Making Performance Evaluations Work: A Few Key Considerations

In the fast-changing, technology-driven world where both employers and employees are facing increasing demands, the notion of performance has been under constant scrutiny. While it is widely accepted that traditional performance evaluations no longer work effectively, business and HR leaders have been struggling to find ways to make them a truly meaningful experience for both the organization and its members.

On June 29, 2023, I had the privilege to talk to Chris Kime, founder of eHire Solutions and former vice president at TTI, Inc. (a Berkshire Hathaway company) about this problem. With more than 30 years of corporate experiences, Kime has built a deep understanding of business strategies, operational excellence, pricing analytics, e-commerce, and organization innovation. He is also a master of the human side of management in the areas of talent acquisition, training and development, leadership, and succession planning.

During an hour-long webinar, which MSCI members can access here, Kime shared thought-provoking ideas and evidence-based insights that are worth further consideration by companies in the metals industry. Below are some highlights.

Embrace Holistic Thinking
Effective performance evaluation starts with a holistic understanding of the human performance system. Typically, an individual operates in a context where their performance is affected by any or a combination of the following six factors. Understanding these factors allows for the accurate selection of proper performance measures later on.

• Performance expectations: Do the employees know the desired outcomes and performance standards? And to what degree?
• Task support: Are there adequate resources (e.g., time, tools, staff, information) available to support the performers for task completion?
• Consequences: What would happen to the employees when their performance exceeds, meets, or fails to meet expectations?
• Feedback: Do performers receive constructive feedback on their performance? From whom? When? And how often?
• Skills and knowledge: Do the employees have the necessary skills and knowledge to perform their job?
• Individual capacity: Are the employees physically, intellectually, mentally, and emotionally capable of producing the desired outcomes?

Set SMART Goals
Goal-setting is a powerful way to increase effectiveness and productivity. Well-defined goals can boost individual performance by keeping employees focused, feeling energized, challenged, and motivated. To ensure performance goals are truly meaningful and impactful, they must follow the SMART principle: specific, measurable, achievable, relevant, and time-bound.

• Specific: What do you want to accomplish? Who will be involved? Why is it important? Where do the key activities take place? The more specific the goals, the more helpful to employees.
• Measurable: How do you know the performance goals have been met? And to what degree? Remember the popular saying: What gets measured gets done.
• Achievable: Are the performance goals set in a way that they are attainable yet still stretchy? Research shows that more challenging goals lead to higher performance, as long as they are within reach.
• Relevant: How are the performance goals tied to job responsibilities, the overall objectives of the organization, and employees’ values and needs? The relevance of a goal directly affects the level of individual commitment to goal attainment.
• Time-bound: When should the performance goals be completed? What are the specific deadlines for different milestones? Having clear timelines allows you to track your progress.

Select Proper Measures
Effective evaluation requires proper tools. Kime emphasized the need for measuring what drives success. For different companies and different jobs, success can be measured very differently. The key, according to Kime, is to measure what leads to the delivery of repeatable positive outcomes. In general, performance can be evaluated from different perspectives.

Here are four common approaches.

• Trait-based evaluation. This approach measures personal attributes (e.g., personality, style, values) and asks how frequently and to what degree are they exhibited by an employee? This type of evaluation can be easily conducted using generic or customized personality tests or competency assessment.
• Behavior-based evaluation. This approach measures individual behaviors: What actions do employees take? How frequently do they demonstrate a certain behavior? And to what degree? Unlike trait-based evaluation, this type of evaluation can be tailored to specific jobs.
• Knowledge/skill-based evaluation. This approach measures individual capabilities related to a specific job: What do employees know? How much do they know? And to what degree? This type of evaluation is strategic in that it pays attention to competencies required both now and in the future.
• Results-based evaluation. This approach measures result: What do the employees achieve? To what degree do they accomplish the goals? This type of evaluation is job-/organization-specific, linked directly to pay, and encourages dialogue and employee buy-in if goals are jointly established.

Balance Business and Individual Needs
Effective performance evaluation requires a concerted effort to balance business needs and individual needs. Based on Kime’s experiences and observations, performance evaluation is conducted mainly for the benefit of the organization (e.g., revenue generation and cost reduction), which is necessary.

Kime takes another approach. He argued that to make performance evaluation truly meaningful, equal amounts of attention must also be given to the benefit of the employees. For example, what future training and/or career development opportunities can managers identify for their employees based on the performance review? A balanced evaluation creates a win-win situation leading to business growth, enhanced career advancement, additional learning opportunities, and more engaged and high-performing employees.

Coach Employee Performance
The idea of constantly coaching employees came up often in my conversation with Kim. Kime likes this analogy because coaching in sports happens all the time. So should coaching be in business.

A good coach, according to Kime, stays in the trench with their team, understands what motivates different team members, rewards achievements in a timely manner, looks for their successes not just failures, and schedules regular one-on-one coaching sessions. Becoming an effective coach requires constant critical self-reflection, continuous learning and unlearning, a firm commitment, and strong compassion.

Organizations must also invest in developing their managers and supervisors into effective coaches. Kime admits that early in his career, he had to learn how to be a good coach the hard way, and he was grateful to TTI for providing leadership development training that allowed him to become a better people leader.

Invite Feedback and Listen
Kime highlights the value of seeking employee feedback on the performance evaluation system since people want to be heard. Seeking feedback from those being evaluated will not only provide an opportunity for management and HR to find out what has worked or not, it will let employees know their opinions matter to their company. Proactive feedback seeking and active listening facilitates trust building and will likely empower employees to be engaged.

Simply put: It is a win-win for both parties.

While all of this advice is definitely easier said than done, Kime reminds us that, with commitment and compassion, you will feel motivated to seek more/better ways to conduct quarterly (not annual) performance reviews that will benefit both the business and people.

I encourage you to take some of Kime’s advice into your future practice.

Click here to find the replay of Wang and Kime’s webinar, “Making Performance Evaluation Work.”

Jia Wang is a professor in the Department of Educational Administration and Human Resource Development at Texas A&M University. Her research focuses on international and national human resource development, organization crisis management, and learning within organizations.