Annual reviews of employee performance can be stressful for both the employer and the worker under scrutiny.
But as an employer, I've found several ways to make the evaluation process more efficient, less personal and more productive. The review should be a positive experience, even if the employee's performance is not quite at the expected level.
Annual reviews are, in essence, a review of the last two or three months. Most people don't have memories sharp enough to produce a detailed picture of an employee's performance over an entire year. The most recent events are the ones freshest in our memories. I've overcome this limitation by keeping a "tickler file" for every employee.
When an employee performs a task especially well, I put a note in my file. I also include notes when the employee doesn't live up to expectations. Any formal reprimand or formal recognition goes into the file as well. When an employee comes up for annual review, I can easily refresh my memory by thoroughly going over my notes for the past year.
Recently, I was particularly glad I had this system. In the three months leading up to one employee's review, her performance declined so much that I thought I might have to put her on probation or fire her. Yet, when I looked in her tickler file in preparation for the evaluation, I was reminded how good her performance had been earlier in the year.
I discussed the problem with her, and found that difficulties in her personal life were affecting her work. I referred her to our employee assistance program, she got professional help, and her performance improved dramatically. If I had simply relied on memory for the evaluation, I might have lost a good employee.
When I put a note in my file, I try to make it as specific and detailed as possible. This way, when I write the employee's review, I can put together an action plan and provide specific goals. I can let the worker know exactly what he or she is doing right, and explain exactly how to improve performance.
In any evaluation, I stick to the facts and depersonalize the process. An employer should set aside any personal feelings, positive or negative, to get the truest picture of performance.
After reading an employee's file, I give him or her a rating between one and 10, with 10 being the best. A rating lower than five earns the employee probation; above that, I assign a predetermined percentage increase in pay for each rating number (a five gets a 2 percent increase, a six gets 3 percent, etc.). Then, if the employee performs above and beyond the job description, I consider a bonus or an additional pay raise.
To reward superb performance, my company's incentive program requires that each employee have a quarterly bonus review. The results of this review also go into the file, making the annual review process even easier.
The more complete and detailed the employee's file, the easier it is to determine if any raise or disciplinary action is warranted. A thick file can be the key to improving the employee's future performance, too. Rich Shearrow is president of Employer Advantage, a Central Ohio-based professional employer organization that specializes in managing human resources and employer risk for companies in a wide range of industries. He can be reached at 923-9331 or firstname.lastname@example.org.
Business owners may thrive on the art of the deal, but when it comes to negotiating an employee health insurance package, their deal-making skills often fall short. They quickly find that their most valuable asset in making a deal with an insurance company is a good insurance broker.
Insurance brokers and agents vary widely in quality, from the questionable types with slick patter who solicit your business over the phone to those who are worth their weight in gold. How do you tell the difference?
The most important thing to remember when hiring a broker to negotiate an employee health insurance package is to get a referral. I asked trusted advisers, other business owners, and contacts within my professional organization, the National Association of Professional Employer Organizations, for recommendations.
If you don't get recommendations from valued sources, you could leave yourself open to everything from inflated rates to late renewals to sneaky practices. Unfortunately, I've learned from experience.
At a former company, we found a broker through tenuous network contacts. This man offered bill administration services at what he claimed would be no extra charge. After months of working with him, I found out, almost accidentally, that he'd been adding 10 percent to each bill without our knowledge.
Before I chose Bill Frazier of Leeson & Frazier Insurance as my broker for Employer Advantage, I interviewed him just as I would a candidate for a top executive position -- a broker can have that much impact on your company. I asked questions such as:
* Do you handle businesses similar to mine? Which ones?
* What are your major markets?
* How many years have you been a broker?
* How many employees are in your office to handle customer service?
* When claims issues come up with employees, how actively involved do you get as an agent?
I found out how many firms he'd represented, because a good broker will have close relationships with several reputable insurance companies. I checked with businesses he'd worked with for a long time, one he'd worked with for a short time and one he no longer worked with, to get their opinions.
For the purposes of employee health insurance packages, make sure the broker is certified with the state and is a Certified Employee Benefit Specialist (CEBS) from the International Foundation of Employee Benefit Plans, or a Health Insurance Underwriter (HIU).
