I like Jack Welch’s (the very successful, former CEO of General Electric) approach to performance appraisals.
Manager presents to the employee a handwritten sheet of paper. The left column lists the manager’s view of employee’s achievements. The right column contains items the employee could do better. Both lists focus on performance metrics and team behaviors.
Manager and employee engage in a meaningful conversation. Manager gives examples, “Your error rate is less than .03 percent, almost a ten percent improvement over last period.” “I like that you went out of your way to help our new engineer learn our software tool.”
Sum up by reporting, “Shelly, you are in the top twenty percent of our employees, and I’ll recommend a good pay increase.” Or, “Jackson, your overall performance puts you in the solid seventy percent of our team and your raise will reflect that. I would like to see improvement in meeting deadlines and reducing errors. I’ll help you with those.
Or, “Alford, I’m disappointed that, after considerable training, your response time is still the slowest in our group. Let me help you find another position that is a better fit.”
Conduct these interviews at least twice a year and allow about thirty minutes for each session.
(Part 4 of 5 on Employee Pay)
“I think annual merit pay increases should be tied to employees’ productivity,” stated a manager.
“I agree,” I responded.
“I also think,” the manager continued, “that appraisal interviews should focus on employee development. But it seems that during my appraisal interviews, all employees want to talk about is the amount of their raises.”
While many organizations consider both performance appraisals and salary reviews on an annual basis, they should not be combined. Pay raises, or lack thereof, communicate strong messages to employees. Salary discussions during appraisal interviews bury attempts of meaningful employee development conversations.
Consider appraisals and salary reviews to be related but separate. I like quarterly appraisals where managers discuss where employees have performed well and what they might improve upon. The appraisal at the end of quarter four builds on feedback given and received during the first three appraisals.
Approximately two weeks after the fourth appraisal, managers can report annual merit increases individually to employees. There is no need to mention appraisal information when communicating pay increases. Employees are very insightful. If managers have been candid during appraisal interviews, employees will connect the dots between productivity and salary.