Ep05 – Are Formal Performance Evaluations Necessary?

Tara: [00:00:00] Hey there I’m Tara Landes. I’ve been working with small businesses for over 20 years, helping them implement the foundational business processes that get them to the next level. From DNA manufacturers to funeral homes. From web-based subscription services to third generation excavation contractors. Lots of business podcasts talk about the big companies. We’re digging into the secrets of the small companies. Want to make your business more fun, more profitable, and more self-reliant than ever before? Lots of people have done it. You can too, and you can start right now. This is the Small Business Foundations Podcast.

In this episode, Gabriel Dhahan and I talk performance management. Gabe’s been with Bellrock since 2015 and is a shareholder in the company. He’s a great business partner for me because he knows how to do a lot of things I don’t, and he brings a different perspective to our work. Diversity in thought is great, particularly when you’re aligned in your values. Living in different cities hasn’t stopped us from working closely together. We’re constantly talking about our clients, what’s working, what isn’t, and how to make change happen in small business. At Bellrock, most of what we implement isn’t rocket surgery. The tricky part is how to implement, getting people to try something new, when they’re already working at their max, fighting fires, and making things happen.

It’s even harder when the company’s already successful, which most of our clients are. Change is hard work, and if it ain’t broke, well, people can be resistant. We’re encouraging them to capitalize on their strengths and get even better. But they’re so busy as it is. There isn’t a lot of time for experimentation in small business consulting. You need to have the right solution, at the right time, implemented in the right way and quickly. If the results don’t come quickly, they’ll fire you, quickly! And since we don’t sign contracts with our clients, they have every right to hustle us out the door without paying a dime. If we don’t deliver, they don’t pay. All of which is to say that Gabe and I put our heads together often to make sure we’re doing what needs to be done. Putting a structured system for performance management into a small business is a lot of work if you do it right. But it’s the final 10% that is the toughest and where the real payoff happens. Not that it takes a lot of time, but what it does take is a shift in perspective on the part of the people using the system. If performance management is treated like an administrative task, instead of a developmental one, most of that hard work and setting up the system, even a really well-structured system, is wasted.

So this episode is Gabe and I digging into the warts and all of performance management. And we kick things off with the first step in performance management, the expectation setting, after all, if you don’t set expectations with your staff, it’s not that they won’t meet them, but it sure shifts the odds against you. In business the most efficient tool for setting expectations is a well-crafted job description.

How many companies have you gone into and done an analysis on, you go in and you say, “do you have job descriptions?” And they say, “yes, let me email them to you”. And so you get them, and then you talk to the staff and you say, “do you have a job description?”

And they either say, “yes, it’s my employment contract. Uh, I don’t know where it is, but I’m sure they gave me something to sign.” So they’re not even really talking about a job description they’re talking about an employment contract, or, “no, I don’t have one,” when in fact they do, they just don’t know about it.

Gabe: [00:03:47] Either it’s “yes, we have them,” and then the staff confirm that there really hasn’t been rolled out the right way or they haven’t looked at it or they haven’t used it, or it’s “no, we just don’t have them”. It’s very rare that the company says, “yes, we have the job descriptions, this is how we’ve been using them, and maybe they’re not perfect, but they’re close”. It’s either, there’s a big disconnect between the leadership saying that they have them and the staff not having them, or it’s just, “no, we don’t really have job descriptions”, because the job description is seen as a bureaucratic element and an administrative document, it’s not seen as an expectation setting tool.

Tara: [00:04:29] And all that time that those HR people, those poor beleaguered HR people must spend creating these things and trying to get them right, only to have them never used, it’s just a tick box, “Yeah we have one.”

Gabe: [00:04:42] Exactly.

Tara: [00:04:44] Yeah.

Gabe: [00:04:46] It’s frustrating. And, and I think that this connects to the next point, which is, the companies see job descriptions as this bureaucratic exercise. And they also tend to see performance evaluations the same way, and they treat them the same way. It’s something that we just check off. And so it ends up feeling like a waste of time and as a result, some companies are tempted to ditch them and so a number of years back there was that trend that took off of bigger larger companies ditching the performance evaluation system. Now, in those cases, they, I think rightly so identified that the performance evaluation wasn’t delivering value and what actually delivered value was having one-on-one coaching conversations.

