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920: What You Should Know About Annual Performance Reviews – Alan Twigg

Traditional annual performance reviews don't work — and there's data to show it! In this episode, Kirk Behrendt brings back Alan Twigg, president of Bent Ericksen & Associates, to share what you should know about annual performance reviews, how to rethink them, and tips for making them more effective. To learn the best ways to give feedback to your team, listen to Episode 920 of The Best Practices Show!

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Episode Resources:

Main Takeaways:

  • Your goal is for your team to know exactly where they stand.
  • Communicate the good, the bad, and the ugly — especially early on.
  • Studies show that traditional annual performance reviews are not effective.
  • Regularly do check-ins and find out your teams’ wants, needs, and concerns.
  • Be proactive with feedback. Don't wait for your team members to come to you.
  • Don't give your team raises the same day you do check-ins or performance reviews.
  • Traditional performance reviews, when not done properly, can come back to bite you.

Quotes:

“Performance reviews and this whole idea, it's all about communicating how someone is doing. We want to, ideally, when we hire someone, communicate what our expectations are. Through our onboarding process and all that, we tell people what we want them to do. Then, there's this idea of, are we holding them accountable? Are we communicating to them that they're doing a good job, communicating to them if they're not doing a good job, and doing that in an effective way where, ultimately, we want to build people up and have them feel understood and heard and appreciated? At the same time, if someone is not performing, we want to make sure that we're protecting ourselves and that we are not inadvertently causing problems for ourselves.” (2:20—3:12) -Alan

“There's no law that says you have to do it a certain way, or you shouldn't do annual performance reviews. It's just that It's not recommended anymore. So, to be clear, there are no laws out there that say you have to do reviews annually, or you have to do reviews a certain way. It's totally up to you. But I think it's important to keep in mind that high-level thing. Ultimately, the high-level goal of this whole thing is all about having an employee know where they stand. So, if I came into your practice and I picked one of your employees at random and I said, ‘Hey, how are you currently doing in your job?’ what will they say? Will they say, ‘Geez, I don't know. I haven't talked to Doctor about my performance in 10 years. I have no idea if I'm doing good or bad’? Or they might say, ‘Well, I just started here four months ago. I kind of feel like I might get fired at any moment because I have no idea where I stand.’ Do your team members know where they stand?” (5:11—6:09) -Alan

“Gallup has this thing, they call it the Q12 core elements. It's basically these 12 areas of business management, business ownership. When these 12 things are in place, they boost employer retention, they minimize turnover, and they, in a sense, lead to a happier workforce. One of the very first ones is, I know what's expected of me at work. So, just real clear, have you communicated your expectations in your policy manual, your job descriptions, and so on? There's also a few of these that talk about feedback. In the recent past, has my boss or supervisor given me feedback? Do I know where I stand? Does it seem like my opinions count? Because again, performance and evaluation is a little bit of a two-way street. Are we asking employees what they think and how they're feeling? So, all of that is big. Number 11 on the list is, in the last six months, someone at work has talked to me about my progress — just in the last six months. It's not even saying I need someone to talk to me every single day or every week. It's just in the last six months. So, these are not big, giant, monumental things.” (6:19—7:34) -Alan

“Don't wait for the employee to come to you. So, even if everything is fine, even if you go, ‘You know, so-and-so has been here for 10 years, and they're doing great,’ tell them. If you see someone do something good, tell them. If you see someone do something bad, tell them. Now, I will be clear that onboarding an employee and this whole idea of performance evaluation, it is more skewed toward the beginning of employment. So, when you first hire someone, you've got to be communicating with them nonstop about everything. Any time you see any little thing that they're not doing quite right, get in there and correct it immediately because in the early part of employment, there's still this building of trust. There's still some hope. There's still, ‘Oh, this is going to be a great job,’ and all that. The worst thing you can do is let someone go for six months, a year, even two years, not doing something the way you want them to do it, and then sit down and say, ‘Hey, for the last two years, you've been screwing this up.’ That never goes over well. So, get at it early on.” (8:41—9:49) -Alan

