When Performance Matters, Do Performance Reviews?

by Jan Torrisi-Mokwa

What is the most critical yet often misused, neglected or abused people strategy? Answer: The annual performance review. Done in an effective manner, performance reviews can be a catalyst for improving performance and, more importantly, contribution. Higher levels of performance and contribution are more often than not the aim of business leaders.

However, today’s volatile business environment has magnified the importance of productivity, client development and fee realization. Why then do we overlook one of the most effective methods of enhancing productivity and contribution?

Whether you work in a large international firm or a five-person local firm, chances are that employees complain about the lack of effective goals, performance feedback and clarity about what they need to do to get to the next level. To address these issues, firms spend millions of dollars redesigning forms, processes or conducting training on how to give better reviews.

In my opinion, those investments will fail to produce the desired results. Effective performance management is not about forms or documents.

Rather, it is about helping people do three things: (1) gain insight into their personal goals and aspirations; (2) gain insight about the firm’s priorities (e.g., building relationships with clients, process efficiency, etc.); and (3) discuss and act on personal goals that align to business priorities. When performance matters, so does an effective annual performance review.

We don’t need more training on what to say. We need a forum for saying what we know.

A simple, thoughtful performance review can help associates and partners better understand the business environment, reinforce high levels of contribution, promote initiative and identify performance gaps.

Take a moment and reflect on your firm’s performance review process by answering the following questions:

  • If you pulled 10 employee files randomly, could you identify the top performers by the rating forms? The bottom performer?
  • Who is accountable for the review? How many hours do partners spend preparing performance review documentation?
  • Are real performance issues and concerns discussed openly and honestly? Who initiates those points in the discussion?
  • What percentage of the review focuses on the past versus the future? Are career aspirations discussed in a meaningful way?
  • How much does it cost you to distribute, track and organize employee evaluations?

Is your review process a forum for reflecting on accomplishments, a mechanism for increasing enthusiasm and a method for achieving goal alignment? Or is it a burdensome, boring, administrative exercise that undermines personal responsibility and creates a barrier to valuable feedback?

The answers to these questions often underscore why performance management is not working effectively. In my opinion, effective performance assessment is not about rating and ranking the performance of others. It is about giving professionals the tools to assess and manage their own performance.

Firms that want to achieve greater levels of productivity and employee engagement will want to implement a performance review that helps associates and partners in the following areas:

  • Reflect on past performance
  • Share aspirations and challenge growth
  • Plan for the future
  • Act
  • Monitor and self-correct

Before we explore each of these steps in detail, it is critical to establish who is accountable for the review process.


Who Is Accountable for Performance?

Responsibility for performance review rests with the same person who can change performance—in other words, with the individual. In too many firms, performance management is the responsibility of the partners. In one global accounting firm, I found that partners spent four to six hours preparing, delivering and documenting an annual review for one associate. The associate was only investing one to two hours.

This leverage of partner and associate time should be reversed. The review is about the contributions, career and aspirations of the associate, not the partner. Partners or leaders do not control the performance of others. They may influence behavior or deliver consequences, but at the end of the day, the individual is the only one who can change the level of contribution.

Furthermore, if you multiply a partner’s time (average chargeable rate of $350/hour) by four to six hours, an average performance review could cost the firm $1,500 per associate. If the partner conducts eight to 10 reviews, the investment is more than $15,000 annually.

Would your partners feel they are getting a good return on this investment?

You might ask, “Isn’t it a good thing that partners are so dedicated to the performance evaluation of their people?” Yes, of course partner commitment to associate performance management is critical to individual and organizational effectiveness. But it is the quality of this time that matters most. Typically, partners spend more than 80 percent of the review time completing forms or writing performance summaries. Only 10 percent to 20 percent of the performance review time is spent giving and receiving rich feedback—the most meaningful and impactful component of the review.


Step One: Reflect on Past Performance

Therefore, the first step to getting greater results is to have the person being evaluated take responsibility for his or her performance and begin by reflecting on the contributions made during the prior year..

Figure 1 is an example of how an associate’s self assessment might look.


Note: There should not be more than five or six goals documented from the prior year. Goal categories should focus on factors that contribute to career and firm performance—in other words, profitability, client relations or service, coaching or helping others succeed, personal/ professional development, work product quality and efficiency.

The form is simple and straightforward. Once the associates have completed their assessments, they are responsible for sending them to their annual review partners or managers for the next step. Associates must have three items in each category. If a partner receives a self-assessment that is lacking in either area, he or she should return it for further development before going to Step Two.


Step Two: Share Aspirations and Challenge Growth

The review discussion is the most important step in creating a meaningful review and enhancing levels of contribution. The partner or review manager should analyze the associate’s self-assessment prior to the meeting and note areas of alignment or disconnect.