So, I think they were right about that, but they were somewhat throwing the baby out with the bath water. It’s like, well, you can actually do both. Now, if someone comes to me and says, I’m either going to do these performance evaluations the standard way, or I’m going to do one-on-ones, I’m going to recommend one-on-ones every single time.

But the ideal situation is that you have the one-on-ones and you have the performance evaluations.

Tara: [00:05:55] Let me leave you with something though. So just as you were saying that it occurs to me that evaluations are not about development. Evaluations are about measuring someone’s performance, like at a fixed point in time, maybe over a previous period, but it’s just about establishing the baseline that day, as opposed to trying to build for tomorrow.

Now, the building for tomorrow, the career development piece may happen in the same meeting, but it is not the same goal and so performance evaluations actually originally started in the military as every management practice ever did it seems, but it started in the military because if you were in the trench and you were the leader in the trench and you got killed, the higher ups needed to know, who was the next person in line to take over and they couldn’t ask you cause you’re dead. So, the evaluations used to only go up and I think that that is another piece that gets really missed in the whole current performance evaluation system. It’s about succession planning. You know, fortunately today we’re not all dying in the trenches, I hope, but who’s going to take your job next, and have you found your second in command and no matter how small or big that organization is, there is no way you can move up or move on if you haven’t found a way to replace yourself yet.

Gabe: [00:07:16] Well, I have to say that there’s been a lot of conversations lately that I’ve had where I’ve asked the question, “so, you go away for three weeks on vacation?” Who’s you? Who do you put in? And I get an empty response, a blank stare. And I ask, so, if you had to replace yourself, who in the current organization would you choose? They might not be quite ready yet, they might not have all the skills yet, but who would you choose?

And again, it’s a blank stare, no response, and that really shocks me because part of the development path as a manager is to be able to identify your successor and start building that person up.

Tara: [00:07:58] Now, I imagine some people would say, well, we’re too small for something like that. We’re too small to have redundancy. That’s what I hear a lot of.

Gabe: [00:08:05] Well, there’s some truth to that, when you’re that small if you’re leading a department of two. Yeah. I can see that. However, how do you grow if you don’t have that? And the risk to the organization is significant.

Tara: [00:08:20] Absolutely. Absolutely. You have to find a way, you have to find a way even if you’re splitting your job in two, in terms of training different people, there has to be some way to have someone who can at least do some of it, uh, or is at least on track to figuring out how to.

Gabe: [00:08:34] So, when I ask managers about vacations they often laugh, and the common thinking around it is okay if I’m going to take vacation for two weeks, I’ve got to prep for the vacation for two to four weeks in advance and then when I come back, I’ve got to catch up for two weeks. And so, there’s an avoidance to take the vacation because there’s all this stress associated with it.

And to me, that just speaks to the fact that they haven’t identified someone in the organization that they’re developing, that they could actually lean on, um, to fill their role while they’re away.

Tara: [00:09:11] I think it also speaks a bit, not in every case, but it speaks a bit to the problem of upward delegation and feeling like you’re the firefighter who has to save the day, because the reality is unless, except for a very few people, you’re always replaceable.

It might take some training, it might take some time, there might be some missteps, but you’re always replaceable. So, there has to be a way for you to take a holiday, because you are going to leave that company. Whether you leave in a wooden box, whether you quit, whether they fire you, whether you naturally retire, like, however it happens, you will leave.

So there has to at least be the inkling of a plan for how to get out of there and so that whole piece of performance evaluation to me seems to just get lost in the ticking of the box. And then the other side of that of course is often evaluations happen because employees are clamoring for them. And what they’re actually clamoring for, I think, is a compensation review.

Gabe: [00:10:15] That’s right.

Tara: [00:10:16] It’s pretty rare that people want, I’m going to sit here, please judge me. You know, it’s going to be great, people don’t usually, I mean, you want that sometimes, most people don’t want that. Most people are just wanting to know, uh, how much more money can I have. And then, so to me, that’s another huge problem with performance evaluations. So you’ve got this compensation review, you’ve got the performance evaluation, which is where you are now. And then you’ve got that third piece, which is the career development piece, which could be also accomplished through, or in addition to one-on-ones.

Gabe: [00:10:47] That’s right.

Tara: [00:10:48] They’re really three different elements. And then the fourth one, which was the expectation setting in the first place.

