Robert Sher’s Performance Review Process

Posted on April 8, 2009

There are many ways to do this, and many points of view, but this is the process I use(d) in my company and find works quite well.  View my presentation slides on this topic.

Performance reviews happen twice per year, at certain times of the year, each year and are not dependent on the hire date.  Announce the cycle to the whole company and put it in the employee manual, so the whole organization has clear expectations, and there’s no easy way to “forget” or let them slide.  I chose two slower times of the year (for my last business), March and September.  Avoid December.

Merit and/or cost of living increases always happened once per year, and I chose September.  I do them together so the “water cooler talk” around this point is contained to once per year, so I can assess the impact overall of raises on my budget, and make balanced decisions comparing the merits of all staff against each other as I divide up the available budget.

A performance review is, at its essence, a documented discussion about the relationship between the employee and their boss, and the employee and the company, and what either party can do to make the employee more successful at the company and as a person.  This is where you care for and guide the employee.  Let this be your prime directive.  Process should be secondary.

At the start of the month during which the reviews must take place, circulate a form (self evaluation form here, the review form itself here) that asks for employee input, and their thoughts about the issues to be discussed.  If they ask for it, give them a copy of the last review.  Remind them to do the self assessment, but don’t insist.  Some people don’t write, hate to do this, etc.

Before the review itself, the reviewer should think about performance issues, what the employee wrote, the prior performance review (get a copy of it) and figure out what they want to say.  They may choose to not fill out the form before the meeting – sometimes it’s best to fill out the form as you talk to the employee.  Unless you’re preparing to dismiss, a negative review that feels overly harsh can be destructive rather than helpful.  Sometimes you can only judge how severe to sound in the moment.

At the review itself, go over what they wrote, or gently ask them questions so that you can LISTEN to their answers and reflect on their perspective.  Have a conversation with them, and as you do so, use the review form (mine is built for this) as a guide.  Fight the urge to talk about the work itself, what projects are going on, etc.  This is not a weekly priority meeting.  This is about the relationship.  Be sure to ask for feedback about yourself too, how you can work better with them.  You won’t hear much, but it’s critical to ask and listen.

When you’re done, you should have the essence of the conversation written down, right there as you sit with the employee.  I do it by hand with a pen, and tell them what I am writing as I write it.  Sign it, and ask them to sign it – just because we are “supposed to”.  Give it to your payroll/HR person to safe keep.  This is a legal document, but I don’t say that to them.

If this is the interval when money is going to be talked about, like a raise, then here are a few more tidbits.  Most people who are expecting to hear their raise will not remember anything discussed until they hear their raise.  So spit it out quickly to get past it, to get their full attention.  If you are a smaller firm and know what the raises will be right away, then give the raise number out in the performance review itself.  However, even if you are small, but you think that the employee may want to have input into the raise amount itself, you should separate the review from the “raise meeting”.  Read on.

For larger firms, the raises are decided and conveyed a week or two after the review that is most proximate to the raise time.  So you’d tell them up front that at this review that they will not learn anything about raises.  That will be the subject of a second, short meeting after pay decisions have been made.  At the review close to raise time, near the end, you should discuss the issue of a raise.  If the company is cash strapped, you’ll make some comments to lower expectations.  You’ll ask if they have any expectations about what raise their looking for.  Since the review is over, they’ll know if you’re loving their work, or they need some big improvements.  I would always explain that raises are based on several things:  merit, parity between all employees in the firm, a comparison to the marketplace for their position, and the company’s ability to afford increases.

After the reviews are completed, I’d give (as CEO) all my managers some guidelines as to what the company could afford – say “the 4% range”, or what was in the budget.  Then I’d ask all managers to allocate the money they had in the budget for raises to all their people, based on their perception of what was best for the company.  I’d meet with each manager, discuss their challenges, approve the raises, sometimes out of budget too if it made sense to me, then the managers, all on the same day, would have short meetings (hopefully) with everyone in the company and tell them the raise, and have any discussions needed.  Most would be short, but there will always be a few that were upset, and those conversations would run longer.

I always made the raises effective the middle of the month promised, so that no-one would get mad in advance that their raise started later than their peers because their evaluation was later in the month.  So for me, it was effective Sept 15th of each year.  We had to have it all done by the end of September or people would be notified of their raise (or lack thereof) by their paycheck, a real disaster.  Emotions around pay never help morale and the relationship much, but they sure can destroy it easily.  Be clear about what is going to happen, and listen to the scuttlebutt carefully so you can take action to squash nasty rumors.

• Promotions are a different matter, and the above does not apply.
• Preparing to fire someone, or where there are legal, HR or other dicey stuff happening are not discussed above, but can have an impact on how all this works.  Each case should be thought through carefully.