It starts with you-the coach.
You want your firm to be the Dream Team: advisors,
support staff, partners-all at the top of their games, working well
together, no one hogging the ball, no one lagging behind, the playbook
in place and working like clockwork. All the rookies and free agents
hope you will draft them. But developing the dream team, the kind of
team that makes people want to join you, means that you have to be an
all-star coach.
This is what too many advisors forget: To build a
great team, they have to be a great coach. Even natural athletes need
ongoing coaching, support and active performance management. Most
advisors groan when they realize building a Dream Team will require
them to establish a formal system for performance management.
A performance management system is critical to the
health and success of any firm. It allows managers to evaluate employee
progress over time and ensure that firm employees are aware of
management's expectations, and vice versa. Providing a regular cycle
for staff feedback as well as personal and professional goal-setting
not only boosts morale and retention but also encourages progression
along the career path, for the good of the employee and the firm. A
well-designed performance management system helps managers meet the
need for individual challenge and motivation that aligns with the
firm's strategic direction. It also promotes job satisfaction through
open channels of communication and exchange of ideas.
Put The Right System In Play
To design a system for managing employee performance, follow these four steps:
1. Identify the desired performance and behavior of
each employee. It is critical to ensure that you are defining and
communicating desired performance and are clear and specific about
priorities for each employee. This can be the most difficult and
time-consuming step in the process.
2. Communicate management's expectations and set
goals with employees. The performance management system is only
effective if your employees clearly understand the process. You will
need to ensure that everyone knows what is expected of them, how they
can make the most valuable contribution to the firm and how they will
be rewarded for doing so. Setting individual goals with each employee
is an important part of this.
3. Create a performance evaluation process. The
process will include the periodic evaluation of an individual's
performance and communication between management and the employee. It
should be based on the following:
a. An individual's performance is assessed relative to the desired behavior.
b. The evaluation method is as clear and objective as possible.
c. A constructive forum is created for dialogue between management and employees.
d. Coaching and goal-setting is used to maximize performance.
4. Connect performance to compensation. In addition
to coaching and active management, the act of directly linking an
individual's performance to his compensation is a powerful mechanism
for driving the right behavior. Just as the employee needs to
understand what the expectations are, he also needs to be clear about
how his performance will determine his compensation.
Define The 'Win'
The first and most critical step for any coach is to
clearly define what performance she wants to see in her athletes. As an
advisory firm owner, you must decide which characteristics of an
individual's performance are most important-and will therefore be
rewarded. What elements of performance are most important to you? What
is critical to the success and culture of the firm? What behavior do
you want to promote within the firm?
The performance expectations must be relevant to the
position. As a result, expectations will vary for different roles
within the firm, though they might fall into the same broad categories,
like technical skills, people development, client management, teamwork
and business building. The performance expectations that the firm has
defined for each position will create the foundation for the
performance evaluation.
Help Employees Set Goals
A performance evaluation takes into account whether
an employee fulfilled or exceeded job expectations, a review of a prior
period's established goals and the behavior demonstrated by the
employee during the prior period. Managers should also help employees
set goals for the coming year and identify areas that require further
development. The goal-setting process allows you to very specifically
align individual goals with the firm's goals.
The supervisor and the employee should approach the
goal-setting exercise in a collaborative and open manner. Both the
supervisor and employee should have copies of the job description and
career path grid in order to provide a framework for the discussion.
Some questions that can prompt the most effective goals usually address
the following issues:
How does this goal support my current roles and responsibilities?
How does this goal move me toward personal and professional fulfillment?
How does this goal support and align with the firm's strategy?
What is the outcome I hope to achieve?
What will be the benefit, both to me personally and to the firm?
The discussion surrounding the goal-setting exercise
should consider the personal goals of the employee and build on the
prior performance evaluation. Even though the process should be
structured enough to direct the employee's goals toward the priorities
of the firm, it should be flexible enough to respond to individual
inclinations. Of utmost importance, the goals must be achievable.
The following structure can assist in creating effective goals.
1. Identify the Goal: Make sure that the goal is specific, realistic, challenging and measurable.
2. Establish the Time Line: Set a target deadline,
with prescheduled progress updates, to ensure that the employee
progresses incrementally toward the goal.
3. Define Action Steps: Action steps are the incremental steps designed to achieve the goal.
4. Set Measurement Criteria: The expected outcomes
of the goal should be articulated and subject to measurements. Based on
the nature of the goal-financial or cultural-different metrics will
apply.
Evaluations Should Be
True 'Coaching' Sessions
In order to be successful, performance evaluation
sessions must be positive in tone and in substance. While there will be
critiques, it is important that the criticisms not be personal in
nature but focus on ways to resolve issues and concerns. The purpose of
effective feedback is to motivate and empower the employee. The
coaching session should be an interactive conversation in which the
manager is employing active listening skills, giving and explaining
feedback, asking questions, providing supporting evidence, taking great
pains to minimize possible interruptions and being aware of body
language.
Both the manager and the employee should devote some
time toward preparation for this meeting, beginning with, but not
limited to, filling out the evaluation form. Appropriate steps include
reviewing the job description and looking over any achievements and/or
concerns that occurred in the previous year.
The following tips are designed to help managers ensure a thorough, effective evaluation process.
Tips for Completing the Evaluation Form:
Give open, honest, unbiased feedback.
There shouldn't be any surprises-this is all
feedback you should be sharing throughout the year. This process is a
recap of the performance period, not the only time you talk to
employees about their performance.
