Giving and Receiving Performance Evaluations - CPAs

By, Mark Koziel, Dopkins & Company, LLP

Performance evaluations can be stressful and confrontational, but they need not be. A successful performance evaluation system benefits both employer and employee. Proper preparation and openness to the process can generate a positive outcome. Encouraging team members to set their own goals gives them ownership in the evaluation process and opens the lines of communication.

The evaluation should be a dialogue over whether specific goals have been met. Initially, team members will need assistance setting realistic goals. With time, an employee’s goals should increasingly reflect personal interests and development. Evaluators should consider all aspects of an employee’s performance, and evaluatees should communicate their needs so the company can help them meet their goals.

The stereotypical performance evaluation can be adversarial, even confrontational. Sometimes, the evaluatee is held to unreasonable or unspecified standards. Without a discussion plan, the evaluator focuses on small “bumps” in performance, missing the positives. What the evaluator considers a positive evaluation is interpreted as mediocre. The evaluatee is given no opportunity for feedback and, therefore, cannot communicate what is needed from the company to succeed. The results? Dissatisfaction, poor performance, high turnover.

The evaluatee wants an opportunity to comment on areas that need improvement, discuss ways to improve performance, and suggest how a senior or manager can improve training techniques. Evaluators want to contribute to an effective employee and a successful organization. Two-way communication would help improve not only the evaluatee’s but the company’s performance.

The Need for Performance Evaluations

A wealth of information attests to the importance of performance evaluations. Most of this information, however, emphasizes performance evaluations as a means to prevent illegal terminations. Most employment arrangements in the United States are governed by the employment-at-will doctrine, which allows the employer or employee to terminate the work relationship at any time. An employee may be discharged by the employer for a good reason, a bad reason, or no reason at all, as long as the reason violates neither federal nor state law.

The employment-at-will doctrine is very ambiguous. Employers should protect themselves against a discrimination suit by documenting performance regularly and supplying abundant evidence for any possible performance-based termination. Performance evaluations serve as a form of legal protection for the roughly 2% of an organization’s employees that might be terminated—the other 98% are quality employees. A successful performance evaluation system protects the employer while benefiting this large majority of employees.

Setting Goals

CPAs have a habit of thinking in the past. They audit financial information, prepare tax returns, and perform month-end and year-end closes—all based on past information. While it is important to provide feedback on past performance, that feedback should be based on specific measurable goals set during the previous performance review. Establishing goals creates an atmosphere of forward thinking and provides tangible objectives. Allowing team members to be involved in setting their goals gives them ownership in the evaluation process and typically opens the lines of communication between team member and manager. Performance evaluations can enable managers to keep team members happily employed.

Most individuals would be likely to change employers if they were offered more money, better opportunities, and less stress. For this reason, employers must decide whether it would be economical, in the current employment market, to make a counteroffer that matches the salary but demands fewer hours and less stress. An effective performance evaluation system can illuminate the advantages of retaining staff. A system that allows for feedback even before the evaluation takes place can be a beneficial and effective tool to help reduce the cost of turnover and maintain job satisfaction.

The Evaluation System

Creating a truly effective performance evaluation system is easier than it seems. Soliciting honest feedback on the current system is a nonthreatening way to determine what is working and what is not. A communication test, such as the one provided in the Exhibit, can be a first step.

Most employers would be amazed at the results of this survey. Of course, it is useful only as long as the employer is open to and candid about the results. Once managers have reviewed and communicated the results with team members, the construction of a new performance evaluation system can begin.

It is tempting—but dangerous—to create an evaluation system based on predetermined characteristics in a checklist format. Although this would initially be easier to implement, the resulting system would be impersonal and limit communication. The best evaluation system requires each team member to address a number of topics and establish specific goals. Employee and manager collaborate to establish these goals at the beginning of the year and then discuss how successfully these goals were met at year-end. Amazingly, when the evaluation is structured this way, the evaluatee typically scores herself lower than the evaluator does. Imagine the morale boost to that evaluatee during the evaluation.

Lines of Communication

The following five categories have proven successful in opening the lines of communication during the performance evaluation:

Chargeable hours and productivity. Measuring productivity for evaluation purposes seems easy but may be one of the hardest areas for new team members to comprehend. New team members are often unsure about what is expected of them with respect to recoveries and chargeable hours. If budgets and hours set for jobs are unrealistic, managers cannot blame anyone but themselves when team members leave after two years.

Managers must set realistic goals and receive input from team members as to whether they are reasonable. Establishing unattainable goals is worse than never setting goals in the first place. Managers should set specific goals for new team members in terms of chargeability and productivity (e.g., a limited number of total hours, a certain percentage of chargeable hours, an average recovery rate). After a year, team members should set their own goals and managers should discuss them during the evaluation.

Technical ability and business knowledge. During the first two years, a new team member should focus on learning and reaching moderate goals established with a manager’s assistance. The goals should grow with the individual and, with time, begin to reflect the aspects of the job the individual finds especially interesting. An interesting and challenging job is as important to many individuals as a high salary.

