I’ve been on one side or the other of a performance evaluation at a large company for the last 30 years. I’ve had good experiences and bad, but in the most part they’ve been nothing special except as a vehicle for announcing promotions, salary increases, or bonus awards.
But that’s OK. I believe that an annual evaluation should really an extension of any career or performance discussions had over the course of the prior year. If the employee – or the manager – is surprised by the outcome of the evaluation then the manager has not been doing a good job of managing! The annual review should start off as any other one-on-one meeting, with the addition of reviewing accomplish-ments, strengths, and weaknesses over the evaluation period. The primary difference between this discussion and all the others is it includes formal documentation that goes into the employee’s record.
What generally makes this a difficult discussion is the annual review is often when financial discussions occur, when salary increases or yearly bonus awards occur. When dealing with big companies, there can be bad years when the financial pool is limited, good years when the pool is reasonable, and great years when it’s generous. I’ve seen years when the salary and bonus pool was zero, which led to challenging conversations with staff who tend to disbelieve how a multi-million (or billion) dollar corporation can’t afford to hand out raises. As managers, it can be difficult for us to believe that as well, but it comes with our job to support the decisions and directives of the company.
I know that some companies and many government agencies give cost-of-living increases, but most public corporations have a merit- or performance-based process for increases Newer managers tend to want to ‘spread the love’ and be equitable in how they hand out raises or bonuses. After years of experience I believe that even though the discussions are harder, it is ultimately in the employee’s best interest to be very up-front about whether they have met expectations over the year and how that has a direct impact upon compensation. Those employees that are high performers should get a meaningful increase that rewards them for their extra effort.
Of course, this approach is very dependent upon regular, honest conversations held over the prior year. Set clear expectations, be clear about what must happen for the employee to meet them. Let them know when they’re doing well, commend them when they’ve done a good job – but equally let them know if they are not meeting those expectations and be very clear about what they must do to improve.
Good communication is the most critical part of any performance plan.