Performance appraisal may well be the most despised management process around, and often for very good reasons. Most performance appraisal forms are only marginally relevant to an employee’s job, and the results of the process itself yield very little – perhaps a token difference in a raise for a “higher performer” over a “lower performer;” but even these distinctions are often criticized by employees because of assumptions concerning how “tough” one supervisor is over another. Simply put, the link between actual performance and actual executive or employee compensation is frequently tenuous at best.
An answer to the desire for a more useful and effective performance management process (outside of the very obvious reality that performance management is not just a “once a year meeting”) can be found in another of the least effectively used business tools – the job description. Simply put, the best possible performance appraisal form is a copy of the employee’s job description and a pencil.
A properly written job description describes the expectations the organization has of an employee. It states the general responsibilities of each job, and the key duties that must be performed. What better way to assess an employee’s performance than to compare it to the expectations of the job? With a performance appraisal form customized to every job, the appraisal process becomes immediately relevant. No longer does a manager need to determine whether a particular characteristic on the “one size fits all” form is relevant, and the term “N/A” disappears forever.
Consider a performance appraisal meeting tied to the job description:
Manager – “Well Sally, let’s look at item 1(a) on your job description – ‘Completes profit and loss statements on a monthly basis.’ Generally speaking, your work is accurate, but three of the last twelve months, the statements have come out a week or more late.”
Sally – Yes, you’re right, but that’s because the billing department did not close out its monthly activities until after the end of the month on those three occasions. The other thing I might add is that our software is not very efficient, and with version X, we could probably cut a day off of the time we need to get that statement out.”
That might seem overly simplistic, but consider the key to the conversation – the focus is on something objective, measurable, and part of the job, not on something abstract like “displays loyalty to the mission.” This is not to say that displaying loyalty to the mission isn’t important, but those types of measures are open to interpretation and subject to different opinions by various supervisors. Controversy and discomfort are much less likely in a situation where facts, not opinions, are on the table.
Having performance management tied to the job description also adds another dimension – the idea that performance is measured on a “has done” rather than a “can do” basis. When employee performance is measured based on the ability to effectively perform a series of tasks, or provide a certain deliverable a certain way, the result is clear, and if there is a dispute, it is simple enough to resolve.
The scoring scheme becomes very straightforward in a job description focused model. Consider three potential ratings on each element of the job description:
1 – Employee is not performing this duty at the standard/level expected by the organization
2 – Employee is performing this duty at the standard/level expected by the organization
3 – The employee performs this duty in a manner, or with higher actual results, than are reasonably expected.
Employees receiving the “1” score should understand exactly how their performance on a particular duty is not at standard, what training/experience will be provided to reach standards, and what performance will look like when “fully functioning” status is achieved. A supervisors’ ability to “over rate” is mitigated by requiring specific examples of performance considered to be beyond standard – someone alleged to be a star (receiving a “3”) must have a blockbuster movie to prove it. For some duties, there simply is not a way to perform beyond the organization’s standards, and the organization should feel no need to identify ways to “exceed expectations” when none exist.
The summary score in a job description based system is similarly straightforward. There are no “averages,” because a fully functioning employee doesn’t become fully functioning by doing only part of the job. Jobs are not designed around the interests or talents of employees, but by the needs of the organization – to do the job right requires doing everything right, not some of it in an outstanding way and some of it not at all. A “fully functioning” (rather than “meets expectations” or “satisfactory”) employee is one who has demonstrated, consistently and over time, effective performance of all of the duties and responsibilities of the job.
Tying performance management to the job description changes the process from an annual “start from scratch” model, to a living document, where appraisal is simply a step in a long term developmental process. The form is not completed anew every year; the focus becomes a matter of looking at what changes have occurred, and perhaps considering new or changed job description elements.
Linking performance appraisal results to employee compensation adjustments is simple when the system is designed around the job description. In a properly designed compensation program, the compensation opportunity at the target wage/salary (typically either a range “midpoint” or “control point”) is appropriate for an employee whose performance is consistently at the level associated with completion of the duties and responsibilities of the job description. When an employee demonstrates that level of proficiency, the employer should respond by paying the employee appropriately. The proper compensation decision is based not on “what did you do for me last year?” but “what are you worth to me now?” The amount of the adjustment is not tied to an appraisal score, but is based on the difference between the employee’s current pay and what it should be.
Organizations with accurate and up-to-date job descriptions will find moving to this type of model a simple process. Twenty years of testing have shown that expectations become better defined, managers and supervisors find the process easier and more effective than traditional performance appraisal and employees feel that they have more control over their own destiny. Organizations can institute changes in job descriptions, tied to compensation, that motivate employees to make changes in their own performance needed to be more effective on the job.
Edmund ("Ed") B. Ura is the President and Senior Consultant at Merces Consulting Group, Inc. With more than 25 years of experience in compensation consulting Ed works with Boards and Senior Management to identify their needs and develop programs that attract, retain and motivate employees. Prior to forming Merces in 1991, Ed was a Consultant with TPF&C (now Towers Watson).
For more information on performance and compensation management contact the author at ebura@mercesconsulting.com, or visit www.mercesconsulting.com.
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