18 Dec 7 ways to make the (dreaded) annual review better for your employees

Originally posted December 12, 2014 by Alan Fox on HR.BLR.com

In the movie Coconuts the hotel employees of a mustachioed Groucho Marx chased him from the lobby and up a flight of stairs.

“We want our money,” they shouted.

“What do you mean?”

“We want our money,” they yelled again.

“I don’t understand. You want whose money?” Groucho shouted back.

“You haven’t paid us. We want to be paid!”

“Oh,” says Groucho, pointing directly at them. “You want my money,” with emphasis on the “my.”

Money is one reason the annual review is dreaded. A second reason is that the employer needs to give the employee “constructive” criticism.

But why should we think of the review as being about the employee? Don’t both the employee and employer want the best possible performance? If you are an employee and don’t perform as well as you can, perhaps you lack the proper tools or training. Maybe you don’t feel appreciated and, as a result, are not as involved as you might be. Tools, training, and the expression of appreciation are the responsibility of the employer, not the employee.

Also, why shouldn’t I want to encourage the best performance possible, and pay fairly for that performance? If all of my 45 or so employees felt unfairly treated and failed to show up Monday morning, my business would instantly disappear. Each of them is excellent at what they do and could easily find a position somewhere else. But how could I reconstruct the outstanding team which we have built together over the past 45 years?

I now regard the (not dreaded) annual review as a review of my own performance, not theirs. I think of my employees as coworkers. We work in the same building, write e-mails to outsiders and to each other, talk on the telephone, and enjoy lunch in the early afternoon. Every one of us is a crew member on the same ship, headed in the same direction. (At Disneyland you would be called a “Cast Member,” which sounds nice but, to me seems more like acting rather than interacting with customers and each other).

The ideal procedure on the annual review is:

1. Keep coworkers up to date on how they are doing during the year.Think of yourself as a coach, offering suggestions and encouragement during the game. Offer approval to encourage your empoloyees, and suggest course corrections to help them focus on what needs to be changed. When your flight lands in San Francisco it’s too late to remember that you should have boarded the flight for Chicago.

In the old days I would say to an employee after his or her first day on the job, “I’ve decided to renew your option. You can come back tomorrow.” I cringe at the thought of how I would feel if my new boss of one day said that to me. Recently I hired someone to help with the marketing and promotion of People Tools. At the end of the first week I asked, “Are all of us providing proper information and support so that you can do your best work?” If you have properly helped your coworkers during the year there will be no bad surprises for either of you at the annual review.

1. When it’s time for the annual review, make sure to conduct it within a week or two of the anniversary date. It’s not fair to your coworkers to delay information which is important to them and keep them walking on eggshells, waiting for “the knife to drop.”

• Ask each person being reviewed to evaluate him or herself. Ask them to write down their accomplishments of the past year and goals for the coming year. Not only does this help your employees learn the valuable skill of self-assessment, it also shows how much you respect and appreciate their opinions.

• Ask the reviewees what salary they think they deserve. I use their recommendation as a guide. Years ago an employee, who worked with me for almost 25 years, always asked for a 10 or 15 percent raise, which was far too high. But at least I knew what she was thinking. One year my vice president/general manager, asked for a raise which was far too small. I increased her salary by three times the amount she had requested.

• During the review ask how you, or other managers, can better assist employees to perform better. “Replace my 7-year old computer,” was one answer. I was embarrassed. I had allowed a valued member of my accounting staff to struggle for 2 years with entirely outdated equipment.

• Give a bonus. If a member of your team has made an outstanding contribution to the company that saves time and money, increases profits and productivity, or improves the working conditions in the office, consider awarding them a one-time bonus. This way, the annual review can be just as much about rewarding performance as it is about offering constructive suggestions on how to improve.

Why shouldn’t you want to encourage the best performance possible, and pay fairly for that performance? If my goal is to retain my team member for another full year, I sometimes pay part of their increased salary as a bonus at their next anniversary date. We all like something “extra,” and often a $2,000 bonus looks larger than $166.67 a month, before payroll taxes.

• Be prepared at to be flexible, especially when it comes to hours of work (some people prefer to begin their work day at 6:00 am), and time away from the office for personal matters. One of the biggest perks I enjoy myself, as an entrepreneur and business owner, is that I set my own hours. I can take off Thursday afternoon and come in on Saturday morning if I like. So I refuse to be a prison warden for my staff. They work with me to accomplish a mission, not to lose their freedom to visit a doctor when they need to, or watch their daughter’s soccer finals.

When I improve as a manager, my coworkers improve at their positions. That is why I no longer dread reviewing them, because, in reality, we are helping each other.