Performance reviews always matter—but perhaps they matter even more in a down economy because “they force the leader to be more specific, more detailed, to sit down and ask, ‘What are we really trying to accomplish?’” says executive coach Quint Studer, a 20-year healthcare veteran credited in the early 2000s by Sarasota Memorial Hospital with turning around employee morale and patient satisfaction through his book, Hardwiring Excellence.   

Founder and CEO of Gulf Breeze, Fla.-based Studer Group, Studer has authored a new book, Straight A Leadership: Alignment, Action, Accountability. In it, he talks about the ways companies can make performance reviews work for them.

“Performance reviews are necessary,” says Studer. “And when they’re done properly, people actually like them. Employees want to know how they’re doing. They want to connect with their managers. And reviews give leaders an opportunity to measure performance results, reward great employees and move not-so-great ones out.”

Good evaluation tools are good for the manager and for the employee, Studer says. For the manager, “Any time the economy gets tight and you have to look at reductions, you like to look at them with objective data, both from an ethical and legal view,” he says. “Organizations tend to make these decisions based on seniority, and it’s sometimes not fair to the better performer; you’re making life decisions without a good way to do it.” And for the employee, Studer says, performance reviews are “a huge indicator for employee engagement; they replace anxiety for an employee because they know what is expected of them.”

Especially in these difficult economic times, performance evaluations help keep the organization focused, Studer says—particularly the leaders. “If I know how I’m being evaluated, even if I may get lost or confused, I’ll still come back to that because it’s on my evaluation.” 

Evaluate This

1. Make the performance evaluation as specific and objective as possible. Instead of just saying the person will be a good communicator, Studer says, write down what you are trying to get out of good communication: “Our customer satisfaction will be this…”

2. Weight it. “What happens in organizations, if you give me eight or nine things that are key, I’ll lean toward what’s easy, not what’s best,” says Studer. “You need to tell me what the priorities are: ‘This sales goal is so important [for example], 50 percent or 60 percent of your evaluation is dependent on it.’”

3. Keep it in front of people. “We tend to only talk to someone when there’s something negative to say,” says Studer.  At a minimum, sit down with the employee quarterly and say, “Here’s how you’re doing.” “You never want to surprise them,” he says.

4. Build development into the process.  “What do most people want in a job?” asks Studer. “They want opportunities to grow in their organization and in their own skill set. That investment really affects quality of life.”

5. Look for times to reward employees.Throughout the year as you’re seeing them perform well, build reward recognition into your company.