Gabe: [00:10:52] Yeah.

Tara: [00:10:53] What I usually say is that the first day, on their first day, we present the job description, and the job description is just a really efficient way to set expectations. So the performance evaluation actually starts day one on setting those expectation.

Gabe: [00:11:08] Right.

Tara: [00:11:10] And then, you know, six weeks or so after the fact getting back together and seeing is their reality matching the expectations and also is it what they thought it was going to be before they even got that job description presented to them.

Gabe: [00:11:22] Well, and I think that this is where both the evaluator and the person being evaluated gets stressed out and things kind of go arise that they’re so focused on performance and not so much about, okay, what are the expectations here? Are they realistic? Do they align well with what you’ve actually been doing on the ground? How is this fitting for you? How’s it fitting for us and just having more of a coaching conversation around it. So that we get on the same page and that takes actually the stress out of it, because it’s really about assessing fit and customizing things and making it work early on.

Tara: [00:11:59] Another thing that I like to recommend is that in that first expectation setting, while they’re going over the whole job description, they’re not necessarily asking the person to do the entire job. They’re just asking them to do a few key things really well, maybe not really well, but get really acclimatized to those few things. So one of them might be, get to know all your colleagues, getting that as one of the expectations, then you don’t really have to worry so much about performance evaluation, per se, when it comes to that particular goal, it’s more about how did it go and where your new colleagues nice to you and how, how are you finding things? And so it’s much less of a, how is your performance going and more about how is it going generally?

Gabe: [00:12:45] Well, as we often say, the day before the employee starts working, is the day that they’re most excited about the job, and we almost want to keep that momentum going during that first week or two. So it really solidifies that first impression that the person has of their, of their new place.

And I think that that speaks to having those connections with colleagues, getting to know the work environment, maybe going to visit that awesome new site that they’re building or whatever the project is, getting them very immersed in the environment and the culture, as opposed to worrying so much about are they working on that particular piece right away.

And so then once they’re oriented in the environment, I think for the manager being able to say to the person, okay, if the only things you do are these five things on your job description, these are them. Do that, do that hard, and we can worry about the little bits and pieces over time. And then when we come back together at the six week mark, or the nine week mark and have that conversation, we can talk a little bit more about, okay, how are those five things going? And what else do we need to add to the mix here and kind of build from there.

Tara: [00:13:53] Those initial things that they focus on, are you picking random duties from the job description because that’s what’s come up or are you choosing the basic function of the role? How do you make those decisions?

Gabe: [00:14:04] I think that’s for the manager to decide, but I think it should be prioritized. You see the problem with a lot of job descriptions is that they’re just pulled, from the internet, or pulled from some posting, and the duties that are in there aren’t even prioritized, they’re just kind of blah, here are the duties and it would be so much more effective to say out of these duties, what are the top ones that you’re doing day in and day out or more frequently than others. And so I would have them prioritized in that way.

Tara: [00:14:33] More frequently or more important, I guess some things aren’t that frequent, but they could be the most important things.

Gabe: [00:14:38] Totally.

Tara: [00:14:40] I guess the manager, then it’s incumbent upon them to prioritize that job description before the employee starts, and maybe before they even start hiring, really.

Gabe: [00:14:50] Agreed.

Tara: [00:14:51] Because how would they find the right person if they weren’t really clear on what that person needed to do?

Gabe: [00:14:56] Well, the job description is the foundational tool for setting those expectations, but it’s also foundational then for hiring. I don’t understand how you can go and hire for the job without knowing exactly what that job should be doing.

Tara: [00:15:10] Yeah okay so devil’s advocate though. It happens all the time.

Gabe: [00:15:13] Of course.

Tara: [00:15:14] So it’s clearly possible.

Gabe: [00:15:17] It’s possible, but it’s not necessarily getting you the most, the best results.

Tara: [00:15:21] Right. Right.

Gabe: [00:15:22] Because then the expectations aren’t being set properly and so you may be able to get someone in the door, but have you properly set the right expectations with them?

Tara: [00:15:31] Yeah and I wonder how expensive it is, even if you found the right person, how, how much time they spend, sort of, feeling around trying to figure out what the right thing is that they’re supposed to be doing. I mean, if you don’t know if you hired them to do something and you don’t know what they’re supposed to be doing, how in the world are they supposed to figure that out?

