HR Management & Compliance

How to Establish Effective Metrics for Evaluating Performance

With any investment, you want ROI, and it’s no different for your people, says Dr. B. Lynn Ware, but a lot of employers have trouble appraising performance when there aren’t convenient metrics.

What Do We Mean by Performance?

Let’s define performance as behavior demonstrated in a particular way for another group of people that causes a defined result, says Ware, who is president and CEO at Integral Talent Systems, Inc. Her remarks came during a recent BLR-sponsored webinar.

For example, she says, if increased sales is the desired result, the behavior is the variety of activities that lead to the sale—marketing, business development, sales efforts, benefits lists, and the closing.

Identifying the individual behaviors that lead to corporate success is the crux. Employers that differentiate themselves are those whose managers are focusing on results.

Why Don’t Employees Perform?

There are four main reasons why employees don’t perform, says Ware.

  • No Aptitude (person can’t do the job even with training). This should have been addressed at the hiring stage.
  • Skill Deficiency (person can’t do the job, but could with training). If the person doesn’t know how to make a strong benefits statement, for example, it’s hard for them to close contracts.
  • Motivation Issue (person knows how to do the job but doesn’t do it). The manager should explore this situation with the employee. Maybe things in their personal life are causing the problem. Ironically, says Ware, it’s often the good people who become demotivated. They do such a good job they get to do more and more of the work—they’re punished for doing a good job.
  • Alignment Problem (person is doing a job, but it’s the wrong job). Many times employees don’t know what the priorities are—they are working hard and long, but not working on things in line with the overarching goals of the company. This goes back to the manager—what are the expectations, what are the priorities?

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Alignment Through Cascading Goals

You start at the strategic level with the mission, business plan, and organizational structure, says Ware. Then it drops down to functional groups and departments and finally, down to teams and individuals.

Ware’s Example of a Goal-Setting Process

If you need to increase year-over-year revenue by 25 percent, for example, there will likely be many goals that filter down into the various business units.

All the groups are working to meet the goal on the left.

Notice that the goals get very measurable as you move to the right, Ware says.

 


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Setting SMART Performance Goals

SMART is a commonly known approach to setting goals. It seems like a no-brainer, says Ware, but she just finished coaching a director-level group from a Fortune 500 company that needed this training.

Specific—The person knows what you want him or her to accomplish.

Measurable—How you will know that it happened.

Attainable—The goal may be challenging or a stretch, but has to be possible to accomplish. (As an example, Ware says she was working with a cost center at a financial services company, issuing credit cards to people trying to reestablish credit. There was high turnover in the call center—very high even for a call center. When she went in, she found that the new employees were held to the same standard as the experienced people. When she talked to a former employee who had quit, she heard “I was on phones, couldn’t find customer records, customers tweeting to me, there was no help, so I quit.” The goal was unattainable.)

Relevant—Goals should be aligned with the strategy and make a difference.

Time-Bound—By when does the job have to be done? This is important for accountability, Ware says.

In tomorrow’s Advisor, more on performance management, plus an introduction to the all-things-HR-in-one-place website, HR.BLR.com®.