can be stressful and confrontational, but they need not be. A successful
performance evaluation system benefits both employer and employee.
Proper preparation and openness to the process can generate a positive
outcome. Encouraging team members to set their own goals gives them
ownership in the evaluation process and opens the lines of
The evaluation should be a
dialogue over whether specific goals have been met. Initially, team
members will need assistance setting realistic goals. With time, an
employee’s goals should increasingly reflect personal interests and
development. Evaluators should consider all aspects of an employee’s
performance, and evaluatees should communicate their needs so the
company can help them meet their goals.
performance evaluation can be adversarial, even confrontational.
Sometimes, the evaluatee is held to unreasonable or unspecified
standards. Without a discussion plan, the evaluator focuses on small
“bumps” in performance, missing the positives. What the evaluator
considers a positive evaluation is interpreted as mediocre. The
evaluatee is given no opportunity for feedback and, therefore, cannot
communicate what is needed from the company to succeed. The results?
Dissatisfaction, poor performance, high turnover.
The evaluatee wants an
opportunity to comment on areas that need improvement, discuss ways to
improve performance, and suggest how a senior or manager can improve
training techniques. Evaluators want to contribute to an effective
employee and a successful organization. Two-way communication would help
improve not only the evaluatee’s but the company’s performance.
Need for Performance Evaluations
A wealth of information
attests to the importance of performance evaluations. Most of this
information, however, emphasizes performance evaluations as a means to
prevent illegal terminations. Most employment arrangements in the United
States are governed by the employment-at-will doctrine, which allows the
employer or employee to terminate the work relationship at any time. An
employee may be discharged by the employer for a good reason, a bad
reason, or no reason at all, as long as the reason violates neither
federal nor state law.
doctrine is very ambiguous. Employers should protect themselves against
a discrimination suit by documenting performance regularly and supplying
abundant evidence for any possible performance-based termination.
Performance evaluations serve as a form of legal protection for the
roughly 2% of an organization’s employees that might be
terminated—the other 98% are quality employees. A successful
performance evaluation system protects the employer while benefiting
this large majority of employees.
CPAs have a habit of
thinking in the past. They audit financial information, prepare tax
returns, and perform month-end and year-end closes—all based on past
information. While it is important to provide feedback on past
performance, that feedback should be based on specific measurable goals
set during the previous performance review. Establishing goals creates
an atmosphere of forward thinking and provides tangible objectives.
Allowing team members to be involved in setting their goals gives them
ownership in the evaluation process and typically opens the lines of
communication between team member and manager. Performance evaluations
can enable managers to keep team members happily employed.
Most individuals would be
likely to change employers if they were offered more money, better
opportunities, and less stress. For this reason, employers must decide
whether it would be economical, in the current employment market, to
make a counteroffer that matches the salary but demands fewer hours and
less stress. An effective performance evaluation system can illuminate
the advantages of retaining staff. A system that allows for feedback
even before the evaluation takes place can be a beneficial and effective
tool to help reduce the cost of turnover and maintain job satisfaction.
Creating a truly effective
performance evaluation system is easier than it seems. Soliciting honest
feedback on the current system is a nonthreatening way to determine what
is working and what is not. A communication test, such as the one
provided in the Exhibit, can be a first step.
Most employers would be
amazed at the results of this survey. Of course, it is useful only as
long as the employer is open to and candid about the results. Once
managers have reviewed and communicated the results with team members,
the construction of a new performance evaluation system can begin.
It is tempting—but
dangerous—to create an evaluation system based on predetermined
characteristics in a checklist format. Although this would initially be
easier to implement, the resulting system would be impersonal and limit
communication. The best evaluation system requires each team member to
address a number of topics and establish specific goals. Employee and
manager collaborate to establish these goals at the beginning of the
year and then discuss how successfully these goals were met at year-end.
Amazingly, when the evaluation is structured this way, the evaluatee
typically scores herself lower than the evaluator does. Imagine the
morale boost to that evaluatee during the evaluation.
The following five
categories have proven successful in opening the lines of communication
during the performance evaluation:
Chargeable hours and
productivity. Measuring productivity for evaluation purposes seems easy
but may be one of the hardest areas for new team members to comprehend.
New team members are often unsure about what is expected of them with
respect to recoveries and chargeable hours. If budgets and hours set for
jobs are unrealistic, managers cannot blame anyone but themselves when
team members leave after two years.
Managers must set
realistic goals and receive input from team members as to whether they
are reasonable. Establishing unattainable goals is worse than never
setting goals in the first place. Managers should set specific goals for
new team members in terms of chargeability and productivity (e.g., a
limited number of total hours, a certain percentage of chargeable hours,
an average recovery rate). After a year, team members should set their
own goals and managers should discuss them during the evaluation.
Technical ability and
business knowledge. During the first two years, a new team member should
focus on learning and reaching moderate goals established with a
manager’s assistance. The goals should grow with the individual and,
with time, begin to reflect the aspects of the job the individual finds
especially interesting. An interesting and challenging job is as
important to many individuals as a high salary.
