are cumbersome, or if the system seems to be more form than substance, participants are likely to disregard the whole process.

Conducting a Formal Evaluation

A performance review is a formal conversation and is therefore different from a casual chat in the hallway. For many new managers, their first performance evaluation means treading unknown territory. Conducting an evaluation is not simply a matter of saying, “I assume you’ve met all your goals” or, “If you didn’t meet your goals, we have a big problem.” Your job as a manager is to analyze the underlying causes that have led to the employee’s success or failure and then communicate that to the employee so he or she can continue to improve and reach his or her objectives.

CASE FILE

FROM ‘RATINGS CREEP’ TO CUSTOMIZED GOALS

Several years ago, managers at St. Jude Children’s Research Hospital in Memphis realized their performance evaluation program was suffering from “ratings creep.” Supervisors had stopped using all but the top two of the five rankings available and so most employees had come to view the “meets expectations” ranking as negative. Moreover, the system was hard...