On Sunday I was invited to brunch by some friends. A real treat, but the topic of conversation was depressing. Two of our party, of six, announced that they were changing jobs. Not because they wanted to but because one felt unappreciated, the other tired of a failing “new hire manager”.

Performance review.
The first, an exceptionally clever person, had just had a performance review where his “new boss” had reduced his performance grade for willingness to undertake overtime and timekeeping because he said that he “Didn’t believe in awards at highest grade…”. The previous year the employee a highest grade for willingness to work overtime at short notice. The reduction would mean a change in salary expectation.

Tired of inefficient management
The second friend, the companies highest producing salesperson, recounted various “New hire ” management decisions that had affected how people were able to perform, ignored previous culture and customs and this was affecting team morale. As a result he was deciding to leave.

I’m not against change but find it difficult to understand when new managers try to create an impression without considering the consequences. Ignoring old customs and culture does no-one any favours. In the end one company might lose an enthusiastic and hard working employee and the other a high performing salesperson.

Reducing costs is a main focus for all business owners and Director these days. The most obvious cost to tackle are the “people costs” but these also happens to be the most problematical.

The problems
The first problem is that, even in difficult economic times, there’s an inbuilt process in most firms that increases people costs. Once a person is hired increases in pay to keep up with inflation, promotions, increases in employment taxes and so on all add to increased costs. If salaries are frozen or small then there will be increased pressure from staff who claim that they are “Unvalued” and continually justify increased bonuses and promotions. Then there is the hidden future pension costs, often not included in company accounts, but which increase staff cost significantly.

Reducing people costs is an issue that Directors talk to me about almost daily. The problem is that getting rid of staff is often a problem. In some countries it’s almost impossible and even in the UK and the USA the process takes time and substantial management time, which is all cost!

Reducing costs by shedding under-performers
Many Directors and firms find it difficult to reduce staffing levels until forced to do so. Concerns over company morale, culture and team spirit all cause delays in shedding staff. However, the fact is, that often reducing dead wood actually improves the morale of those that remain.

A main flaw
One of the most effective ways to manage staff costs is through a robust performance appraisal system. Yet I’m still surprised at the number of companies that have a poor system of staff appraisal. This is so costly, makes change and restructure difficult. Ideally a good performance review is held every six months, is focussed on targeted results and linked to time-framed development and which actually identifies the best talent as well as the costly talent.

The final stage is to ensure that action is taken to manage the bottom end of the talent pool effectively so that it is continuously pruned.

I’ve been reminded by a sales team that I work with that their annual performance review time is fast approaching. I’ve been asked to give my top three tips for conducting a good Performance review for their management briefing.

The emphasis in appraisal is Praise
There was a time when the team hated the event. The emphasis always seemed to be focussed on the negative aspects of performance. Negative statements have far greater impact on an individual than a hundred good things that may be said.

I know that it’s important that a correct picture of performance is recorded. But the emphasis, as Dawn French mentioned in the video Arts film on the performance Review, should be on PRAISE

Tips
The first tip I’ve often given to those conducting the PR is to ask the team member to “Self-appraise”. Asking “How would you assess your performance?” often allows the resulting self criticism to be toned down and saves negative comments being made that cause offence and upset.

Tip two
Prepare. This is the most important meeting of the year with the team member (for the person being appraised). It’s their chance to talk about their career, aspirations and development. As such it’s polite, efficient and good management to prepare and treat the meeting seriously.

Top three
Listen…And listen to what’s not said and allow time for explanation. Some people are shy and need coaxing to speak. Don’t hurry a PR it’s a chance to learn how the employee feels

Finally, what happens after the meeting…”The notes get filed”.
But isn’t there follow-up?
Remember, more CVs (Resumes) get updated after a poor PR than at any other time!