What Matters Most – Annual Employee Assessments with Chuck Olsson

Today we're joined by Chuck Olsson, Chief Human Resources Officer at First United and we discuss trends and best practices in Annual Employee Assessments, how they can help your employees, your managers, and your business.


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Eric: Hello, and welcome to “What Matters Most,” the podcast all about finances, community, savings, and security for you, your family, and your business. This podcast is brought to you by the helpful folks at my bank, First United Bank & Trust. I’m your host, Eric Nutter, and in today’s episode, what matters most are annual employee assessments. And for this helpful discussion, I’m thankful to be joined remotely today by Chuck Olsson, vice president and chief human resources officer at First United. Hey, Chuck, how’s it going?

Chuck: Good, Eric. How are you today?

Eric: I’m doing very well. I appreciate you joining me today. We wanted to talk about something that’s…it’s a topic that happens usually in the first quarter, first couple of months of every year, and that is around annual employee assessments, and there’s a lot of different ways that companies can handle this. I’ve experienced several over my career. And we wanted to kind of pick your brain about trends in the industry and just what you’re seeing as best practices to help those of our listeners who may be running a business and may be trying to deal with that. Does that sound fair?

Chuck: Yeah, absolutely. Great subject and a lot of great things I’ll be able to talk about there.

Eric: Excellent. So, as I mentioned, over the years, there have been changes in that, and some of the simple ones are something as simple as manager-led annual assessments versus employee-led assessments. Can you give us kind of a baseline? First of all, just identify what those two things represent and then kind of where the current trend is in the industry.

Chuck: Absolutely. Yeah. The manager-led employee assessment process, you know, that’s been the traditional approach that’s been in place for decades now. The role of a manager to the responsibility to document employee performance, you know, rating them in terms of subscale of being, you know, high, medium, low, below standards, above standards, you know, a very, very time-consuming process, but one that managers are responsible for. And the reason for that, typically a two-fold, but the biggest has always been, you know, to document employee files so that, you know, future decisions about employment can be justified based on an objective method of evaluation.

The real opportunity in that file document is going to provide some level of protection against any kind of adverse employment decisions that might be made, where if the employee feels like they’ve been treated unfairly that they would come back and attempt to sue the company. That’s usually the biggest reason HR departments…or the function in an HR role is to make sure that those documents are being completed in employee files, and then, you know, somewhat secondary to that is also done in terms of decisions for potential advancement, for promotion, compensation adjustments to be able to support that based on performance.

The real fall down on this, in my experience, and why a more advanced method or best practices coming out of it is that because it’s one-sided and the manager has to put a lot of the time and energy into it, it’s not overly motivating to the employee, and there’s not a lot of participation because it’s pretty much one-sided. You know, “Here’s what I see. Here’s how I load it. Here’s what I think.” And the employee is certainly able to participate in that conversation, but with not any opportunity to provide any documentation or feedback themselves to the review, you know, it’s not quite as motivating and, you know, sometimes could be disagreed or might be seen as subjective or maybe even unfair.

The more progressive approach that’s really been underway for a number of years now, not a number of years, but more recently, has been what we call the employee-led review where you provide the employee the opportunity to document their performance. It’s their responsibility then to really make the first draft of the performance evaluation where they provide the input in terms of what they’ve accomplished. Lot of advantages here. One is the employee typically knows more about what they did in the job as it relates to a goal than the manager who might have multiple views and have to, you know, try to keep up with all that through either note-taking, but it creates a better opportunity to create a more objective review. And then the manager’s role is to provide feedback off of that.

The real selling point of this, as far as why it works better, is it not only motivates the employee to want to participate more because it’s their review, the manager doesn’t have to put as much energy into the evaluation and to really focus their time on providing feedback against an employee’s observations and then can direct the review more to, you know, what’s coming next and put more time and energy into the fuller look than into the documentation of really what’s been kind of past history by the time a review is done.

Eric: Right. Yeah. And, I mean, just personally, I’ve experienced it in the way of both sides, really. You know, in the manager-led scenario, it can sometimes come across wrong. It can come across like they don’t know what I do. You know, they weren’t paying attention or they didn’t think what I was doing was good enough or something like that because the manager wasn’t quite as aware. To your point, the manager wasn’t quite as aware as the employee is of what they’re doing on a day-to-day basis. So, having employee-led allows you to sort of toot your own horn as an employee and say, “Here’s all the great things I did,” and then the manager can then, as they should, be able to kind of view things at a high level and say, “Those things you did were good, and here’s where I’d like you to go next, and here is my thoughts on how you accomplish those things.”