Gabe: [00:15:53] Exactly.

Tara: [00:15:54] It’s funny. Cause it happens all the time.

Gabe: [00:15:56] So I don’t think it has to be perfect by any means, and that’s the purpose of having that, let’s say six to nine week review period, because you can revisit the job description. Take a look at what’s working, what isn’t, what’s missing, what’s redundant, whatever, and fine tune it. But it should be, let’s say 80% there when you hire the person.

Tara: [00:16:17] And I don’t think it could ever be perfect.

Gabe: [00:16:20] No.

Tara: [00:16:21] Because job’s changed so much over time. Even if a company has been doing the same thing for so many years now that said, when I’m thinking about that, I’m thinking more in terms of knowledge workers. Um, there are other jobs that are more static, that it is similar day in, day out. But even then, you know, all of a sudden we introduce a new timekeeping software or, uh, all of a sudden there’s a different kind of reporting that needs to go on to the office, or even an example, recently, a company that we’re working with they now are requiring people to bring their trucks back to the office instead of allowing them to take them home. And even that is like a really big shift. So things change in every job, and I guess, evaluating that job description on a regular basis, it can’t ever be done. I can’t ever be completed.

Gabe: [00:17:07] Well, I think that that’s part of the problem though, too, with the job description as it’s presented, if at all that first day, and then it’s put in a finder somewhere.

Tara: [00:17:17] Yeah.

Gabe: [00:17:18] And in that six to nine week review period, or in the six month review or in the one-year review, we should be pulling up that job description and saying, does this still make sense? Yeah, so coming back to your original question, I think was around timeframe and when these performance evaluations should happen.

Tara: [00:17:33] Is that what I asked?

Gabe: [00:17:35] I think so. So set the expectations on day one. Review those expectations and make sure it’s still a fit in about six weeks. And then from there, whether it’s six months or a year, I think you can argue that, but have that evaluation where it’s an opportunity to take a step outside of the daily grind, and really reflect on what’s happened over the past year and where you want to go next.

And so I think that’s the ideal timing and it’s what I often say to people is, if the job description is how you set expectations and the performance evaluation is how you measure those expectations, then the one-on-ones are how you manage them. The one-on-ones are how you connect the dots between those two things.

So then at the performance evaluation, let’s say after a year, as you said, you break apart those different parts, but then you do the goal setting and you talk about, okay, one year from now, three years from now, where do you want to be? Where do you want to get to? What do you need to do to develop, then if we’ve set that up right, then in future coaching conversations, we can reference that and say, okay, you decided that you wanted to take some sales training and get better at sales. How’s that going? What are you working on? What do we need to do to free up some time so you can really focus on that. So then the one-on-ones end up connecting the goal-setting piece.

Tara: [00:19:01] Nice. Yeah, it’s all, it’s all linked and you need all of those pieces I think, to really develop employees, to really grow the organization, you know, everybody says their most important asset is their people. So there just has to be a way to invest in those people, and time is, is the toughest thing to invest. Sending them to training is actually the easiest, throw money at the problem. That’s the easiest thing to do. Um, it’s investing that time.

Gabe: [00:19:27] And so where I, what I often see is, okay, they, they set the expectations with the job description. They do the performance evaluation, but then the one-on-ones fall off. And then that’s where you get the surprises at the evaluation. Oh, like, you think I’m doing this way, and I think I’m doing that way, and actually, we’re totally disconnected. Why didn’t I know this. So while you haven’t been having conversations about it, you haven’t been getting regular feedback, then of course the performance evaluation is, is kind of frustrating because you haven’t been developed throughout.

Tara: [00:20:01] In some professional services organizations like architectural firms or design firms or construction firms, the person who is evaluating the performance, may not have been that person’s manager on the project that they were working on. And so there’s sometimes some sort of pushback to the idea that, well, how could you possibly evaluate my performance? We didn’t even work together. How do you know how I work? And I always find that one really interesting as well, because the act of evaluating performance means doing research. It’s talking to the people that they worked with, uh, digging through the emails and the evidence, and coming up with a robust evaluation of where they’re at, that might be easier, if I directly manage that person the whole time, but the process doesn’t change. And so having an evaluation from somebody who didn’t directly supervise you on the work during that time can actually be an even better evaluation.

