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Dear Workforce Why Should We Continue Evaluations if We Cant Give Raises

Our company imposed a raise freeze during the past three years, but should we still conduct yearly employee evaluations anyway? If so, what are the credible business reasons for continuing the practice?
September 30, 2010
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Related Topics: Compensation Design and Communication, Motivating Employees, Performance Appraisals, Dear Workforce, Compensation
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Dear More Questions Than Answers:
There are few absolutes in organizational behavior, but one is the continuing need for employee evaluations to drive business results. In good times and bad times, employee evaluations provide significant benefit. Consistent evaluations help:
Drive dynamic communication. Employee evaluations ensure that, at least once a year, employees are evaluated on performance. The two-way communication that occurs between a manager and an employee is important. Increased communication within organizations accelerates overall performance. The key is to drive employee evaluations beyond once a year to include monthly one-on-one sessions, routine coaching and consistent mentoring, along with score cards to optimize performance management.
Improve performance. Remember the adage: What gets measured gets done. How can employees improve when they are not measured? The answer: Without employee evaluation, there can be only limited performance improvement. Once given insight into their strengths and development opportunities, only then can employees advance to the next level and deliver on mission-critical business goals.
Foster “same page” mentality. What happens when 100 percent of employees have an evaluation? It creates a culture of everyone “being on the same page.” This is essential for business purposes because top management wants to ensure everyone is heading in the same direction and selling the same service while also promoting the same company mission. “Same page” mentality allows expectations to be established, shared and implemented at various levels. Employees increase productivity when they know what to expect and have a path to achievement.
Generate new ideas. Employee evaluations are an essential component of generating new ideas that could increase sales, enhance products, open new markets and make day-to-day operations more efficient. Once the manager and employees have a series of discussions, there is an ebb and flow of ideas, some with the potential to serve as catalysts within the company. Time must be taken to discuss new ideas and allow them to be nurtured during employee evaluations. By keeping an open mind, both managers and employees welcome new insights that affect your business in a significant and meaningful way.
Provide management consistency. Employees want management consistency across functional areas. The employee evaluation is one tool to ensure such consistency in how employees are assessed. Your company can use a systematic approach to employee evaluations with confidence knowing it has a structured tool that is shared throughout the organization. In the process, employees will feel more engaged and connected.
Show appreciation and value. People appreciate being evaluated. It demonstrates that your company cares enough to invest the time and effort. To truly value the person, focus on the next step: Follow up on the initial evaluation results. If the employee evaluation is one moment in time with zero follow-up, it will not provide the needed business impact.
Boost morale. Think about employees who rarely—if ever—have been formally evaluated. They would not know where they stand or what areas they need to improve. Thus their performance would be limited. Provide the same employees with a regular evaluation and watch their performance rise. As long as performance evaluations are conducted in a systematic and fair way, they can help boost employee morale. Even employees in need of improvement will benefit, since your company is taking steps to support their growth and development. Everybody wins.
Differentiate the business. During a down economy, many companies downsize internal practices focused on employees. It is not unusual for a company facing severe economic challenges to jettison performance evaluations or suspend them “until things get better.” That is a shortsighted approach. Maintaining employee evaluations—especially if the competition eliminates theirs—helps differentiate your organization. The implication: Strengthen your internal employer brand now, so that when business picks up, you will be well-positioned to recruit top talent, clients and suppliers.
SOURCE: Dana E. Jarvis, adjunct professor of leadership and management, Duquesne University, Pittsburgh, July 16, 2010
LEARN MORE: Everyday coaching is considered by some to have a greater impact on performance than the annual evaluation.
Workforce Management Online, September 2010 -- Register Now!
The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.
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