There are old and accepted ways of doing things, and there are new and bold ways. It’s your choice. 
Are you thinking of changing your performance evaluation system? Are you tired of the meaningless nuance between a 3.5 and a 4.0 rating? Then pick up a copy of the April issue of Harvard Business Review, which is dedicated to reinventing performance measurement and incentivizing employees. One article explains the new performance evaluation system at Deloitte. Limited to four questions, it is simplicity itself.
The first three questions are to be answered by the supervisor on a scale from “strongly agree” to “strongly disagree”:
- Based on what I know of the employee’s performance and if it was my money, would the employee be given the highest possible compensation increase?
- Given what I know of the employee’s performance, would I want him on my team again?
- Is this person at risk for low performance?
Finally, the supervisor must answer either yes or no to the question “Is this person ready for promotion?” The performance review is given quarterly or after a project concludes. The article explains its effect: “We are asking our team leaders what they would do with each team member rather than what they think of that individual.”I also like a similar idea I heard about elsewhere, an evaluation on a single sheet of paper with three categories:
- What you are doing right and should do more of.
- What you are doing wrong and should stop or remedy.
- What can we as a company do to help you do more of the first and less of the second?
The second radical idea, which also comes from the April issue of Harvard Business Review, deals with salespeople and “at-risk pay” (i.e., compensation that’s the result of incentivizing a salesperson to go out and sell more). According to Andris Zoltners, professor emeritus at Northwestern University and cofounder of sales consultancy ZS Associates, there’s a catch to that type of compensation: “If you sell something one year, there is a high probability you’ll make residual sales the next year without any effort. If a salesperson is paid a commission or bonus for free sales, we call that a ‘hidden salary’ since it’s an incentive paid for something that’s nearly automatic.” To learn more about Zoltners’ ideas for compensating salespeople more efficiently, read his interview, “Getting Beyond ‘Show Me the Money.'”
The third radical idea comes from a December 17, 2013, New York Times article on how pharmaceutical company Glaxo compensates its sales force. The company ditched incentives based on the number of prescriptions doctors write for Glaxo products. Now, salespeople are paid based on their product knowledge, quality of service, and overall company performance. A great and inspirational idea.
Hello, legal profession? Many firms pay their lawyers based on raw and brute billable hours instead of client satisfaction. 
The perverse effect is that a lawyer’s compensation suffers when he settles a case in a client’s best interests (saving the client money) as opposed to litigating and trying it. Once upon a time, the billable hour was simply a way of keeping inventory, but then it became the inventory. And it was off to the races. Thinking of hiring a law firm? Ask one question: How are your lawyers compensated?
Michael P. Maslanka is a partner with Fisher Broyles in Dallas, Texas. He may be contacted at Michael.Maslanka@untdallas.edu.