How to Streamline Performance Reviews (All Business.com's Chris Bjorklund interviews HR guru Danika Davis on how to streamline your company's performance review policy.)

Chris Bjorklund: You're listening to the AllBusiness podcast. I'm Chris Bjorklund. If you're getting this through iTunes and RSS feed or an on-line streaming media player, you have the opportunity to hear a more valuable advice from top business experts right here on AllBusiness.com. We'll be right back after this brief message from our sponsor, comcast.

Chris Bjorklund: Many employees have no idea how they're doing on the job because their bosses don't give them feedback or conduct any kind of performance review. Our guest today believes that's wrong. Danika Davis has worked nearly 20 years in the human resources field and is currently CEO of the Northern California Human Resources Association. In this show, she'll be talking about how to evaluate your employees in six easy steps. Danika Davis, welcome to the AllBusiness podcast. It's a pleasure to have you.

Danika Davis: Thank you Chris. It's great to be here.

Bjorklund: Some employers, when they begin thinking about doing performance evaluations, might be rather overwhelmed. How do you begin coaching someone like that?

Davis: Well, I think the first thing is to tell them it doesn't have to be really hard. I think that we look at these things and if you go out and you do a search, or you've had handled a huge organization and this complex form that had lots of math on it and, you know, seven levels of performance in 27 categories--that is overwhelming. But, it really doesn't have to be that way. Where you start with performance management is, "I want to recognize the people who are doing great and I want to help the people that need to get better."

Bjorklund: Do you think that you should warn your employees that this is coming if they've never had performance reviews before? I mean, shouldn't they be involved some way in the process?

Davis: Well, I love the term "involvement." I think when we use words like "warn," it shows just the emotion that's around. "Folks, you're going to evaluate me." "I have to evaluate others." "This is going to be negative." So, I'd love to start maybe changing the thought process around performance management to recognition and development, which I don't think it has historically been. So, should you warn them? I think you need to tell folks that you're going tohave this great new plan and really release it in a positive manner. Words matter.

Bjorklund: I was going to say the spin is everything. Or a good part of it.

Davis: Well, you know. I think that in a spin, often times is that you're kind of tricking people. I don't know if it has to be a trick. It has to be about what is your goal? Is your goal to document people so if you fire them and you get sued that you will not have any liability? OK, that can be part of it. But, really if you start with the goal of being positive, talk about it in a positive way, that we might always have been giving you feedback, which I hope is the case if you're supervising or managing someone that you're letting people know when they're doing a great job and when there are areas that they need maybe to do better and give them the tools to do that is the second part of that. We just need to take some of the emotion out of this as we begin. So a positive thinking place about it, the words you use--it's a development plan, we're kind of seeing evaluation be a term that goes off, and it's more development and performance management, performance recognition--all of those are ways to introduce it. But, first you've got to introduce it to yourself. If you're a manager or a business owner and you're thinking about doing this, I would ask yourself why you're doing it and start there.

Bjorklund: What about involving the employees in the actual tool that you might use for the review? We're not saying evaluation. I'm trying to get away from that word.

Davis: I'll probably slip into that vernacular myself. It has been around for a long time. I think that that's a fantastic idea. The talk about people's resistance to change--there has been some research that people don't mind change. We change all the time. We don't like being changed without having any influence in a process. And that's becoming more and more true with each generation. Folks now can customize everything right? They customize their computer screens, what music they listen to. So, they're demanding or they're expecting these same dynamics to be in the workplace. So, involving them in the design of it would be fantastic because they've got buy-in from the beginning. So what categories should we be looking at right? What's important to our business? If you had consensus around those things, you'd be halfway there--as far as, "Hey, this is important to my business." So, you know, the areas that are on almost all performance management tools, being work quality, productivity and relationships, internal or external, are there but also helping the folks pick the words that you use. Every organization has their own vernacular. So, having those folks involved in what words are used, what categories are measured, will really go a long way to making the program stick.

Bjorklund: What role should the supervisors play if your company is big enough to have supervisors? I mean, when do you involve them? Do they do the reviews? Does one person do the reviews? Are there any guidelines on that?

Davis: Well, whomever is managing an individual should be the one that's primarily responsible for performance management. It's kind of inherent in management that you're responsible for the performance of your folks. So, if you have supervisors and managers, they should be doing the reviews.

Bjorklund: Not an HR person that oversees the whole shebang?

