Re-eval­u­at­ing the eval­u­a­tion sys­tem

De­spite mov­ing into an era in which em­ploy­ees are re­ally seen as a cap­i­tal of the com­pany and em­ployee train­ing has true value in im­prov­ing a cus­tomer’s ex­pe­ri­ence, the ar­chaic sys­tem of bian­nual eval­u­a­tions per­sists. Mas­ter Trainer Mark Dick­in­son thinks

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Go­ing back in time, there was a point when ev­ery com­pany com­pul­sively re­viewed the per­for­mance of all of its team mem­bers on a bian­nual ba­sis. Jan­uary and June were statu­tory months for em­ployee re­views. Some­time af­ter came the 360 re­view and things got even more com­plex. Most com­pa­nies un­der­took th­ese re­views with­out even think­ing about why they were do­ing so; eval­u­a­tions were just one of those things that ev­ery ‘good’ com­pany should do.

Em­ployee hap­pi­ness suf­fered, as bell curves av­er­aged out the re­sults of the eval­u­a­tions and en­sured that only a small per­cent­age were ever in the high­est per­centile, with the ma­jor­ity fall­ing in the mid-range and a few be­ing as­signed the be­low-stan­dard mark. The bulk of this eval­u­a­tion process was cre­ated for the pur­poses of ad­just­ing salaries and en­sur­ing that the over­all in­crease given to the com­pany’s work­force was an aver­age amount, say five per­cent. The prob­lem with this kind of sys­tem, how­ever, is that the high per­form­ers end up with the lion’s share of the in­crease, while the work­force ma­jor­ity end up get­ting the stan­dard pay in­crease and the poor per­form­ers be­come dis­en­fran­chised.

The prob­lems with the cur­rent sys­tem

• Eval­u­a­tions have con­sis­tently equated to an­nual in­creases and salary ad­just­ments, yet it is fre­quently an un­fair sys­tem. Eval­u­at­ing peo­ple has of­ten been sim­ply a cover story for those ad­just­ments. • True eval­u­a­tion of an em­ployee’s per­for­mance is a skilled task that re­quires ex­pe­ri­ence in hu­man re­sources and per­haps some psy­chol­ogy. Many eval­u­a­tors do not have the re­quired skills. • Un­der­tak­ing an eval­u­a­tion is time con­sum­ing and where there are many em­ploy­ees in a de­part­ment, the task is of­ten not given the fo­cus and im­por­tance that it re­quires. • Em­ploy­ees rarely feel that their eval­u­a­tion is a true re­flec­tion of what they be­lieve they con­trib­ute to an or­ga­ni­za­tion.

The fu­ture

In or­der to sat­isfy em­ploy­ees’ needs, while en­sur­ing they feel val­ued by an or­ga­ni­za­tion and that their ever-in­creas­ing mon­e­tary needs are met, it’s im­por­tant to look at the en­tire scope of eval­u­a­tions from a fresh per­spec­tive. At Done!, here is how we ap­proach the chal­lenge:

There are four kinds of money that an em­ployee thinks about

An­nual raise - em­ploy­ees ex­pect to gain an in­crease in their com­pen­sa­tion rel­a­tive to the rise in na­tional in­fla­tion. Things cost more, through no fault of their own, and they need more money to stay afloat. The salary they earned last year will no longer pay for the things that it would buy last year. This is specif­i­cally re­lated to in­fla­tion.

Con­tri­bu­tion to the or­ga­ni­za­tion - over a pe­riod of time, em­ploy­ees con­trib­ute their en­ergy, pas­sion and ef­forts to their place of work. Rec­og­niz­ing their con­tri­bu­tion is a moral re­spon­si­bil­ity of an or­ga­ni­za­tion. This con­tri­bu­tion is un­re­lated to their per­for­mance; they have poured their time, ef­fort and life into the con­tin­u­ance of the busi­ness. Mostly em­ploy­ees do their work to the best of their abil­i­ties and set out each day to give their all. We have noted over time that em­ploy­ees’ per­for­mance is pretty much set ac­cord­ing to their per­son­al­ity, their pas­sion and their rea­son for work­ing. An eval­u­a­tion high­light­ing strengths and weak­nesses is help­ful for them to un­der­stand ar­eas where they can im­prove, but this is un­re­lated to their gen­eral con­tri­bu­tion. Em­ploy­ees will fre­quently per­form at the level that is re­quired of them by their man­age­ment team.

In­creases - em­ploy­ees that get pro­moted and are re­quired to take on greater lev­els of re­spon­si­bil­ity are en­ti­tled to an in­crease in line with the new level of au­thor­ity and re­spon­si­bil­ity that they carry. There­fore, it is rea­son­able for an em­ployee to ex­pect an in­crease when they are pro­moted.

Bonuses - th­ese are fre­quently tied to a con­tract that states what per­for­mance is re­quired to earn a spe­cific amount of money for a ser­vice per­formed and is there­fore not part of the eval­u­a­tion process. If dis­cre­tionary bonuses are paid, it is the de­ci­sion of the own­er­ship of the com­pany.

So, there re­main three kinds of money that con­trib­ute to the em­ployee’s ex­pec­ta­tions. What if we were to turn the sys­tem up­side down?

