Few small business owners enjoy giving performance reviews—especially when they’re negative. But it’s important for managers to understand the most effective ways to give feedback to employees. Tom Spencer, president and CEO of Aubrey Daniels International, a 30-year-old consulting firm, helps clients do just that. His company works with business owners to understand how to do performance reviews in the most constructive way. Spencer earned a doctorate in psychology from West Virginia University and a master’s degree in applied behavior analysis from Northeastern University. He started with Atlanta-based ADI as a consultant before taking over the top spot in January. In a recent interview with writer Debbie Griffin, Spencer explains why performance reviews are important and the best ways to do them.
DG: Let’s start with the basics. What is the purpose of a performance review?
TS: A performance review helps to develop the person and should enable them to perform to the best of their ability for the organization. It identifies the behavior you’re looking for from the employee and ensures that workplace conditions will support it. An ideal performance review sets up multiple opportunities for reinforcement of those behaviors and should prompt a manager to look for those opportunities.
DG: Who should conduct a performance review?
TS: An employee’s direct supervisor should do a performance review, but it should be a two-way conversation. It’s a 50-50 responsibility to make sure expectations are clear, and it should be more performance management than review or evaluation. The purpose is to get the behavior you want from the employee and make yourself available to them.
DG: How do performance reviews affect the bottom line?
TS: Typically performance reviews won’t support the bottom line unless the performance goals of individuals are aligned with overall goals of the organization. Pinpoint the results you’re looking for and the behavior that will drive those results. After that, there needs to be frequent follow-up and reinforcement of the behavior required to achieve those goals.
DG: How often should performance reviews be conducted?
TS: If it’s important enough to have a goal around it, it’s important enough to talk about every month, or at least quarterly. An annual performance review is a challenge especially if that’s the only time you do it. And those goals defined annually tend to be so general or broad that they’re misaligned with day-to-day activities. The goals need to be measurable, and there should be agreement on how they’re measured. The most important thing is providing frequent, positive, reinforcement of desired behaviors and opportunities to engage employees in general.
DG: How should a manager address issues that an employee needs to improve?
TS: You describe the behavior and the impact of the behavior on the organization. It’s important to be conversational rather than confrontational, and a manager must have employees’ respect and trust in order for those conversations to happen. For example, asking a worker to perform a particular task better but reacting adversely when he or she asks questions in order to learn actually provides negative reinforcement of a desired behavior. Conversely, good behaviors are extinguished all the time because nobody notices or says anything.
DG: How does ADI conduct its own performance reviews?
TS: ADI holds monthly meetings and defines measurable outcomes for each team position, some of which are tasks, while others are behaviors. Take the hypothetical examples of marketing and IT, where the measurable outcomes are more leads and improved server up-time. The behaviors or tasks involved might be meeting a quota through cold calls and implementing a server-redundancy plan on schedule. ADI has sit-down meetings, continuous one-on-one conversations, and frequent team meetings via Skype. The company uses scorecards and progress graphs to track results, measure progress, and set new goals, and the scores can earn profit-sharing money. At the end of the day, people should know if it’s been a good day or a bad day, and it’s good to have daily reinforcement.