Davis: Well, it's very uncommon for that to be the structure. HR is, generally speaking, responsible for the process, but not for the output. And so oftentimes, if you're large enough to have an HR person, you're definitely large enough to have supervisors right? Usually, an organization is right around 30 to 50 before somebody even thinks about considering HR as a full time position. Oftentimes, it's the business owner or the office manager or folks like that. Supervisors should do the reviews if you have supervisors. Back to the earlier comment you made, they should be involved in helping design the process. Now, if you're an established organization, you're not going to redo your process every year. I think I was sharing that inside about having people involved if it's new. If it's new, then they're involved. But if it's new supervisors and you already have 10 of them and you already have a process then they're not going to be involved in the development of the process. They should certainly be the primary folks conducting the management session.

Bjorklund: Danika, how often should you review employees? Are there standards for that or best practices? What's the thinking on that right now in the HR field?

Davis: The tradition is very much still an annual review. There's been some new thinking on that it's difficult to set goals for 12 months when business models change so quickly.

Bjorklund: Oh, it's fast out there.

Davis: So going to quarterly reviews is one of the newer iterations. But, there's quarterly performance management that's more formal. Probably the newest innovation is the concept of coaching and mentoring being that whether you have a form that you fill out either quarterly or annually, it's really the coaching and mentoring every single day. It's those interactions that is the real performance management process. So, at least annually, better quarterly and whether you have a review schedule or not, everyday.

Bjorklund: What about the sticking to the schedule once it's established? How important is that?

Davis: I think it's critical for the following reason: nothing says "I don't care about you" more than missing someone's performance management review if you're a manager. There's a lot of emotion around this. "Someone's going to tell me how I'm doing." That's important to most people because most people want to do a good job. So, if you put off their review or forget or make them beg to be evaluated, I think you put them in a very difficult emotional spot. So, if you're going to have a schedule, you need to adhere to that schedule. Think of it. If you're a manager, your employees are your customers in one very large sense. And, if you were a manager and you're a traditional definition of a customer, doing it whenever, even though you said you were going toget it by Friday but you're going toget it to him whenever, that wouldn't be OK for customer service. To the outside world, why is it any different to people who are looking to you for guidance and leadership to put off something so important to them?

Bjorklund: My 23-year-old son has his first professional job. He said that ten people had to review him and eight of them had and two of them hadn't. It was an upsetting thing for him. He just couldn't believe after busting his tail for a year that those people didn't care enough about him to take five or ten minutes to answer whatever questions there were. He was annoyed that he had to follow up and press them to do his review.

Davis: That's exactly...

Bjorklund: You're so right.

Davis: Think of it. It's difficult when we're managers sometimes `cause we're so busy to think back to how we would feel if someone told us, "Hey, we're going to tell you how you're doing" and then not. As your son's experience is evidence of asking for it, it just doesn't feel good.

Bjorklund: It didn't feel good to him at all. Since we're talking about how to do these evaluations, I think it's--sorry, I slipped into that word again--reviews, I think it's important to talk about what should be included in a review. Are there some key things? Should you focus on only the positives or should you really talk about the areas where there's got to be some growth in a particular position?

Davis: I think it depends on the structure of your review. I hate "it depends" answers. But, it depends on the structure of your review. Some organizations have gone to where they have one document that is for acknowledgement of the positive and setting goals. And, another document if there is an improvement area that that's handled separately. There's some reasons to do it that way. Because sometimes people will only see the negative or only see the positive. So, if you kind of design it so that they're looking at one thing at a time, it helps you focus on that. If you're only going tohave one review time though, you have to include both for a couple of reasons. One, you do people a disservice. It's kind of disrespectful to not tell somebody when they're not doing what they should, and then get upset about it and fire them later. And then it also protects your organization from liability. There's almost nothing worse as a human resources professional or a labor attorney will tell you than "A manager's kind of fed up, there's a straw on the camel's back, I've got to get rid of this person." You pull the documentation if your company has a performance management process and everything is glowing. It's like, "Well, what is it?" "Is this person great or is this person not?" "Well, I didn't want to put any areas for improvement because it's just hard to talk about those things." Well, you know, management is not for wimps. You have to talk about the things that are hard to talk about.

Bjorklund: And now, if we could just condense the steps that you have to go through to do the review, can you help us with that? So we can have a, sort of, Cliff Notes version or whatever it's called SparkNotes.

Davis: I'm old enough that CliffsNotes to me makes sense.

Bjorklund: OK. Can we talk about those because you, kind of, honed in on I think some really--you've simplified it in a way, where you start. I think one of the steps in the beginning is just to start preparing to do it.