Birth­day in­crease cov­er­ing in­fla­tion

In­stead of bat­tling with the eval­u­a­tion process and all its va­garies, what if we re­placed the sub­jec­tive process with an ob­jec­tive one? Ev­ery year, on an em­ployee’s birth­day, how about they au­to­mat­i­cally re­ceived an in­crease rel­e­vant to the gen­eral in­fla­tion­ary level cur­rently in the mar­ket? If in­fla­tion were to run at 3.5 per­cent, then it would fol­low in most cases that prices of prod­ucts and ser­vices sold would in­crease by a sim­i­lar amount. There­fore, log­i­cally, the cost of la­bor would in­crease by an equiv­a­lent amount.

Pro­posal: Set an an­nual in­fla­tion fig­ure on Jan­uary 1 each year which is the guar­an­teed in­crease that ev­ery sin­gle em­ployee will re­ceive an­nu­ally on their birth­day . This has the ad­van­tage of spread­ing the salary in­crease across the en­tire year, as op­posed to im­ple­ment­ing stepped in­creases twice each year.

Birth­day gift rec­og­niz­ing the time that an em­ployee has con­trib­uted to the or­ga­ni­za­tion

As­sume that each year an em­ployee con­trib­utes to an or­ga­ni­za­tion is valu­able to the busi­ness, then rec­og­nize that con­tri­bu­tion with a birth­day gift.

Pro­posal: Cre­ate a dig­i­tal box of gifts that em­ploy­ees can choose from, linked to the amount of time they have been with the com­pany. For ex­am­ple, an em­ployee with a num­ber of years of se­nior­ity on their birth­day will have the op­por­tu­nity to choose a gift of their choice. The gifts would have dif­fer­ent val­ues; each year the gift could be equiv­a­lent to 5 per­cent of their salary mi­nus in­fla­tion. In our ex­am­ple here, the gift would equate to 1.5 per­cent of the an­nual salary,

so an em­ployee on USD 15,000 per year would get a gift value of USD 225. That gift could be in the form of a one-time cash pay­ment, a shop­ping voucher (if a com­pany were to pur­chase 50 vouch­ers from a suit­able busi­ness, they would get them at a dis­counted price, thus adding more value to the com­pany) or it could be ac­cess to ser­vices of the com­pany at sell­ing price. If a com­pany sells food and bev­er­ages, then it could be a voucher for ser­vice at the com­pany; again the com­pany would be do­ing well as the voucher would re­ward the em­ployee at the face value of the voucher, while pro­vid­ing the ser­vice at cost. There are un­lim­ited ways of do­ing this, but the beauty is that on each birth­day, an em­ployee would feel their value to the com­pany was be­ing rec­og­nized. More­over, if an em­ployee were to per­son­ally se­lect their own re­ward for their ser­vice from a va­ri­ety of gifts, they’d de­rive greater hap­pi­ness from it and avoid hav­ing to en­dure the painful eval­u­a­tion process.

In­creases given in­stantly

Many em­ploy­ees only re­ceive pro­mo­tions at their time of eval­u­a­tion. They are re­quired to wait in what rep­re­sents a post­pone­ment tac­tic de­ployed by sev­eral busi­nesses to de­lay the day of in­creas­ing an em­ployee’s salary. Since the sticky is­sue of an­nual in­creases has now been en­tirely elim­i­nated and there is to­tal trans­parency in the sys­tem, it is now pos­si­ble to sep­a­rate a per­for­mance re­view and a pro­mo­tion.

Pro­posal: When peo­ple de­serve to be pro­moted, in­crease their salary on the spot.

Ef­fect: With this sys­tem there are sev­eral ben­e­fits.

• A skilled HR team is able to know ex­actly what the pay­roll will be through­out the en­tire year and can plan in de­tail.

•The birth­day-gift­ing process means that the ad­di­tional amount each year is not an in­crease in the pay­roll and taxes, but rather a one-time gift that is given, there­fore low­er­ing the up­ward creep in re­mu­ner­a­tion.

• Long-term em­ploy­ees will not reach the end of the salary scale for their po­si­tion, as the an­nual in­crease will al­ways be in line with in­fla­tion (and prob­a­bly the min­i­mum wage).

• Birth­days be­come a truly fun and in­spir­ing mo­ment in a team mem­ber’s jour­ney with the com­pany.

What about eval­u­a­tions?

Eval­u­a­tions should be an on­go­ing, daily re­spon­si­bil­ity of man­age­ment. Em­ployee per­for­mance al­ways re­mains un­der re­view by ex­pert man­agers. When em­ployee per­for­mance is flag­ging in a cer­tain area, man­agers should deal with it im­me­di­ately. When em­ployee be­hav­ior is in­ap­pro­pri­ate, it should be han­dled in­stantly. Em­ploy­ees that no longer add value to the busi­ness should be coached and coun­selled on the spot, and im­me­di­ate im­prove­ment should be ex­pected. So why wait for an eval­u­a­tion to deal with an is­sue? Deal with it im­me­di­ately. Get ev­ery team mem­ber to be happy and pro­duc­tive on an on­go­ing ba­sis.

Sav­ing thou­sands of work hours per year in not do­ing eval­u­a­tions is a mas­sive ben­e­fit to an or­ga­ni­za­tion and keeps team mem­bers fo­cused on do­ing their jobs, rather than wor­ry­ing about fill­ing in end­less forms, sub­mit­ting them and giv­ing ‘feed­back’ to team mem­bers. It avoids dis­en­fran­chis­ing the mass and en­cour­ages the sys­tem to au­to­mat­i­cally im­prove the weaker mem­bers of the team or sug­gest an al­ter­na­tive em­ploy­ment op­por­tu­nity.

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