“The hope, of course, is that you have employees stick around for a long time. Once you have done this on the front end and you get to the point where you're doing fewer and fewer, it is okay to potentially go a year or two without a big sit-down formal thing. Because, yeah, if someone has been there for 10, 15 years, they know what's going on. We have employees here at Bent Ericksen that have been here for 15, even 20 years. I don't have to do constant course corrections with them because they know what's going on. But we did all that on the front end because when we hired them, there was a lot of check-in, a lot of evaluation, and we got them homed in exactly where we wanted them to be.” (9:52—10:34) -Alan

“A common question we get is, a new employee, what should I do in those first 90 days? A general recommendation is that you're doing at least two check-ins where this is a good, dedicated time, not just passing in the hall, ‘Hey, you're doing great.’ ‘Thanks. Bye,’ but a thing where you're sitting down, having a good chat with this person. How are they doing? How are you doing? We recommend two of those, one at about four weeks and one at about 11 weeks. That gives you a chance to feel it out. If the person is going down the wrong path, then it gives you a chance to get ahead of this so that if you do need to let the person go, it's not a total surprise.” (10:50—11:29) -Alan

“Let's talk about this classic annual performance review, the traditional annual performance review. The theory of that is you would sit down, you'd write it all out, all the good stuff, all the bad stuff, and then you meet with the person, and you unload all of this on them. The theory is that they're going to hear all this and go, ‘Okay, good. I'm going to take in the good, and I'm going to work on the bad,’ and then you meet a year from then, and things are better. It doesn't work. Nobody likes the traditional annual performance reviews. Employees don't like it, managers and owners don't like it, it takes a lot of work, and the bottom line is study after study has shown that it's not effective. It does not have employees boost performance when you do it that way.” (11:30—12:17) -Alan

“There are also some pretty big risks with [traditional annual performance reviews]. We touched earlier on this idea of, you don't give all the bad because you kind of want to sugarcoat it. You don't want the person to cry, you don't want them to get mad at you, and so on. What that does is it creates a document where an outside observer who looks at this sees this and they go, ‘Oh. Well, this employee was great.’ It's all positive and maybe one negative. So, then if you, let's say down the road, terminate this person, they basically have documentation that says they were not fired for performance issues. They were fired, and then they start making up stories. ‘I was fired because I'm a minority. I was fired because I was pregnant.’ They start filling in a gap. So, that's where that traditional performance review, when it's not done properly, can come back to bite you.” (12:18—13:10) -Alan

“Let's talk about what is recommended. One of the big ones that we strongly recommend is goal setting. Goal setting is where you sit down, and you are looking to the future. So, it's not about looking backwards at the past. We're not looking at the last 12 months and what someone did wrong. We're saying, ‘Let's look at the future. What do we collectively want to achieve going forward?’ One of the starting places with that is practice goals. What are the practice's big goals, and how does each team member fit in with that? It might be something like, ‘Well, I want my dental assistants to get some added CE or certifications, and we want them to do that in the next six months.’ Maybe there’s some new equipment or technology or software we want our front office team to implement. Maybe there's some cross-training that we want to do, or updates or projects, those things that have always been on the back burner, but let's finally get them done. Whatever it is, you lay those out, and you sit down with the team, and you say, ‘Well, I want this to get done in this time period.’ It needs to be realistic, specific, measurable, and all those typical goal criteria things.” (13:48—15:01) -Alan

“Here's the key thing about goal setting. In addition to being future-focused and therefore positive and hope and future oriented, it creates a built-in performance evaluation because when you get to the end of those six or nine months, the goals are going to be achieved, or the goals are not going to be achieved. So, it builds in this built-in performance evaluation, but it's all future oriented. The other thing too is you want to check in along the way. So, it's not just set it, and then you don't talk to someone for six or nine months. You want to check in monthly or every couple of months or something like that. So, goal setting is big. That's one of our recommendations.” (15:02—15:46) -Alan