Davis: Well, the very first step, we've already addressed which is to decide you're going to do them. And then probably the very first step is to prepare for the review throughout the review period, whatever the cycle is--if it's quarterly, if it's annual. This doesn't have to be hard. I've had, when I've been a manager of a team, a folder in my desk with each person's name on it. And as things came up, just jotted myself a note on a post-it with the date and what happened and slipped it in there. There's an inherent bias that's called the "recency bias" and that is that--especially if you have annual reviews--you can really only remember about the last 30 days right? So, you are a busy person and you sit down with all good intentions to do the review and you've had a lot of things on your mind and you only remember what happened in the last 30 days. What really undermines the credibility of the review process is to only list things that have happened in the last 30 days in a 12-month review. Because what if they've been great and had a bad last 30 days? So, all of a sudden they get a not-so-good review just because of something very recent. And then, the individual's like, "Yeah but for 11 months I was great." It does require a little bit of discipline. The opposite can also happen--that they were really not-so-great for 11 months and employees know how to do this. You know my son gets really good right around his birthday. So, folks are intelligent which is why it's so great to work with them. And they know their review's coming and all of a sudden, they're at work on time everyday, offering, being helpful--that's all trying to play into this recency bias. So, the first step, prepare all through the review period. The second step would be to have them give you some feedback about their own performance before you even start having your documentation process or a conversation. And, that serves several purposes. One, it involves them as a participant. It's not something that's happening to them. It sets you up to have a conversation about performance rather than a dressing down about performance. It also gives you an opportunity to remember some of those things you might have forgotten to write down.

Bjorklund: So, it doesn't have to be a form even.

Davis: No. You know, really, I've sent an email out and said, "Just getting ready, some thoughts around this, can you let me know what you think you've done particularly well this year." These things don't have to be complicated. I think we build complexity into them because we think they're more objective if they're more complex. Performance management is subjective by nature. As somebody who's telling you how to do it, don't be afraid of that. The last thing that having a self-evaluation does in the second step is it sets you up in case there's real divergence in what you, as the manager, think their performances and what they think their performance is. So, if you get back that self-evaluation form and they, you know, should have your job or your boss's job or should rule the universe from their own perspective and you don't think they're doing so great--that's a different mental model as you prepare for the conversation. "Boy, we're really far apart. I need to give more examples. I need to lead this differently." If you're right on target, boy, that's going to be an easy conversation right? You agree with them. You're right there. They have your expectations, you have theirs. The third step would be to prepare the document. Well, I'm a huge fan of management by walking around and constant specific feedback in the moment. If you're going to have a formal process, you have a document right? When people talk about performance review evaluation management, it's a codification. That's not a bad thing. It's a way to reward people that are doing well by writing down what they've done well. And, it's a way to really help people move forward. So, you're going toprepare that document and you're going tolist specific examples. It's really tough when you get a review. So, think of it as the participant. So, you get this review and it says improve communication and you don't think you have a communication problem. How do you improve it? So, part of the preparation of that document is that you give someone an example, you know, especially if it's an improvement area. Even if it's a compliment, you know, great customer service skills. What does that mean? So, if you got those notes, you could put, "Back in February, you went above and beyond on the Jones account when you assured that their order shipped on time by staying over." But really in the area of improvement opportunities or performance improvement plans, being specific that you, "I've observed you four times in the review period being abrupt, which makes people shut down." Which damages your long-term relationships with your co-workers or your customers.

Bjorklund: You've touched on the term "document." Can you give us some ideas about where to find such a document if you've never done these kinds of reviews?

Davis: You know I never create anything I didn't try and steal first. And, there's a lot of resources available for managers starting to embark on this process. I'm a huge fan of just typing into your favorite search engine "performance review." You're going toget a lot of things come up and some are going tobe actual samples of the form. You can take a look at what you like and don't like and just kind of Frankenstein your own a format of that. You can purchase forms. On many of the things that will come up in that search will be websites that offer stock forms for sale. Sometimes, those are challenging because they include categories that are important to your organization. So, you might buy it but then retype it and only include what's relevant to you.

Bjorklund: That's good to get started though because sometimes a blank piece of paper shuts people down.

Davis: You mentioned it can be overwhelming. If you're writing a paper, the worst thing is staring at you. The most intimidating in the world is a blank sheet of paper when you've got to fill it up and you don't know what to put.

Bjorklund: Absolutely. I guess we're on step 4 now.

