Carrot and Stick: 6 Principles of Successful Evaluation of Employees

As Peter Drucker, one of the most influential theorists of management of the XX century once said: "If you can't measure it, you can't manage it." During the period of growth, every company thinks about the introduction of staff performance assessment. We asked professional HR-manager to anonymously share the experiences and tell how to start setting goals for employees and evaluate the quality of their performance.

"I used to work in a small company, where there was neither an evaluation system nor any rules of bonuses review. Wages were increased for those who asked for it or those who, according to the line manager’s opinion, worked well, although every manager had different criteria of "good work". Once a year, all line managers gathered for a meeting and had a heated debate about who is more worthy of a promotion. The budget was not big enough to bring all proposals to life, and so every time there would be someone who believed that his or her team were underestimated. The solution to this problem was right in front of us - to develop a transparent evaluation system that shows to both managers and employees what is actually important in the work and what later can be evaluated by the company."

It would have been the easiest for me, as an HR-manager, to develop an assessment system myself. But then I, firstly, could miss some important details about the different departments’ work processes, and secondly, I could face colleagues’ resistance to the new assessment tool if I failed to include them in the development process. So, first of all, I suggested my colleagues from other departments to come together and create a working group to develop a new performance measurement system.

We talked about goals that we all wanted to achieve: which place in the market we want to have, what level of quality and customer service we want to provide, what kind of relationship we want to see in our company, and so on. We broke these overall goals into smaller target goals for each manager and employee. Here we could use such indicators as production rate, costs, sales, and customer satisfaction. In our case, for example, the evaluation criteria for the head of sales department were the implementation of sales plan, turnover in the department, team development, and the rate of customer satisfaction.

Each indicator must be evaluated somehow. We chose a five-point rating scale for each indicator: Well Above Expectations – Above Expectations – As Expected – Below Expectations – Well Below Expectations. It is undesirable to use five-point scales such as numbers from zero to four or letters from A to F. Culturally they are associated with the school marks and prevent objective approach to the assessment because any mark that is less than "3" or "B" will seem to be a bad result. For each mark, we have appointed the corresponding indicator scale. For example, the implementation of sales plan of less than 60% was evaluated as "Well Below Expectations", 61-80% - "Below Expectations", 81-100% - "As Expected" 101-120% - "Above Expectations", and more than 120% - "Well Above Expectations." The same went for every other indicator.

The evaluation of employees’ effectiveness we decided to conduct once a year. The first time we did it in a test mode and warned that no negative decision will be made. This way we tried to reduce the anxiety about the new event and also verify that the chosen criteria were right. The meeting with an employee to discuss the results of his or her work is the culmination of the whole event. It affects the mood for the next few months of work and it should remain positive.

After the first evaluation test, our management team agreed that it was a very useful exercise for the whole team. Of course, there were things that had to be changed, but we choose to keep the basic principles. So we identified several recommendations in order for assessment to further benefit both sides:

1. Positive atmosphere. A positive attitude helps to have a more open communication, and open communication, in turn, allows you to be on the same page with employees and inspires them to new achievements.

2. Listen! Begin by asking an employee about how he or she evaluates his/her own work. Listen and offer your comments.

3. Praise! Notice when an employee works well. Some managers forget to do this and take good work for granted. At the same time by noticing employees’ success you psychologically reinforce their good behavior. Tell the employee how his or her efforts help you as a manager to achieve the department goals, and the company - its overall goals.

4. Wonderful future. Tell the employee about his or her prospects about what waits ahead if he or she masters the skills that are underdeveloped at the moment. Light up the enthusiasm with the thoughts about the future!

1. Development instead of a whip. When discussing the failures of the employee, take enough time to discuss the development of his or her skills. Find out why the employee failed to achieve the goals. That will help him or her achieve them the next time. Discuss together the specific steps for developing the necessary skills.

2. “No” to making it personal. When estimating the areas in which the employee was not successful, always discuss specific examples when the employee was wrong, do not say "you cannot do it" or "you are not able to" or any other negative personality characteristics. Explain how his or her bad work affects the overall results.

A year after the first evaluation, I began to notice that during job interviews the managers often mentioned the assessment system as a confirmation of the principles of transparency and equity in the company. Two years later, the staff began to drop by the HR-department to find out the date of the next scheduled assessment, because they wanted to discuss their personal development with their superior as soon as possible. I felt that the assessment has become a natural process in our working lives. In addition, the term "chief’s pet" has disappeared from the vocabulary of our team, because now everybody has an equal chance of success during the productivity assessment.

Before you implement this kind of system in your company, enlist the support of your colleagues. Move from general to personal: the company's goal - the goal of a department - the goal of an employee - specific indicators. Praise, but also do not forget about the development. And help your employees become better!