Careers: Performance Reviews by the Numbers
Tuesday, 29 June 2010 | Leadership Observatory
The Wall Street Journal
By Joe Light
When Maria Giraldo began her job as a nurse at Long Island Jewish Medical Center nearly 12 years ago, performance reviews were conducted using a 10-page paper form that asked managers to score her on qualities like "leadership" or "respectfulness."
"They were very subjective," says Ms. Giraldo, who is now a nurse manager in the intensive-care unit at Long Island Jewish Medical Center. She was often graded on intangibles like how well she worked with others, which Ms. Giraldo says were important but open to interpretation.
But three years ago her hospital implemented a new computer-based performance system that broke her job description down into quantifiable goals such as to keep infection rates for her unit low and patient-satisfaction scores high. When review time came, the discussion didn't dwell on how she had performed -- either she had hit the goals, or she hadn't.
It's the same sort of hard-facts review system that many organizations in the U.S. are adopting. And it's changing the way companies and professionals view success and how to get ahead in a career.
Knocked around by the recession, U.S. businesses are trying to overhaul evaluations in a way that better separates top performers from underachievers. According to Hewitt Associates, 10% of managers and 11% of other employees are now judged based solely on the results they achieve, as opposed to a combination of hard figures and softer behavioral characteristics, such as demonstrating corporate values or showing leadership, up from 7% and 8% five years ago. Nearly a third of professionals at an executive level are evaluated based solely on results, up from a little more than a fifth in 2005.
In the North Shore-LIJ Health System, the old, subjective evaluations had led to the corporate equivalent of grade inflation, say officials. "The chance of earning a good score was almost guaranteed," says Joseph Cabral, chief human resources officer of the health system, which has 15 hospitals and 42,000 employees in New York and Long Island.
Now, rather than a subjective score from a manager, nurse performance is directly judged by how high patient-satisfaction scores are. One key reason the hospital system changed its performance reviews: By October, many insurers plan to pay hospitals for care based in part on patient satisfaction -- which will be collected by surveys after patients are discharged. If the North Shore-LIJ Health System's scores had stayed where they were, Mr. Cabral estimates the change would have cost it at least $55 million annually.
As companies shift their evaluation models to focus more on business-based metrics, employees have to adapt their behavior in order to keep being considered a top performer, says James Harvey, a vice president at Dublin, Calif.-based Taleo, which makes performance-management software. "There will always be some degree of subjectivity, but it becomes much harder to hide behind how well you get along with the boss," says Mr. Harvey.
At CDW, a Vernon Hills, Ill., technology products and services firm, employees' performance is electronically tracked to the point that if a project isn't completed on time, it's automatically logged into the performance system. "Truthfully, the old system was a little soft," says Tess Reinhard, senior director in human resources for CDW, which implemented its new system last year.
At the end of the year, employees receive a score of one, two or three based on how well they hit the metrics, such as customer-satisfaction scores for someone who interacts with clients or goals for the retention of top performers for a manager. If they receive a one, they get no merit raise for the year. If they receive a one for two years in a row, they'll likely be fired, says Ms. Reinhard.
When your company changes to a new system of tracking performance where the intangibles count less, it's not as easy to model your career to follow a higher-up's path to success.
To help adapt to the new system, make sure you get a chance to help set your goals at the beginning of the year, Mr. Harvey says. The new evaluation metrics can hurt employees whose jobs don't seem directly connected to the bottom line at first blush, such as the manager of an engineering team, who can meet production deadlines but isn't responsible for selling the product.
Instead of focusing on revenue-generating objectives, the manager, who is expected to develop his employees, could set a goal of mentoring and eventually promoting two of his 10-man team in the fiscal year or to identify at least one of them as his potential successor.
"Any time you can find a way to quantify those things, the better," says Mollie Kohn a principal in Hewitt Associates' talent and organization consulting practice. Without input, Ms. Kohn has seen companies establish financial objectives for employees who have no control over them. "You don't want to be judged on something that you only have an indirect contribution to," she says.
Once the goals are set, employees should set up regular meetings with their managers to review them and make sure the measures are updated over the course of the year, says Mr. Harvey. Otherwise, at the end of the year, employees might find they performed poorly on a goal that was no longer a priority for their position or that they weren't measured on goals that had been put in place during the year.
If your company doesn't automatically track how well employees hit certain targets document your progress on your own. Don't wait until review time if you aren't hitting a goal. When it becomes obvious try to make the case that what you are doing is contributing to the bottom line.
"If you wait to have that conversation until your yearly review, it's too late. The system has already marked you as a poor performer," says Mr. Harvey.