 “I'll give people three questions that you can ask in this little check-in. Question number one is, what fills your bucket? So, in your current role, with what you're doing, what is something that you love? If you could do that all day, every day, you'd be the happiest person in the world. So, what fills your bucket? Number two is, what is one of your top concerns? So, not, ‘What are all of your top concerns?’ because we don't want to be here all day. What is one of your top concerns where you say, ‘Okay, this is one of the biggest things that's holding me back from being successful’? That might be equipment. It might be as simple as their chair or their mouse. It might be interpersonal conflict with somebody. It might be a procedure and flow in the office. What's one big concern? Then, number three is, what is something that you want to learn or something that you want to grow into or with? So, that would be something that may turn into a future goal. Maybe that's, ‘Well, I'm kind of interested in getting my such-and-such certificate or my extra licensing,’ or, ‘I'm interested in going to hygiene school and becoming a hygienist,’ whatever it is. So, there are the three questions.” (17:29—18:47) -Alan

“The caveat with [the three questions] is, don't go down this path unless you're willing to actually follow through and follow up and take action on this. The worst thing you could do is ask these questions, get this information, and then do absolutely nothing. If someone does come to you and say, ‘Hey, I've got a really valid concern here. I really feel like I'm not able to do my job because I'm dealing with this,’ and you say, ‘Okay, cool,’ and then that's it, that's bad because the person has basically put you on notice and said, ‘I'm not really happy,’ or, ‘I really want to do this thing,’ and then it never happened. So, be aware that you may find some stuff out that you do need to actually do some work on. Be careful about that.” (18:48—19:35) -Alan

“Sometimes, people will say, 'Well, when should I do raises if it's not done in conjunction with a performance review?’ What we recommend is that you write in your policy manual — hopefully, you have a policy about performance reviews, performance evaluations — make it really clear that you don't do raises at the same time that you do these check-ins or these performance reviews. Put that out there. Then, in terms of raises, it's up to you. You can say, ‘Anyone is welcome to come to me at any time. Any time you feel like you want a raise or need a raise.’ You can do this idea of the annual cost-of-living raise, three percent, something like that, and then maybe there are additional raises on top of that. You can go down a path that says, ‘We don't really do big raises. We have a bonus system. So, our raise is that we will grow this practice, and we will all share as a bonus in the growth and success of that practice.’ It's up to you. I think it's good to bring these things up proactively as well. You can certainly check in with folks and say, ‘How are you doing with your wage? Are you happy with that?’ You can always surprise folks and say, ‘Hey, look. You've been really kicking butt. I've been really happy with you. I'm going to give you a raise.’” (22:54—24:18) -Alan

“When someone comes to you with a raise, the answer is, ‘Yes, and . . .’ It's, ‘Yes, and let's figure out how we can make that happen,’ not this idea of, ‘Oh. Well, no. I can't afford that,’ or, ‘We can't do that,’ or, ‘That's not possible,’ or, ‘We'll never be able to pull that up.’ Make it a “we” thing.” (27:53—28:11) -Alan

“Communicate your expectations. Tell employees how they're doing — both good and bad. Always communicate. And there's no right or wrong way to do this whole performance thing. It's just whatever works, works. So, whatever works for you, whatever works for your team. Check in with them. Make sure that whatever you're trying, check in with them and say, ‘Hey, just so we're clear, do you understand how you're doing? Do you know where I'm coming from?' Check in with them. If it works, then it works. Keep doing it.” (29:09—29:39) -Alan

Snippets:

0:00 Introduction.

2:13 Why this is an important topic.

3:24 Team members need to know where they stand.

6:12 Gallup Q12, explained.

7:51 Don't wait for team members to come to you.

10:40 Tips on the first 90 days for new hires.

11:30 Traditional annual performance reviews aren't effective.

13:44 Tips on setting goals.

16:32 Three questions to ask when doing check-ins.

20:51 Do what works for your practice.

22:49 Tips on giving raises.

31:35 About Bent Ericksen.

Alan Twigg Bio:

Alan Twigg is the president of Bent Ericksen & Associates. For over 10 years, he has guided thousands of clients and consultants through the ever-changing world of HR and employment compliance. He is a speaker, consultant, and author who is passionate about bringing education and peace of mind to such a confusing topic.

As a strong proponent of symbiotic employer-employee relations, Alan is passionate about teamwork and positive work cultures, with an emphasis on long-term personnel retention and employment compliance, where his solutions-oriented outlook excels.
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