Throughout the year, keep a file or notes on each
employee so that when it comes time to write their reviews, it's not
just your most recent interaction with them that you remember. Before
you write their review, look over these notes. Review e-mails and other
correspondence. Review the notes and histories on the clients, accounts
or projects the employee worked on.
A given review should consider only the six or 12
months since the prior review took place, and your review and comments
should be limited to performance within that period. Make sure that you
aren't dredging up performance (good or bad) from previous review
periods.
Make sure to include written comments for at least
75% of the areas you evaluate (rather than just a numeric score) and
give lots of examples. A great comment includes:
Description of Performance + Good Examples + Clear Expectations = Great Comment.
Smart Tips That Keep You Legal
Don't use harassing, discriminatory or derogatory language or statements such as these:
"Now that he is older, he isn't doing as well."
"She lacks motivation ever since she became a mom."
"He is not a great writer because he came from a foreign country and doesn't speak English very well."
"It's been a really tough year for her because of her divorce."
Focus on the results and the performance you have observed.
Don't promise or imply future employment-refrain
from comments like, "At this rate, she can expect to be promoted at the
end of the year."
Don't retaliate for adverse personal or professional interactions.
Include the facts: honest feedback with specifics whenever possible.
Tips For Conducting
The Coaching Session
Make sure you are well prepared for the meeting:
Gather feedback from others if you are delivering a composite evaluation.
Ensure that the employee has submitted a self-evaluation.
Review the evaluation period's goals and progress
reports, the employee's proposed goals for the next period and
promotion guidelines/career path grid.
Provide the employee with a copy of the composite
evaluation (and last year's goals) at least 24 hours before the
coaching session.
Prepare for what you are going to say.
It's also important to respect the employee by
respecting the appointment-don't reschedule unless it is a dire
emergency. As famed Duke basketball coach Mike Krzyzewski says,
"Leaders show respect for people by giving them time." Don't reschedule
for a client meeting unless it is a desperate situation. You should be
no more likely to cancel a performance review appointment with an
employee than you would be a scheduled meeting with a client-use the
same criteria.
The meeting itself should begin with an introduction
that sets the stage for the evaluation and builds rapport between you
and the employee. It's a good idea to review the purpose of the meeting
and ensure that the employee has read the composite. During the
performance review, the following items should be discussed: each
category of the written evaluation; individual ratings for each
category and comments to support the rating; summary comments; and
strengths and areas for development. In addition, you should take the
time to review the prior period's goals and the overall rating.
Finally, you should spend time setting goals for the
next period, discussing career development, defining any next steps and
scheduling future meetings.
Implicit in the formal performance evaluation system
is the assumption that informal but frequent exchanges of feedback will
occur throughout the year as part of the management-employee
relationship. Performance evaluations, therefore, are cumulative
appraisals and should not be construed as the only opportunity for an
exchange in feedback.
Know The Score
Another important component of a good performance
evaluation system is to make sure that everyone completing evaluations
is using a common scale, and that they all have the same understanding
of what the various scores mean. In our consulting work at Moss Adams,
we frequently find that while some people interpret a "3" on a scale of
1 to 5 as a good score, others think it is a poor score, even if the
scale has been communicated that the score of "3" equals "good." As
shared in a previous column on bonus structures, an example of a 1 to 5
scale is as follows:
5. Exceptional Performance, Exceeding Expectations:
This person is doing as much as they possibly could. I almost can't
imagine someone doing it better. They really have exceeded my
expectations in this area, and have distinguished this as one of their
strengths. I would point to this person as an example of how to do this
exceptionally well or that they exhibit this quality to the greatest
extent possible.
4. Demonstrating High Performance: This person is
doing this even better than I would expect and I am quite pleased at
the extent to which they are exhibiting this behavior/quality. They
have clearly made this a priority and have demonstrated their
commitment to doing this even better than the guidelines outlined.
3. Satisfactorily Meeting Expectations: This person
is doing exactly what I expect in this area. They have demonstrated
their ability to do this consistently, though on average they rarely
exceed my expectations in this area. I am content, but not overjoyed,
at their performance in this area.
2. Needs Improvement: This person is not doing this
as well as I expect. Though they may have demonstrated this
skill/behavior/quality on occasion, they do not do so consistently at
the level I expect. I have suggestions for this individual on how they
might be able to improve in this area, and I expect them to improve in
this area in order to meet the firm's expectations in this area.
1. Unsatisfactory: This person is not exhibiting
this behavior even close to as much as I expect them to. They need to
make vast and deliberate improvements in this area, and coaching them
here should be a priority.
N/A. Not Rated: There is not enough information or first-hand experience to evaluate performance.
Play To Get Paid
The final step in the performance management system
is to tie an individual's performance to compensation. This can be
accomplished either through an incentive bonus program or through
periodic adjustments to pay. We believe that an incentive plan is often
the best way to accomplish this. Therefore, the
basis for determining the amount of incentive compensation that an
individual receives is based on a semi-annual performance evaluation
process. Scores from the performance evaluation dictate the amount of
incentive pay distributed.
The evaluation tool should function such that it
will produce a composite performance score for the individual. You
should decide how to score and weight the various components of
performance and whether to place equal weight on all areas of
performance.
Once you calculate an individual's score, it will be
used to translate into a calculation of incentive compensation. In the
case of annual salary adjustments, the evaluation score would be used
to determine the amount of any pay increase.
While having a performance evaluation system in
place is the core to your human capital development plan, simply having
a system isn't enough. To borrow another line from Mike Krzyzewski,
"Effective teamwork begins and ends with communication."