Wednesday, June 1, 2016

Performance Reviews: Metrics vs. Gut Checks

Office building

As a manager, you need an objective, fair, and reasonable way to grade your employee’s work. There are many reasons why this is necessary. The rub here, really, is how you conduct a review and what they really tell you? It’s an important question, especially in the U.S. where 90 percent of all nonunion labor receives some sort of review and reviews are mandatory for all federal government workers.

Conduct Purposeful Reviews

But let’s go back to that “why” question for just a moment. While there are many general reasons why reviews are conducted, you need to have a specific reason why you are conducting a review of a specific employee. If you have a reason, and this reason is applied equitably to all employees you can create a specific process that remains both fair and objective.

For example: what if an employee wants a merit-based raise, or they come to you and state they are doing work for which they are not being paid. Both of these situations could be dismissed out of hand – aggravating the employee and putting you in the crosshairs of a lawsuit. Or you could just go off the cuff and chat a bit, then render a verdict based on your feelings at the time. That, too, is problematic, because you end up making inequitable decisions.

The Effects of Bias on Job Performance

How do we know that? Because, even in the best situations, the number one predictor of how an individual will do on a performance review is bias. If the boss likes them, they do better. If not, worse.

So, in addition to a specific reason that can be equally applied, you need to have fair benchmarks designed to reduce bias. Some natural biases to look out for: individuals who are similar in age, gender, race or background tend to score each other higher than those with whom they have differences. The trends are impossible to ignore. Another factor to consider: baselines change. If you begin the year or the assessment period with a clear objective and the circumstances that created that objective don’t change, that might seem like a clear and helpful metric. However, what if the line of business that inspired those goals changes? What if the market increases or crashes and those related objectives must be amended? What are you left with to judge—adaptability? So that brings us to another factor. Your performance reviews need to be situationally aware and subject to offsetting circumstances. Suddenly your simple checklist and rating scale is taking on an algorithmic feel.

Remember Why

This brings us back around to the point of it all. That’s the most important factor to consider. WHY are you conducting that review? What happens because of it that won’t happen if you don’t conduct that review? When you know that answer, it can help you work backward to see how it’s best determined.

David Milberg is an NYC based investor.

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