As 2009 comes to a close, many organizations are preparing to head into their annual employee performance management process. It’s been a tough year for many companies and in today’s economic environment it may be difficult for you to provide similar financial incentives to your employees as you have done in the past.
Because of this, it is even more important to plan ahead, set expectations, and implement a performance management process that ensures that your employees will continue to feel valued. It’s during challenging times like this that employees need open and honest feedback and a sense that they add value and are part of the organization’s future success.
A productive performance evaluation process always requires good planning. Now is not the time to skip or rush through these critical discussions because you are unable to reward employees. Schedule the review cycle so that it provides plenty of time for both employees and managers to complete the process in a thoughtful way.
For managers, you might need to provide additional training to prepare them to deal with difficult questions regarding compensation and/or the overall health of the company. Employees may not always like what they hear, but they will always respect an honest and straightforward response.
Although the economy is showing some signs of improvement, most companies remain cautious about their finances. Consider setting expectations about the compensation situation with your employees in advance of the formal performance review meeting. By doing so, both you and the employee can keep the discussion focused on performance. While employees will understand why raises or bonuses may be limited or not likely this year, it doesn’t mean that they won’t be disappointed.
Also, this is an opportunity to get creative and consider other rewards you can provide in lieu of raises or bonuses. Consider opportunities for additional training, leadership/career development opportunities or team rewards. It’s important to remember that pay systems alone do not manage people or performance.
Implement A Continuous Process
Ideally, performance management should be a continuous, year-long process. Best practices indicate that performance reviews are not as effective if they are perceived as a one-time annual event. It’s during times like this that an employee’s performance can truly define the difference between whether your business gains or loses. Therefore, you simply cannot afford to wait to address performance issues on an annual basis.
Implementing a continuous review process has many short- and long-term benefits:
- It allows the employee to immediately begin to improve on areas of opportunities;
- It allows you to immediately acknowledge great performance and make employees feel valued for their efforts; and
- It minimizes surprises during the formal evaluation meeting.
Effective performance management is important regardless of how the economy is performing. Now is the time of year that you can still make an impact with employees and pave the way for when the economy and business gets better.