I simply asked the candidate where I could verify his credentials. You can also verify them with the accrediting institutions and the State Insurance Board. While credentials don't guarantee a broker is good, they do indicate the kind of specialized knowledge you need.
Here are a few other characteristics I kept in mind as I looked for the best insurance broker for my needs.
* Honesty. I'm not just talking about a broker who stays within the law, which is an obvious asset. A good broker should also be willing to tell you things you might not want to hear, such as that your expectations from a certain package proposal are not realistic. Beware the broker who promises you'll reach the impossible goal of a cheap plan with maximum choice and the highest level of benefits.
* Informative. You need all the information you can get, both about the insurance companies you might be dealing with and about the insurance business, so you can make a reasoned decision about the health insurance package. A good broker is something of an educator and consultant.
For instance, mine told me about possible changes in COBRA legislation and the parts of the Patients' Bill of Rights most likely to be passed, both of which will have an impact on the way I do business. A good broker will answer any questions you have, even if he or she has to check with the insurance company to find the answers.
* Specialization. Just as you'd want a heart specialist for your transplant, you want a health insurance specialist to negotiate your health insurance package. The very best brokers will even refer you to another broker if you have additional needs, such as key man life insurance, that are outside their field of specialization. Frazier is a health insurance specialist, and when I turned to him for life insurance advice, he referred me to a trustworthy life insurance specialist I've now been working with for some time.
A good broker can become practically a strategic partner in your business. Mine is my primary liaison with the insurance companies. He also operates my employee benefits hotline, which means I don't have to add in-house staff for that.
But more than that, he's taken the time to get to know my specialized business and can help me in less tangible ways. How to reach: Rich Shearrow, Employer Advantage, 923-9331 or email@example.com; Bill Frazier, Leeson & Frazier Insurance, 882-8535
I usually answer with an analogy -- it doesn't matter how beautiful a building's architecture is or how efficient its heating and cooling system is or how wired it is if the foundation is weak. Without a strong foundation, a building will crumble.
The same is true in building a business. A business's foundation is built upon its people. You can purchase the best equipment and the most advanced computers, but if you don't have the right people to operate them, you don't have a business. You have a failure.
Human resource management allows you to find and keep the right people, and provides the strongest foundation for success. Sure, I'd like my workers to be happy for altruistic reasons, but it's also in my best business interest to keep them happy through good management techniques.
If your workers are happy with their jobs, they are more productive. With happy employees comes lower turnover and lower costs for health insurance and workers' compensation because, generally, happy employees are healthy employees with good safety records.
Conversely, unhappy employees tend to get sick more often due to stress, their productivity declines, and when on the job, they can wreak havoc. Stressed employees become distracted and may injure themselves, and angry employees may resort to destructive strategies, damaging equipment and customer relations.
Clearly, it pays to keep your workers happy, and good human resources management does that.
One element in the foundation of good human resource management is a detailed, understandable employee handbook. But the policies in the handbook must be applied equally. Employees will recognize the arbitrary application of policies as unfair treatment, leading to lowered workplace morale. To ensure consistent application, we aggressively train our managers and supervisors on our employee handbook.
Another element is a good health plan. I've consulted with small business owners who felt they should just buy the cheapest plan. They weren't looking at the bigger picture, though. Employees with few or no health benefits don't receive adequate preventive health care, leading to increased absenteeism and decreased productivity. People who go to work sick are more likely to have accidents, increasing workers' compensation claims.
Finally, good communication is important in a strong foundation. We once consulted with a small business owner who believed two of his best employees must be having personal problems that had caused a decline in their performance.
It turned out the two had been covering for a third employee's poor performance for months. With resources stretched thin, and with a manager who harangued rather than communicated, they began to experience stress and deteriorating morale, which led to their poor job performance. If the manager had made the effort to determine the causes behind this case, the situation would not have reached crisis proportions.
Most unpleasant workplace situations can be resolved through good communication. It's dangerous to build a house on a weak foundation, and it's advantageous in so many ways to build a business with good human resource management techniques. Rich Shearrow is president of Employer Advantage, a central Ohio-based Professional Employer Organization that specializes in managing human resources and employer risk for companies in a wide range of industries. He can be reached at (614) 923-9331 or firstname.lastname@example.org.