Asset Based Lending
Chief Investment Officer
Commercial Loan Automation
One might ask the question: who needs performance evaluations? No one likes them. Managers hate taking the time to complete them, especially when the subject is not a stellar performer. Employees dread receiving them, often for the same reason. Yet we all feel like they are essential to maintain employee engagement, provide feedback and facilitate career development.
I am a proponent of conducting performance evaluations, but not the way they are done today.
Here are some thoughts as to how to broach the topic:
- Purpose - Why spend so much time on performance evaluations in the first place? There are different objectives the process can achieve, and the first step in improving its effectiveness is to spell out what is the desired outcome. Some use evaluations to enhance accountability. Others use them to better motivate the workforce; some measure success by enterprise-wide results. The point is, identifying the real purpose(s) of this process in advance is the first step to success.
- Executive level support - Even the best-designed paperless performance evaluations require time, thought and often conflict from managers. Consequently, many are loathe to do them. Having strong CEO-level support for the process, coupled with a clear understanding of its goals, are necessary to get the managerial staff to conduct the evaluations and to do so in a productive manner.
- Quantitative vs. qualitative - Too many evaluation forms are too subjective. As a result, they change based on the grading harshness (or lack thereof) of the manager. One’s 5-rated employee will be another’s 3. That per se is demotivating and unfair. Further, when employees are unclear about the objective measures of their success, they are less likely to achieve them. I am a strong believer in a large objective/measurable component to all performance evaluations, and do not accept that there are too many jobs at the bank where objective measures can’t be instituted.
I understand and accept the value of qualitative criteria, especially where corporate culture is strong. It’s just that the ratio is often skewed way toward the qualitative side, which makes the evaluation a judgment call rather than an analysis of facts supplemented by managerial observations. There is room for both, but too much judgment yields unrealistic and unfair evaluations. Just check your own bank’s evaluation ranking distribution—is it normal (10% rated 5, 10% rated 1 and the rest distributed among the other three categories)? I bet it’s not, and that your bank is well skewed toward the higher ratings of 4 and 5. This isn’t because you have only fantastic employees. It is because your managers are reluctant to candidly assess their workforce. Objective measures require that candor, which helps all involved – manager, employee, customer and shareholder.
- The evaluation conversation - Many performance evaluation meetings involve a focus on past events, a look-back. While that is important, the focus really should be on the future. Learning from the past is good, but what can be changed and where management can add value to their associates is in looking forward. There is no point in a conversation that doesn’t add value to the employee and to the bank. So, past performance should be acknowledged, and, whenever possible, celebrated. But the majority of the time should be spent on focusing on career development, future opportunities, employee aspirations etc. This is the one time when the employee gets the manager’s undivided attention for a nice chunk of time. Let’s make the most of it.
- Tell it like it is - Candor matters. Managers lose credibility when they are too reserved where celebrations are in order, or when they sugar-coat bad news. The employee knows reality and needs to know the manager is on the same page, and a willing coach to help the employee succeed in the future. Alignment requires honesty, and alignment is key to engagement.
- Thoughtful goals - Setting goals is one of the most important parts of management, all the way from the top down. Aspirational goals can be daunting but motivational. Layup goals reduce stress but also job satisfaction. Mission-impossible goals yield disengagement. In addition, goals must ultimately get the enterprise to where it needs to go financially and otherwise. So goal-setting is critical.
It is useful to have only a few goals in every evaluation to ensure proper focus. You might also categorize the goals into “do your job well daily” goals, “strategic” goals, “special project” goals etc. It’ll help create a good balance between setting the expectations for the “business-as-usual” part of the job and the “stretch and grow” part of the job.
Spending time on goals, their reasoning, how they fit into the bank’s overall strategy and the employee’s career development and job satisfaction is time well spent. It can provide context for the associate’s contribution to the institution, which, in turn, facilitates employee engagement, better decision-making and job satisfaction.
There is much more to be said about performance evaluation. My bottom line is simple: If we’re spending so much time, money and heart on the process, let’s make the most out of that investment!