blog

Tying it All Together

by Lee

As we put the holidays behind us and move into a new year, most of us also leave behind performance review season. Many of my friends were complaining at various holiday parties about having to "waste" so many hours on performance reviews, discussions about bonuses, and other year-end rituals. While certainly time-consuming, I see these efforts as anything but a waste, if done properly (a big if).

While many (surprisingly, not all) firms conduct performance reviews with their employees, most fail to tie their performance measurement, compensation, and employee development systems together.

Several of our clients, for example, conduct annual performance reviews for their wholesalers that highlight strengths and weaknesses. The training wholesaler efforts at these firms, however, are one-size-fits-all: no special training efforts are made to address weaknesses.

Compensation systems are no better: all too often, we hear from our clients that their employees get paid what the client "thinks they should make" rather than what they have earned. One friend achieved all of her performance objectives for 2007, yet received virtually no year-end bonus, while another missed most of his objectives but was thrilled with his bonus.

An effective, holistic approach to performance measurement should:

• Align individual employee goals with organization objectives (when employees succeed, the company should, as well)
• Measure employee performance objectively, fairly, and accurately (metrics should not be subjective)
• Focus training and development where it is needed most (individualized training plans should be created to help employees' careers grow)
• Tie employee performance to recognition and reward (performance reviews should have a significant impact on compensation)

When done properly, performance reviews become a valuable roadmap for employee success, and not simply another task to complete.