Chuck: You know, it’s a great point because it’s about credibility, right? It’s, you know, how valid is the assessment? And when you think about that, especially if they’re done on a yearly basis, that is a lot of time to figure out and document performance. And most of performance appraisals are really just kind of capturing, you know, kind of the overall performance, even though you’re trying to specify in terms of results and goals. But you’re right. When the employee has the opportunity to bring all that experience and knowledge to the review so that, you know, it’s more credible for the employee, and it puts the manager in a much better position to say, “Well, let me just give you some feedback on whether we’re hitting the target or not as it relates to what’s coming next.”

We promote it that the manager role is then to spend more time reviewing the capabilities of the employee than to try to justify a rating on a form. In a more progressive state, we allow the employee to make the rating, you know, so that they have the opportunity to sit there and say, “I’m really doing well,” or, “I’m not doing well.” It’s an interesting dynamic because you usually have this, then, the high performers, you know, will always rate themselves a little differently than a marginal performer would, you know, and how much easier it is for your high performers because they would typically come back and say that they’re just doing the job as the way it was supposed to be done, and even though you view them a high performer, they see themselves as, you know, just kind of doing the job of more of an average level. It’s that marginal performer under the system that comes back and says, “I’m doing a great job,” where if the manager sees that ahead of time, imagine how they can prepare it for the meeting.

So, instead of trying to sell it, they see it as the problem the employee comes in and says, “I’m doing a great job,” or the manager can say, you know, “I’m going to have to steal this direction of this conversation off of their input,” based on the feedback that they need to give them that they’re not performing well. But it’s all about credibility. So there’s a motivation. If you’ve been in a review before, you know, you knew it had to be done, and your manager is giving you the ratings and the reviews, and, you know, how many times have you stood up and high-fived them and said, “That was great. Thank you.” I’ve never heard that story in all the years I’ve looked at these things. [inaudible 00:08:00] there’s usually a [inaudible 00:08:02] it’s just kind of dead work, you know, like “Okay, well, thank you. Where do I sign?”

Eric: Exactly, exactly. Yeah, so, it gives the managers more flexibility. It gives them some better ways to kind of manage, really. I mean, that’s what it comes down to. It gives them that ability versus the previous way which didn’t. So, outside of benefits to the manager, you know, the employee benefits are there as well, because you said it gives them more ownership over the process. They can be more invested in what they’re saying, what they did, tooting their own horn, that kind of thing, which can be kind of tough for some people. Some people have a hard time recounting and knowing all the great things that they did, or they may not see them as great things, like you pointed out. They might see them as just, “That’s me doing my job. I don’t know why I need to tell you about it,” you know, that kind of thing. So how do you coach people who are managing associates like that?

Chuck: Well, you know, and I’m glad you brought that point up because, you know, left by itself on an annual basis, I don’t think it works as well for employment reviews without some type of periodic feedback. And so, a method that we use at the bank, and it’s really a cultural process in our company, is that we require our managers and employees to meet at least quarterly to review the performance goals so that by the time…or maybe [inaudible 00:09:35] kind of more of the detail of what occurred over the last three months so that by the time you get to the annual review, it’s more of a recap, you know, and think about that from the time we’ll spend on that annual review, the recap should be very short, because what you really want to be talking about is what’s the next set of goals? Where do we gotta go from here?

And when you think about that from a business owner’s perspective, you know, that’s where you want your time and energy because, you know, we’ve already documented the past. We’ve talked about it multiple times during the year, so we’re just kind of wrapping up a file document that the HR department still needs. But in the meantime, you know, we can spend more time talking about goal setting, you know, how can we leverage the individual strengths to move forward and get into new things for the company? Another thing to talk about would be, you know, what do we want that review to tell us? It’s how do we want to leverage that employee’s strengths not only in terms of what they did but what we need them to do because we have a new set of challenges in front of us for the upcoming period of time.

Eric: Right. Right. No, that’s a great point. So, we talked about this newer direction that the HR industry as a whole is kind of leading towards this employee-led direction, the benefits that it gives the employee, the benefits it gives to the manager from leading that process or giving the ownership of that process over to the employee and then seeing it that way. What benefits can you note that the company as a whole gets by having that process being done by employees? You mentioned HR benefits from a potential, you know, documentation lawsuit kind of a sense, but, like, what more can you talk about in regard to the benefits the company gets?

Chuck: Yeah. And that’s why I think it’s important that the companies think about doing this. It’s a performance management tool. It’s about performance. It’s about results. And when you can create a process that the employees become more engaged and motivated, the sense of ownership you talk about, if you think about that as an organization that all employees are doing that, you know, what’s going to really drive performance, you know, has to involve a certain level of engagement and motivation. So, certainly, you know, the employee-led review contributes to that, especially if it’s got the look of terms of how we’re focusing on their strengths, things that we can do to develop them, to grow in their jobs, providing them new challenges and opportunities. You not only get this great work dynamic and culture, you’re all focused on excellence and high results. And, you know, it really turns into the thing that drives those results.

