Methods of Performance Evaluation | What’s the Best Method of Performance Evaluation for Your Team?

Annual performance reviews are a complete waste of time. They are totally dated. They are not caught up with today's modern way of growing, retaining, and developing your top talent. So in today's video, I'm going to break down for you some methods of performance management are that you can choose from as an organization, how to decide which is right for your organization, and some best practices for for keeping your performance review process on track. My name is Matt Vadie. Welcome back to another episode of Culture and Compliance. And in today's episode, I'm excited to talk about performance management because this is the one area of my business that I always think I can never, ever, ever invest too much time here. And so I am sharing some slides in this video. If you're watching the video, this will make perfect sense because you'll see the slides. If you're listening to the podcast, obviously, you can come by and check out the slides on YouTube. Make sure you follow and subscribe our YouTube channel. But I'll still try to make sure it makes perfect sense with or without the slides. I will say that we're going to go very meme-heavy in today's slides, though. All right, so let's talk about what are my options as an employer when it comes to performance reviews? What are the types of reviews I can choose from? So we have 5 different types of performance reviews that you can look at. You can do what's called a basic performance review, a prime performance review, a freeform assessment, an informal assessment, or a 360-degree review. And I use those terms interchangeably— review and assessment. I'm not going to get too hung up on what each of these means and what the actual definition is, but we're going to talk about each of these and what it means, when it makes sense, and when it doesn't make sense. Spoiler alert: a 360 never makes sense. All right, we'll get more to that in a little while. So what is a basic performance review? Well, this is ideal for organizations that are just starting out with performance reviews. It's simple, it's easy to implement, it's kind of your traditional performance review questions. And if you're listening to this or watching this, if you look in the description, you'll find a link to our $37 Ultimate Performance Review package where you can get all the templates for every one of these types of reviews along with guides on how to use them. There's about 20 different templates in there that you can use. And I'm— this, this video should complement that quite well when you're making a decision for which one makes the most sense for your organization. And it's just $37 compared to thousands of dollars worth of templates you'll find in there. So we've got the basic, which is a very fundamental sort of review. It's the traditional review you'd think of. You want to do these at least annually. You want to make sure that they are— you know, I would say there's really no good performance review process that's not held at least quarterly. Uh, business life moves too fast. If you're going less frequent than quarterly, then you have a whole bunch of things that creep in. Um, you're going to have the halo effect where maybe one good thing happens from an employee and then that's all you can remember. You're going to have recency bias because you're only going to remember what's happened in the last couple of weeks, 30 days, 60 days. So that's why when I say annual performance reviews are a total waste of time, that's exactly what I'm talking about is recency bias is the biggest reason why they're a total waste of time. Plus, I do not think that your performance reviews should be directly correlated with your salary increases. So for example, the old way of doing it is I come in, I sit down for my performance review. At the end of the review, you say, great job, here's a 3% raise because we had a scale of 2 to 5% for your role. You you did this, and so now you get a 3%. Great work. I like to decouple the two, look at the entire performance of the individual inside the organization, and do salary increases when available based on merit and based on the value the individual brings to the organization. So, first option is basic. Second option is what we call a prime review. Prime review is perfect for companies that have clearly defined goals and a strong culture of feedback. So, this type focuses on growth and development. It's excellent for organizations where both employees and managers are really heavily involved in the progression of their careers. So you want to think if you're a development-focused organization, if it is part of your culture, part of your DNA to provide feedback regularly, this is a great option. You can schedule consistent check-ins. This is very much in line with the type of reviews we do at Guru, where we are doing a monthly, what we call plan and review. And then a quarterly assessment. So we're on a regular schedule, but then we also have rather frequent coaching conversations in between. We don't ever want to let anything sit for 30 days that could be addressed in real time. But in reality, we also just want to give people the opportunity. We do a self-assessment component and a manager assessment component so that we get, you know, 180-degree feedback on a teammate when we're looking at their performance. Great option for many small businesses. Next option up is freeform. So this is a little bit more what it sounds like. It's adaptable, short, to the point. It's often used in a project-based environment. So think maybe design firms, CPA accounting firms. These are great because we'll— maybe we'll do an assessment after a project is over, a debrief. We'll, we'll assess your performance on the project. That way we can improve, iterate on it, and improve for the next project. I really like this for