Employee Performance Reviews

Employee performance reviews may be something that business owners don’t necessarily look forward, yet, it is something that is critical and must be done. Performance reviews can provide great guidance for the employee. It will highlight the areas they are excelling in as well as the areas they need to improve upon in order to help make the business a success. It important in a performance review to identify what your business goals for the company are to help the employee in what they are trying to achieve moving forward.

TAB-Certified Facilitator, Oswald Viva, talks about a different way of doing an evaluation of an employee; a method that measures and employees performance rather than just review their performance.

The business world taught us to do formal performance “reviews” of employees on a fixed schedule, as a standard management requirement. Why? Does this practice make better employees? Does it make better managers? Does it guarantee excellence in performance? Do they really work?

Please allow me to answer those questions right now. No, they don’t really work and are mostly a big waste of time and effort.

I favor a different approach and a different method to “measure” (as opposed to “judge”) employee performance. I always told my employees (of any level) that they are being reviewed daily by our continuous interaction and I used “Management by Objectives (MBO)” and a “Review by Objectives (RBO)” method for measuring performance. Obviously the MBO is not a new system or management fad; to the contrary, it has been around forever (it seems), but many times it isn’t well understood or used.

What is the difference between RBO and the standard review method? RBO eliminates the subjectivity of performance judgment, because it does not depend on the difficult impartiality of a manager over multiple employees. With the RBO method—when used properly—there is no subjectivity, no favoritism or personal dislikes; results are clear, the goals were met or they were not and there is no ambiguity.

In a RBO process, a manager still meets “formally” with the employee but they meet to review progress achieved on the goals previously set. Judgment then is easy; were the goals met? Were they met on time? How many did not reach completion and why? Did performance exceed the goals set? Did the employee achieve extra merits?

The same meeting is also used to develop and set new goals for the new period. These goals must be jointly developed and agreed to—rather than being dictated by the manager—to ensure buy-in of the employee and to prevent future discrepancies. The frequency of these meetings depends on the length of the goals, but always ensuring that there are periodic ongoing progress reviews. Managers must not wait until the target date for completion to see if the goals will be met or not.

I’ve heard people claim that the RBO process cannot be used for production line workers or other low level employees because it is not practical to set goals for them. This is a fallacy as goals can be easily developed, monitored and measured for employees of any level.

Another benefit of the RBO process is that, contrary to the traditional method, all parties benefit from it. The employee learns and improves because the manager guides them through the goals set and, hopefully, teaches the employee how to accomplish them. Also, the employee knows exactly how they are being measured and what is required of them. The manager benefits because they have employees that respond to the guidance and become more productive and efficient and the company benefits from the increased productivity generated by happier employees and managers.

Incidentally, another erroneous practice is to tie-in performance reviews with salary increases. Creating this practice aggravates all the negatives of the traditional reviews and also of the RBO program because employees feel inevitably entitled to an increase at “review time”. I much favor a disengagement of the two, associating increases only to the achievement of goals as jointly developed.

My advice then is to scrap the traditional employee performance reviews and adopt a Management by Objectives (MBO) and Review By Objectives (RBO) process that ensures value of the process, fairness in performance judgment (measurement) and eliminates all the negative consequences of the traditional process.