The discussion begins by having the partner ask the associate what he or she wants to accomplish during the review. This reinforces that the review is for the associate’s benefit. It also sends the message that the associate is responsible and accountable for performance. After meeting objectives are outlined, the partner asks the associate to share or review the information they provided on the self-assessment. The partner listens. After the associate shares his or her learning points, the partner offers observations and feedback.

The extent to which the partner is engaged in the discussion and prepared will predict performance improvement. I often encourage partners to imagine that the associate is their most important client and they are discussing the client’s business performance.

In fact, the associate’s reaction to this meeting will affect the partner’s business results.

The level of openness and insight the associate has is a key indicator of ownership and contribution. The partner or manager should reinforce accomplishments and praise the associate in sincere ways.

Additionally, reviewers must push the associate to explore areas for improvement that are not fully developed. The greatest growth and increased levels of performance are achieved by learning from disappointments, not success.


Step Three: Plan for the Future

After concurrence or alignment is reached on past performance, the partner and associate identify no more than six goals for the coming year. The SMART (specific, measurable, achievable, results-oriented and time-based) goal criteria should be used. Ideally, the associate would come prepared with the goals in a draft format for the partner’s review.

As mentioned previously, good goal categories for professionals in an accounting firm might be profitability, client relations or service, coaching or helping others succeed, personal/professional development, work product quality and efficiency.

The goals should look like the sample in Figure 1. Simple, straightforward and measurable goals drive performance, not paragraphs of vague terms and aspirations. Goals should reflect the firm’s priorities and the associate’s priorities for continued career growth (areas for development identified during the self assessment). Once the partner and associate have agreed on a set of goals for the next year, time should be dedicated to discussing longer-term career aspirations. Questions like, “How do next year’s goals fit into your longer-term goals?” or “How have your aspirations changed since the last time we met?” are good ways for the partner to explore the associate’s career strategy.

Like client relationships, the associate’s level of candor and request for feedback are indicators of the trust and relationship the partners have developed. A higher level of self-disclosure about challenges or opportunities produces higher levels of future contribution.


Who Prepares the Performance Summary or Review?

The associate. Once the discussion on career aspirations is complete, the partner will ask the associate to prepare a summary of their meeting. The summary should be no longer than two pages and must include the associate’s self-assessment, goals for the next year and career discussion points or any other issues discussed during the review. It is critical to agree upon a date that the partner will receive the summary for review. Ideally, it should be no longer than one week from the review. The final copy serves as documentation for the personnel file and record of the agreement between the partner and associate.


Step Four: Act

I call this the Nike step. In other words, “Just Do It.” The associate is responsible for acting on goals established and ensuring they are accomplished on time and with high quality.


Step Five: Monitor and Self-Correct

Finally, performance reviews that promote self-monitoring are the best at enhancing performance. The firm may want to establish touch points or reminders to associates on a monthly or quarterly basis to review goals and meet with coaches, mentors or annual review partners.

Associates should always be encouraged to take initiative to seek feedback and solicit guidance when needed. Partners can role-model this behavior by periodically asking the associate to provide them with a status on goals. Goals may need revision as the business environment or firm’s priorities change. However, associates must gain the reviewing partner’s concurrence on changes to the goals documented in the review.

This monitoring ensures that goals align throughout the year and prevents excuses at year-end.

In summary, the annual performance review can be a powerful tool in a firm’s practice management tool kit if used effectively. This column offers an individual-driven approach to performance management that shifts the responsibility from partners or leaders to the individual.

This approach increases alignment between individual and firm business goals, leverages partner time and increases individual ownership or accountability for performance. In addition, the opportunity for meaningful performance discussions between partners and associates increases. The review discussion is no longer a dreaded experience, but one where associates are seeking feedback and concurrence on their perspectives, and partners serve as facilitators and coaches. Furthermore, fewer forms and documents minimize the administrative burden of the review and shift costs to an associate whose chargeable time is at a lower rate. In today’s competitive, constantly changing environment, productivity and contribution are market differentiators. When performance matters, so does the performance review.

This article is reprinted with the publisher’s permission from the JOURNAL OF TAX PRACTICE MANAGEMENT, a bi-monthly journal published by CCH INCORPORATED. Copying or distribution without the publisher’s permission is prohibited. To subscribe to the JOURNAL OF TAX PRACTICE MANAGEMENT or other CCH Journals please call 800-449-8114 or visit www.tax.cchgroup.com. All views expressed in the articles and columns are those of the author and not necessarily those of CCH INCORPORATED or any other person.

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