Within two to four years, a team member should be finding an area of expertise. She will become an asset to the organization if she is allowed to build a technical background and proficiency through self-directed CPE. Performance evaluations become easy as the team member sets her own goals.

Client service. Client service goals should pertain to frequency of contact with the client, response time to client needs, relationships with certain key client personnel, friendliness of service at all levels of the client’s organization, and value-added services provided to the client. Client service goals should be as concrete as possible and include references to specific clients and client personnel with respect to relationship building. The assistance new team members receive in establishing these goals will educate them on company performance standards.

Client service monitoring must support the evaluation system. The No. 1 source of feedback will be the client’s employees. Managers can expect an informative response simply by asking the payables clerk, “How did you enjoy working with Sue Staff this year?”

Client service should encompass not only external clients but internal clients (i.e., support staff) as well. Some personnel have little or no contact with external clients, but do provide service to client service teams. These internal personnel also need to set goals and understand how their performance compares to those goals.

Business development. Many accountants prefer numbers to sales; however, business development can involve more than just selling to potential clients—and might not involve selling at all. Business development means generating new clients as well as additional business from existing clients.

Goals in this area will depend primarily on personality and technical knowledge: Many accountants simply are not comfortable with selling and would leave a position that required it. Every organization contains “hunters” and “skinners.” Hunters live for the hunt; they enjoy selling and want it to be part of their everyday job. Skinners dislike the hunt, preferring to take over once it is complete. In the accounting profession, skinners are better known as technicians.

Personal goals should reflect this distinction. Hunters should establish goals that put them in touch with the public: joining outside organizations, conducting new client presentations, and assisting with the firm’s marketing plan. Goals for skinners might include more of a one-on-one approach to selling: meeting with existing clients about specific needs, giving technical seminars for small groups of client personnel, and explaining technical changes that will affect products the hunters are trying to sell.

People development and teamwork. A personal evaluation system must be strong enough to minimize internal strife. Personality conflicts can create counterproductive friction, but a successful system will find the root of the problem without making team members feel as though they are pointing fingers.

People development and teamwork goals may include reassigning projects, giving and receiving instruction and training sessions on certain issues, and providing feedback. An effective system encourages new team members to actively pursue knowledge in new areas and encourages seniors to actively share their knowledge with new team members.

Evaluators should ask questions to determine where the system may have broken down. For example, if a new team member believes she did not meet her goals for taking on a new area in the audit, the evaluator would emphasize the organization’s role in helping team members attain their goals: “How could we, as an organization, have helped you to better reach your goals?”

Giving Performance Evaluations

Strive for consistency. The system is only as good as its delivery, and consistency beats occasional excellence. A consistent approach to evaluations will lend credibility to the system and prevent discrepancies in performance. The best way to implement consistency is to ensure that all team members know the system’s expectations. Managers should know that the goal is fair and honest feedback that will help team members grow with the company. A peer review system should be implemented before evaluations are given, and comments should confirm that each employee knows the system is being applied uniformly throughout the organization.

Give praise where it is due. Too often, managers do not give high marks in evaluations. Team members want to know that they are valued by the organization. Informing them that they “meet expectations” tells them that they are average at best. Managers should consider not only results, but also effort and commitment. A team member that is committed to the organization and gives 150% to each and every task exceeds expectations. Such individuals should know how much their effort is appreciated.

Turn negatives into positives. Even bad situations can be given a positive spin. If a team member’s performance falls short of expectations, the evaluator should let him know, but also ask how the organization can help him improve. If an evaluator tells a team member that his performance is lacking and that he must improve or suffer the consequences—without giving advice or offering help—the team member is likely to start looking for employment elsewhere. If evaluators are open, honest, and helpful, evaluatees will reciprocate.

Receiving Performance Evaluations

Receiving a performance evaluation need not be a stressful event. There are ways to minimize stress and ensure that the performance evaluation is a positive experience for both the company and the evaluatee.

Be prepared. Performance evaluations are usually scheduled far in advance. The waiting period should be a time for self-reflection: The evaluatee should compare achievements against previous goals and come to the evaluation ready to explain how specific goals were met. If every goal was not met, the evaluatee should have specific plans to ensure that this does not happen again. Which resources can the company provide to reach personal goals and why these are important to the overall corporate mission? Evaluations are a time for self-reflection, not excuses—for both the evaluatee and the employer.

Communicate. A good evaluation—and subsequent promotion or raise—requires a good explanation. Companies prefer to invest in employees that show potential for growth and stability within the organization. The best team members are those individuals that have a positive attitude. An open, honest, positive conversation during the evaluation will benefit both sides.

Focus on the future. The evaluatee should be ready to set goals for the upcoming year and create a plan to reach them. In addition, the evaluatee should be able to explain how personal goals relate to company goals and how the company can help meet them. The performance evaluation can be a powerful tool for the evaluatee’s—and the company’s—self-improvement.

Thank you to Mark J. Koziel, of Dopkins & Company, LLP and to The CPA Journal for allowing this reprint.

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