For a manager, few things are more difficult than delivering honest performance feedback to an employee. And far too many managers don’t give feedback at all. Fortunately, there are ways to address performance review problems. Success lies in the execution of these simple ideas.
Define the culture of your organization, i.e., the behaviors that lead to success. Recruit people who demonstrate those behaviors. Hire only people who fit your culture. Most employee performance problems are hiring problems. Managers hire people who don’t fit their culture and then waste valuable time trying to “fix” them.
Update your organization’s job descriptions. There should be no disagreement over what successful performance looks like at your company. Managers need to set clear employee expectations that are tied to organizational priorities. For instance, if your firm has a new CFO, replace the typical, generic job description jargon with something more specific: Cut operational expenses by 5% by the beginning of the next fiscal year. Within six months, select and integrate financial reporting software that reduces the monthly closing cycle time by one-third. Expand the finance department’s staff by 10% in the coming year. Renegotiate the company’s senior credit facility within nine months to reduce borrowing costs by 4%. It’s much easier to measure performance and deliver feedback once you’ve established objectives such as those with each employee in your organization. Without such specificity, the responsibility rests on each manager to subjectively determine if someone’s performance is satisfactory. And that is a very uncomfortable place to be.
Conduct regular check-ins—at least monthly—with employees to review their performance. One good technique is called “five by five.” When using this technique, the manager prepares a sheet with the employee’s four to six performance goals for the year, as well as the employee’s development goals. Below those goals, the employee lists five activities he or she plans to work on over the next month to accomplish the annual goals. At the next monthly meeting, the employee reports his or her progress on those activities. Then the employee sets five activities for the next month. The manager provides feedback and input. This process is repeated monthly. For this system to work, the manager must make it clear that the employees own their performance, which is another tenet of effective performance management.
Pick an appropriate review process and stick to it. Otherwise, you’re just wasting everyone’s time with changes that won’t improve your workers’ performance. That’s because performance management isn’t about the form, it’s about the conversation. Many employers constantly tweak their performance review form—with poor results. A five-by-five system—i.e., regular structured conversations—and no performance review form can get you closer to optimum performance than most appraisal processes. In fact, some companies have abandoned the annual performance review for a check-in system similar to the five-by-five technique.
Focus on the behavior, not the person, when providing feedback. What you ultimately want is more good behavior and less bad behavior. Managers can learn how to provide appropriate performance feedback. These tips can help, as can additional training for managers. Success in this area leads directly to improved employee performance, and that translates into improved financial performance … which, as financial managers, should be somewhere on your annual success profile.
Editor’s note: This checklist is adapted from the article “Secrets to Effective Performance Management,” CPA Insider, May 27, 2014, available at tinyurl.com/p6wo2st.
—By Doug Blizzard (
), vice president of membership at CAI Inc.