the environments that it makes sense in for that reason, because we're doing it in real time. As soon as that project is done, we can have a conversation about it. We can debrief. We've got a formalized process that we put around it, and then we immediately improve as we roll into the next project. So I, I love this for that reason. Great for project-based organizations. And again, we've got this template in the packet that is in the description. You can click that link and get all these performance review templates along with tons of guides and additional information for just $37 in the description. So another option are just informal reviews. So these are best suited for companies that are dedicated to continuous feedback without the confines of a structured process. So if you're looking to foster a coaching culture, which is, hey, When I see something happen, we're going to sit down and talk about it right away. We're going— managers are trained coaches, right? So this is a really important thing. If you're going to go with the informal route, as much as it sounds— this sounds a little bit counter to the name— you better have really well-trained leaders who know how to have a coaching conversation, who know how to ask questions, who understand the value of coaching philosophy, and are willing and able to provide that feedback in real time consistently. Because coaching, you know, one of the biggest things— you can check out a couple of really good coaching videos on our channel. Make sure you're subscribed. And if you want more than what we have, leave a comment. I'll create more. Because coaching is one of my favorite topics. One, it's one of the biggest mistakes people make is they think coaching— they see a coach on the sidelines for a sporting team yelling at his players, talking at his players, instructing them. Coaching is about asking questions, about knowing somebody has the information inside of them. Knowing it's your job to pull it out of them. That's what great coaching is. So informal reviews are great for really strong coaches. Now let's talk about 360-degree reviews. So what is a 360-degree review? It's exactly what it sounds like. It's a comprehensive review. I get employee self-assessment, a manager assessment, an assessment from vendors, an assessment from teammates. It is an assessment from anybody and everybody around this person. It was all the rage for a few years. And then what we all started realizing is, A, it's really intrusive. It's really disruptive. It puts teammates on the spot. Imagine being asked to review your peers and provide open and candid feedback about the person sitting next to you in the next cubicle over. Imagine asking your vendors to provide reviews of your employees. Honestly, it's ridiculous. I understand that a lot of people think it's great because it is great. You're going to get a really nice big review out of it, but it's just totally disruptive to business. And it's so hard to keep up with it and be consistent year over year. And that's the biggest thing for me when I think about a performance management process. If you leave all these different processes aside, and like whether or not you fit into the bucket as I just described it, the best performance review process is the one that you can execute well. So that's the first thing I consider when I'm thinking about which one I want to use is Can my company execute this really well? And so here are a couple other things that make sense. So as I look at these types of reviews, you know, are we tracking metrics for our teammates? Like, when I— do we have SMART goals set for them? These are things I want to consider before I decide if I want to go with a Basic, a Prime, a Freeform. What are the other metrics that are involved? So for us, as an example, as we have what we call a scorecard that complements that monthly plan and review and the quarterly assessment. So we know what the expectations are for this individual from a metrics perspective and for a goals perspective. What are the 3 big outcomes we're expecting for the year? And are we on track to achieve those outcomes or be able to achieve those outcomes? What is your organizational structure? Again, like if you're starting to look at reviews and assessments that require a ton of coaching, a ton of training, hands-on feedback, Do you have the managers who are capable of doing that? Do you have people in-house who can train the managers to do that? And then finally, you want to look at past results. Again, is this something that you've already tried? It wasn't sustainable for one reason or another. Is it something that you guys have, you know, had success or failure with in the past? And what skeletons are already in the closet as it relates to this? Because sometimes those things can be hard to overcome or they're great learning opportunities for you to build on. Again, if you need help with your performance review process, make sure you click on that awesome list of templates that we have down in the description. But you can also enlist Guru as your HR team. We are an HR team in a box. If you are between 10 and 49 employees and don't currently have an HR professional on staff and you're looking for an outsourced HR team, that's what we do. We'd be happy to help in any way we can. And we have been doing this for over 10 years and it's something that we have a are very good at. We have a 99% client satisfaction rating, and a lot of our clients feel great about working with us because we are a mission-first organization who gives 5% of our business away to charity. So thank you for tuning in today. I appreciate the time. And while I apologize for having slides, I also hope that you got some joy out of the memes. Thanks for stopping by. Please make sure you like the video and subscribe to our channel if you want more updates on how you can improve the HR at your organization. Thanks again.