Davis: We were. We were talking about scheduling the review session--and we've touched on this already--and doing it on time and really scheduling it. Don't tell someone when their review is going tobe. It's all about this participation so going to them and saying, "You know, it's time. We're going to sit down and talk about this. What are good days for you?" It's amazing the difference with "Be in my office at 5 o'clock on Tuesday" and "I have openings these three days, pick one." It's all about lessening that emotional part of the review or performance management process. So, having the individual have some say in when that's going to be is usually important. And then, five--you need to conduct the session. So, you're going totalk with someone, hopefully it's a conversation rather than a monologue. I'm not a fan of having someone sit in front of you and reading them a document--that's not a conversation. In some industries, your teammates don't know how to read but most of the time they do. So, if you're going to say, "I'd like to call out a few areas I've noticed in this area" and give them a couple of examples, tell them you're not going toread and you expect this to be a dialogue. "How about your thoughts about this area?" I think that's real important.

Bjorklund: Maybe you should call them employee performance conversation.

Davis: That would be a great evolution in the process. Because, really, you want to have a conversation with folks. I think some of the trepidation comes around "I'm going to go into a room and someone's going to just read at me. I'm an adult, I'm a contributor." So, that's not a comfortable thing. You know, the preach and perch or perch and preach, I guess, methodology. So, conversation is better. There's also then the thought about where you sit. And I think small things are big things so if you're going tohave a conversation across a 20-foot table where the boys are on one end and your chair is higher--that's not a conversation. So, sitting next to the person catty corner--you know, all the things we learn about good dynamics, the interpersonal dynamics--are at play and probably more so in this thing. And lastly step 6 is to follow up. Some of the new thoughts on performance management is you don't actually complete the whole document. You have a section well, that's about goals and that you fill out together in the review session.

Bjorklund: Pretty interesting.

Davis: And then you follow...

Bjorklund: You partner up.

Davis: It is really about the evolution in performance management is about coaching and mentoring which is not mono directional.

Bjorklund: What would you say, in closing, to an employer who's really on the fence about the value of these conversations, these performance conversations or reviews? You just want to push them over to the other side and encourage them. Is it good for business?

Davis: This does have an inherent level of bias in it. You have to realize that in the career of human resources. So, what I would do to someone who was on the fence: "Most business owners want to optimize every element of their organization that is involved in the final delivery, whatever their product is." So, they'll spend a lot of time if it's in manufacturing, making sure that machine is at top efficiency, and that it has the right parts, and it has a regular maintenance schedule, and they do all of those types of things around a hunk of equipment that can't change. It can only be changed. And yet, we're not doing that. For what all of the pundits say is the real differentiator amongst a thriving business and one that either just survives or one that fails and that's our people. So, to say it's not worth it to tell somebody that they're doing great or to help them do better, particularly when you do some kind of a cost analysis on what it is if you got somebody who's almost there but not quite versus letting that person go on out and, you know, casting your net to see if the next person is better--that's very expensive to do. So, good performance management is good for business because it is keeping that element. What people are saying is the most important part of a thriving entity which is, "It's the people, doggone it." And, putting that kind of attention you would towards a machine in manufacturing or a computer that you went and bought more memory for or any of those types of things.

Bjorklund: If a small business or a medium-sized business listening to this needs help getting started, you must know some resources. Where can they begin?

Davis: Well, organizations like the one I work for, the human resource organization, they are in most geographies so they are nice places to start. There are also again your favorite search engine, type it in. Entities like AllBusiness.com--great place to start right? You're going and you're looking. There might even be a form that you're looking for that's there or something in one of the things like this--a podcast on where to get started. Small business entities, organizations that are designed to help small businesses that are through local city government or Chambers of Commerce. Some community colleges also have these types things--incubators where they help you get started.

Bjorklund: There's lots of help out there.

Davis: Oh, there's lots of help out there. It just doesn't have to be that complex, you know. If you had a piece of paper and you sat down and say, "What makes my business work?" And you wrote those down and that's what you used, you've got a performance management system.

Bjorklund: So you don't always need to hire an outside consultant that would cost you lots and lots of money? You really don't have to start there.

Davis: I don't believe so. Start where it's comfortable for you and grow from there. It can be an organic process.

Bjorklund: Danika, you're a real pro.

Davis: Thank you.

Bjorklund: I really enjoyed talking with you today. And, I hope that we can cover other human resource issues in the future.

Davis: Fantastic. I welcome the opportunity.

Bjorklund: In this AllBusiness podcast my guest, Danika Davis, CEO of the Northern California Human Resources Association, has discussed how to conduct employee performance reviews. If you have a comment about this show or would like to suggest a guest for a future podcast, send your email to podcasts@AllBusiness.com. I'm Chris Bjorklund. Thanks for listening.