That’s Why it is the First Question

Steven Cesare, Ph.D.

A business owner from Colorado called me the other day to talk about his Company’s performance appraisal process. By way of pretext, this business owner had done an absolutely great job setting the stage for the actual performance appraisals. In specific, he established empirical goals for each of the four Balanced Scorecard quadrants, conducted a strategic planning session to ensure open communication and clear alignment with the relevant Department Managers, developed key initiatives to guide the Managers toward achieving their respective goals, provided monthly financial review meetings as the forum to share ongoing results with the Managers, scheduled monthly one-on-one meetings with each Manager to help them stay focused, and of course, shared the job description and performance appraisal form with each Manager.

Off to a superb start!

Before I had a chance to lay the foundation for our telephone meeting, the adept business owner correctly anticipated my second question by immediately sharing a summary of each Manager’s strengths, weaknesses, and overall performance appraisal ratings to me. His summaries were very well done: behaviorally-based, nicely-documented, and strategically prescriptive as evidenced by an action plan that he had compiled for each Manager.

With that much investment, detail, and planning, it was not hard to believe that his Managers received numerous performance ratings of “4” (i.e., Exceeds Expectations) and “5” (i.e., Role Model) on their actual performance appraisal forms. This sounded like an All-Star Team.

By the time an opportune break in the conversation presented itself, I finally got a chance to ask the question that is always asked first to a business owner as he/she begins the performance appraisal process: “Did your company achieve all of its business goals during the last year?”

What do you think he said?

“No” was his response. In actuality, the Company underperformed during the previous fiscal year, losing more that $250,000, with similar substandard performance in other goal quadrants. Inquisitively, I asked how could his Managers have performed so admirably well as illustrated by their glowing performance ratings, while his Company failed to meet its business goals as validated by the Company’s Balanced Scorecard results. “They tried really hard” was the response.

With all honesty, I am sure they did. But they obviously did not try hard enough on those key behaviors that were supposed to achieve the business goals. The disconnect between individual ratings and organizational results was too immense to ignore. After explaining the essence of performance appraisals to the business owner, we agreed that he would re-evaluate his Managers within the context of their Departmental results.

Not surprisingly, most of the Managers received a rating of “2” (i.e., Below Expectations) on their revised performance appraisal forms. Without a scintilla of doubt, this revision fundamentally saved the integrity of the Company’s performance appraisal system. With all the impressive pre-work he had completed, the capstone did not validate his effort.

Looking forward, the business owner and I agreed that all future monthly one-on-one Manager meetings would more closely examine year-to-date Departmental results, evaluate the current efficacy of the key initiatives each Manager is supposed to demonstrate, and provide ongoing development feedback (i.e., action plan) focused on future goal achievement; a direct parallel to the standard performance appraisal meeting framework.

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