Within two to four years,
a team member should be finding an area of expertise. She will become an
asset to the organization if she is allowed to build a technical
background and proficiency through self-directed CPE. Performance
evaluations become easy as the team member sets her own goals.
Client service. Client
service goals should pertain to frequency of contact with the client,
response time to client needs, relationships with certain key client
personnel, friendliness of service at all levels of the client’s
organization, and value-added services provided to the client. Client
service goals should be as concrete as possible and include references
to specific clients and client personnel with respect to relationship
building. The assistance new team members receive in establishing these
goals will educate them on company performance standards.
Client service monitoring
must support the evaluation system. The No. 1 source of feedback will be
the client’s employees. Managers can expect an informative response
simply by asking the payables clerk, “How did you enjoy working with
Sue Staff this year?”
Client service should
encompass not only external clients but internal clients (i.e., support
staff) as well. Some personnel have little or no contact with external
clients, but do provide service to client service teams. These internal
personnel also need to set goals and understand how their performance
compares to those goals.
Business development. Many
accountants prefer numbers to sales; however, business development can
involve more than just selling to potential clients—and might not
involve selling at all. Business development means generating new
clients as well as additional business from existing clients.
Goals in this area will
depend primarily on personality and technical knowledge: Many
accountants simply are not comfortable with selling and would leave a
position that required it. Every organization contains “hunters” and
“skinners.” Hunters live for the hunt; they enjoy selling and want
it to be part of their everyday job. Skinners dislike the hunt,
preferring to take over once it is complete. In the accounting
profession, skinners are better known as technicians.
Personal goals should
reflect this distinction. Hunters should establish goals that put them
in touch with the public: joining outside organizations, conducting new
client presentations, and assisting with the firm’s marketing plan.
Goals for skinners might include more of a one-on-one approach to
selling: meeting with existing clients about specific needs, giving
technical seminars for small groups of client personnel, and explaining
technical changes that will affect products the hunters are trying to
People development and
teamwork. A personal evaluation system must be strong enough to minimize
internal strife. Personality conflicts can create counterproductive
friction, but a successful system will find the root of the problem
without making team members feel as though they are pointing fingers.
People development and
teamwork goals may include reassigning projects, giving and receiving
instruction and training sessions on certain issues, and providing
feedback. An effective system encourages new team members to actively
pursue knowledge in new areas and encourages seniors to actively share
their knowledge with new team members.
Evaluators should ask
questions to determine where the system may have broken down. For
example, if a new team member believes she did not meet her goals for
taking on a new area in the audit, the evaluator would emphasize the
organization’s role in helping team members attain their goals: “How
could we, as an organization, have helped you to better reach your
Strive for consistency.
The system is only as good as its delivery, and consistency beats
occasional excellence. A consistent approach to evaluations will lend
credibility to the system and prevent discrepancies in performance. The
best way to implement consistency is to ensure that all team members
know the system’s expectations. Managers should know that the goal is
fair and honest feedback that will help team members grow with the
company. A peer review system should be implemented before evaluations
are given, and comments should confirm that each employee knows the
system is being applied uniformly throughout the organization.
Give praise where it is
due. Too often, managers do not give high marks in evaluations. Team
members want to know that they are valued by the organization. Informing
them that they “meet expectations” tells them that they are average
at best. Managers should consider not only results, but also effort and
commitment. A team member that is committed to the organization and
gives 150% to each and every task exceeds expectations. Such individuals
should know how much their effort is appreciated.
Turn negatives into
positives. Even bad situations can be given a positive spin. If a team
member’s performance falls short of expectations, the evaluator should
let him know, but also ask how the organization can help him improve. If
an evaluator tells a team member that his performance is lacking and
that he must improve or suffer the consequences—without giving advice
or offering help—the team member is likely to start looking for
employment elsewhere. If evaluators are open, honest, and helpful,
evaluatees will reciprocate.
Receiving a performance
evaluation need not be a stressful event. There are ways to minimize
stress and ensure that the performance evaluation is a positive
experience for both the company and the evaluatee.
Be prepared. Performance
evaluations are usually scheduled far in advance. The waiting period
should be a time for self-reflection: The evaluatee should compare
achievements against previous goals and come to the evaluation ready to
explain how specific goals were met. If every goal was not met, the
evaluatee should have specific plans to ensure that this does not happen
again. Which resources can the company provide to reach personal goals
and why these are important to the overall corporate mission?
Evaluations are a time for self-reflection, not excuses—for both the
evaluatee and the employer.
Communicate. A good
evaluation—and subsequent promotion or raise—requires a good
explanation. Companies prefer to invest in employees that show potential
for growth and stability within the organization. The best team members
are those individuals that have a positive attitude. An open, honest,
positive conversation during the evaluation will benefit both sides.
Focus on the future. The
evaluatee should be ready to set goals for the upcoming year and create
a plan to reach them. In addition, the evaluatee should be able to
explain how personal goals relate to company goals and how the company
can help meet them. The performance evaluation can be a powerful tool
for the evaluatee’s—and the company’s—self-improvement.
Mark J. Koziel,