Gabe: [00:21:05] Well, because it can be a little bit more objective.

Tara: [00:21:07] Exactly. And people are so reluctant to give feedback directly to someone because they feel like they’re being harsh or cruel or mean, or will be taken the wrong way but when you’ve got somebody who’s like removed from it, they can be more straightforward with the feedback.

Gabe: [00:21:23] Totally. And I think this speaks to the need to have both qualitative and quantitative measures in the job description in terms of how you’re going to be measured on your performance. So some of it is more qualitative. Like what do your colleagues say? How do clients generally respond to you? How do you show up? And then some of it is more quantitative. Like, did you meet budget on these projects? Did you meet our quality standards? Whatever they are, there should be those measures too. So I think if you have a combination of performance metrics that are being looked at, whether you’re the direct manager or the staff manager or whatever it is, you can evaluate.

Tara: [00:22:02] Absolutely, I mean, we do 360 reviews where we deliver the feedback, and we don’t even work there at all. And we’re still gathering the research and doing the evaluation and people have found that to be pretty helpful, I think.

Gabe: [00:22:14] I think a lot of this just comes back to, we need to take the stress and the anxiousness and the negativity out of this and make it far more about a conversation around performance and fit and growth and development, and that the orientation here is, “Hey, we’re going to give you feedback and we want to hear your feedback on how you’re doing,  so that we can get better”. It’s kind of this idea of coaching up or out. It’s not about, you’re a poor performer and that’s it.

Tara: [00:22:48] Yeah, although there is sort of that that separation between this is how you’re doing, and then this is how we coach you and develop you.

And so I think the evaluation will always be a fraught meeting. It will always be stressful and emotional, both for the person getting evaluated because nobody likes to be judged and for the person evaluating, because most people don’t like to judge people to their faces, although behind their back, they love it.

Gabe: [00:23:16] True, but I think it just gets a lot easier and better when we start off right?

Tara: [00:23:22] Yeah.

Gabe: [00:23:23] So if we start with that job description presentation and are really focused about what are the expectations here, if we reference that regularly, if we have those coaching conversations, if we’re giving direct feedback regularly, then when we get to the performance evaluation, it’s going to feel less fraught.

Tara: [00:23:42] Agreed.

Gabe: [00:23:43] That’s my take.

Tara: [00:23:44] Yeah. But it’ll still be there.

Gabe: [00:23:44] Yeah.

Tara: [00:23:45] The other, the other thing that can help I think is evaluating not just on negatives. Which I think too many people fall into the trap of, or too many negatives. Now, some people just aren’t performing well and you, so you, okay, well, you gotta be realistic, but even the best performers often get mostly here’s what you can work on to do better from a place of weakness, as opposed to this is your strength. So we really want you to work on that strength to get even better at that strength. Okay, I gotta say something.

Gabe: [00:24:19] Okay.

Tara: [00:24:20] I’ve done your performance evaluation before.

Gabe: [00:24:22] I always want to know. I just want to know whether bad or good, at least if I know I can do something about it and I actually think that connects back to this whole conversation, right. It’s people just want to know. So even though the coaching conversations are really helpful, there’s something about that report card. There’s something about that retrospective and being able to take the space and time out of the daily, kind of life of the work and talk about that stuff and kind of know where you’re at. There’s almost like a rubber stamp element to it that I think we all crave.

Tara: [00:24:54] I would agree. And it makes you feel seen. Well, thanks for the conversation Gabe.

Gabe: [00:25:00] You’re welcome. It was fun.

Tara: [00:25:01] Yeah it was fun.

Tara: [00:25:02] Bye.

Gabe: [00:25:03] Bye.

Tara: [00:25:07] We covered it a lot of ground on this one, as Gabe said, if the job description is how you set expectations and the performance evaluation is how you measure those expectations, then the one-on-ones are how you manage them. We talked about performance evaluations as tools to identify successors in an organization and being one step in allowing managers to take vacations. Man, all of these tools.

Most small businesses don’t even have a person with HR experience, never mind a whole department of them. Who’s supposed to create all this stuff, but these tools are the foundations that allow businesses to grow and thrive. Putting a performance management system in place takes time. It’s hard work, but don’t let that stop you, if it feels like too much, don’t worry. We’ve got you. You can learn this stuff and get it right, the first time.

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