Again, if you think about it in the traditional sense of the performance appraisal system that the manager runs is really the thing that you have as a tool to try to drive higher results, and it’s unmotivating. It’s something that’s more of a burden than an activity. Basically, it becomes kind of as something that works against the company’s needs to want to drive higher performance. So, it really is the method that companies should embrace if they’re truly trying to drive, you know, year-over-year growth in their performance.

Eric: Right. The other aspect that I think, and you mentioned culture, that I think is really beneficial at the company level with regard to annual assessments is the reinforcement of brand and cultural tenants. So, if the company is particularly interested in people who do a certain thing, whatever that thing is, whatever that behavior is, that activity, that community service, that type of team mentality, whatever that thing might be, having those documented and inspected, you know… The old saying of “They respect what you inspect” kind of thinking with it being in that document and employees leading the way with their own annual review, they see, “I need to do these things. This is what I’m being graded on, so I want to make sure that I’m doing those things or I’m living according to that brand standard, that culture,” and if it doesn’t fit, if it’s not a fit, it’s a good indicator for people who may do better in a different environment or in a different role or in a different business all together.

Chuck: Absolutely. And, you know, it’s an important part of how you construct and build an assessment form or an assessment process, because there’s really two things in play. There’s the results, which, you know, come out of documented goals and activities that will drive it, but then there’s always a behavioral side that you’re mentioning. And a really well-prepared assessment form would be capturing, you know, the brand values of the company in the actual performance appraisal so that those behaviors can be reinforced. So, they need to be defined, and then, you know, more importantly, because every individual employee and maybe the job and they might be a little unique towards that core definition is to make sure that part of the process revisits you know, what it means to…you know, what’s it look like? What’s that value really look like when it’s being applied to the results that you’re trying to drive?

So, it does a couple of things. It rewards for the right behaviors, but then it also reinforces the values and the behaviors that the company wants to emulate to drive its business. So, yeah, it’s just not all results. [inaudible 00:15:09] results. But when you type the values, you know, that’s an important component because it would be too easy to sit there and say, “Let’s go rate skills or generic attributes,” where if your company has a specific defined set of values that, you know, represent what you market to the customers and the customers see you tie that to the review, the one thing we know about value is that these are deeply scripted, hardwired beliefs that our employees that we hire that align and fit to the company bring to the table every day. And you’re right. When they don’t have that value or they can’t live to that value, this also should be something the appraisal should help kind of root out because maybe you have the wrong person in the company at that point. But yeah, I’m a big believer. You just don’t pick attributes. You pick values that align to the company’s brand at that point to make sure that there’s an alignment there.

Eric: Absolutely. Excellent point. So, Chuck, with the few minutes we have left, the other thought I wanted to kind of throw out there and get your opinions on is, you know, if we have listeners who have a business, maybe they’ve got a few employees and they want to implement something like this, maybe they don’t have a program like this set up already where they’re doing annual reviews, is there any best practices? Is there a guide or a reference they can kind of reach out to or look to kind of start something, start somewhere so that they can begin to incorporate these reviews or best practices or to instill those values in their employees to kind of get the results that they’re looking for?

Chuck: Yeah, there certainly is, you know. There’s a lot of literature that’s been written about this, and I think, you know, many, many management and leadership resources are out there that would discuss this, but it’s a really pretty basic process, and I think the starting place, especially for a smaller company would be is, you know, to really sit down and say, “Hey, if this is something that we feel is going to work, let’s involve our employees. Let’s have that discussion.” Because the one thing I’ve noticed is that if you put something like this in place and your employees aren’t comfortable with assessing themselves yet, or even know how to do it, you know, you’re not going to get the results that you want.

So, a starting place is, you know, talk within your management teams, you know, share the concept with your employees. See what they think is the right thing to do in terms of how they might want to have the opportunity to participate in a program like this. But yeah, from the design standpoint, there’s lots of resources out there, and as we always do for all of our clients is, if it’s something that they’re interested in looking through, they certainly can contact myself or anybody in our bank that we’d be glad to kind of help and advise and give them some guidance on how to set something like this up.

Eric: I appreciate that, and I’m sure our listeners do too. Chuck, thank you so much for joining me today. I really appreciate your insight and your thoughts, and I’m sure we’ll have you back again when we’ve kind of gotten more HR. There’s plenty of HR topics. You and I were talking beforehand. We can talk for hours about this stuff. So, I appreciate your time and thoughts today.

Chuck: Thanks, Eric. Really enjoyed it, and thanks again.

Eric: Excellent. Well, that brings us to the end of our show. You can always find more episodes by visiting mybank.com/podcast or find us on your favorite podcast app. And we’re basically on all of them, so find the one that suits you on your smartphone device and subscribe. You can always leave feedback, ask questions, or request a topic for us to discuss by sending an email to podcast@mybank.com. Thanks again for listening. We’ll be back next week with more helpful content, but until then, we wish you the best in focusing on what matters most to you.

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