Businesses use performance evaluations to assess their team’s work performance. These evaluations also help employers pinpoint deficiencies in work performance and determine the company’s expectations for the future. Written performance evaluations are best because a written evaluation creates a tangible record, which can be reviewed and referenced in the future.
The performance evaluation process generally involves a series of steps:
Developing guidelines and standards against which an employee’s performance may be compared.
Gathering appraisal information, which when analyzed against the established standards reflects the employee’s performance.
Discussing the appraisal information with the employee.
Documenting the evaluation process in the employee’s personnel file.
Businesses use performance evaluations for the following reasons:
As positive communication tools to help employees improve job performance.
In salary administration for determining merit increases.
As regular workforce monitoring tools.
In the disciplinary process where an employee’s job performance is unacceptable and could lead to discipline or termination.
Whether you’re looking to build a formal evaluation process or improve your existing one, this post will provide the actionable steps you need. In this post you’ll learn:
What are the benefits of conducting regular performance reviews
What are the types of performance evaluations
How to conduct meaningful performance evaluations
How to implement a formal performance evaluation process at your business
How to ensure your performance review process is legally compliant
What are the Benefits of Conducting Regular Performance Reviews
An effective performance evaluation system can benefit your business in many ways including:
Assess Employee Potential. An effective performance management helps business leaders make informed decisions about employee promotions and transfers. A sound performance evaluation system can also help you proactively identify employees with special skills and abilities.
Identify Training Needs. Performance ratings help evaluate the effectiveness established training programs. Your business might design and target training programs to better address the performance problems caused by a lack of training.
Assist in Compensation Planning. Linking pay to performance is an effective compensation strategy, especially at growing businesses. Reliable, consistent performance evaluation processes enable your business to predict future payroll costs and reward your high-performing employees.
Identify and Correct Poor Work Performance. Performance evaluations generate discussions between employees and supervisors that identify poor work habits. During these conversations your and your employees can uncover mutually agreeable ways to correct issue areas.
Defend Against Lawsuits. The performance evaluation process allows companies to document poor job performance. Employers depend on this documentation to defend themselves successfully against employee claims of unfair termination or disciplinary action.
Motivate Employees. Performance evaluations can motivate employees in their efforts to meet your business’ performance standards. A positive evaluation assures the employee that your business recognizes their hard work and that they will be rewarded for exceptional performance.
What Are the Types of Performance Evaluations
When it comes to conducting performance evaluations, there are several different methodologies your business might opt to leverage. Some of the most popular ones are elaborated on below.
Rating Scales
The rating scale method provides a high degree of structure for evaluations. The scale rates employee traits or characteristics on a bipolar scale where there is a neutral point and the two ends of the scale are at opposite positions of the opinion, ranging from “poor” to “excellent.”
The characteristics evaluated on these scales include employee attributes such as the following:
Cooperation
Communication ability
Initiative
Punctuality
Work skills competence
An employer can select which traits to rate based on factors that are relevant to performance of the employment position. Proper selection of traits may protect against legal action based on a claim of discrimination.
Essay Method
In the essay method approach, the supervisor or manager prepares a written statement about the employee being evaluated. The essay describes specific strengths and weaknesses of the evaluated employee in job performance. It also includes suggestions for courses of action to correct any problem(s) identified in the evaluation. The statement may be written and edited by the supervisor or manager alone. It may also be composed in collaboration with the employee who is evaluated.
Results Method
Management by objectives (MBO) performance evaluation is results-oriented. It attempts to measure employee performance by examining the extent to which employees meet predetermined work objectives. The objectives are usually established jointly by the supervisors and employees. Once an objective is established, the employee is usually expected to identify the skills needed to achieve the objective. Employees do not rely on their manager to locate and specify their strengths and weaknesses. They are expected to monitor their own development and progress toward achieving the objective.
How to Conduct Meaningful Performance Evaluations
Many businesses have ineffective performance evaluation processes that result in little insights for the leadership team to reward high-performers, address performance issues, and make other informed business decisions. Here are some key things to keep in mind to ensure your evaluation process is effective:
Honesty
In order to be effective, performance reviews must be honest and candid. Although supervisors may be unduly harsh on employees during an evaluation, excessive leniency occurs much more often. It’s a good idea to note and praise good work done by an employee in the past. However, the evaluation must also identify any issue areas in employee performance. Defending a wrongful termination suit is extremely difficult if the reason for termination was a problem that existed for an extended period of time and was not noted on the employee’s performance evaluations. The employer’s case is further damaged when the employee received favorable performance evaluations, including favorable remarks on the categories of performance that are later involved in the reasons for termination.
Uniformity Among Supervisors
An employer should always monitor managers as they conduct performance evaluations, making sure the process is uniform throughout the organization. If your process lacks uniformity, supervisors in one department may give more favorable (or harsh) evaluations than those in another department. When these inconsistencies occur, it is difficult for an employer to defend against wrongful termination because the suit could attack the credibility of the business’ evaluation system.
Strengths and Weaknesses
Each evaluation must include a discussion of the employee’s strengths and weaknesses. Evaluations should include deserved compliments (rather than only criticism) to be fair, balanced, and objective.
Constructive Criticism
Giving constructive criticism in performance evaluations also has advantages. Some constructive criticism of good employees may help lay the groundwork for negative evaluations of those employees in the future if their overall performance deteriorates. This is particularly true when an employee brings a wrongful termination suit after an unfavorable performance evaluation. When defending against a wrongful termination suit, it may be helpful for the employer to demonstrate that the employee was previously criticized for some of those same faults (which triggered the termination) on prior evaluations, even though the problem perhaps was in its infancy at that time and did not warrant an overall negative evaluation.
How to Implement a Formal Performance Evaluation Process at Your Business
If you’d like to launch a formal employee performance evaluation process or refine your existing one, consider providing the following:
Clear written instructions to all managers involved in the evaluation process.
Relevant training for supervisors and human resource leaders involved in the evaluation process to ensure complete understanding of all employee job duties.
A job-related performance evaluation system.
Reasonable precautions to guard against improper bias by the evaluating supervisor or manager.
A procedure that includes multiple levels of review and approval of the evaluation.
Central monitoring by human resources to ensure uniform performance rating standards among all supervisors and managers conducting the evaluations.
A procedure that allows the employee to comment or respond to the evaluation.
A procedure providing the employee with an appeal process of a poor evaluation, within a reasonable time after the evaluation.
A procedure requiring the supervisor to identify specific performance goals as part of the evaluation process.
How to Ensure Your Performance Review Process is Legally Compliant
Federal civil rights and state fair employment practice laws are in place to prohibit employers from implementing performance evaluation systems that discriminate against employees based on race, color, religion, gender, national origin, or disability. To avoid liability, your business must ensure that its supervisors and managers base their performance evaluation judgments solely on job-related factors.
In determining whether performance evaluation systems are discriminatory, courts generally apply the same standards used to determine whether employee selection procedures and tests are discriminatory. Under such standards, a performance evaluation system is nondiscriminatory if it is both valid and reliable. When the system does not satisfy both requirements, the discriminatory impact of the improper factors might cause the system to violate one or more federal or state laws.
Valid and reliable performance evaluation programs normally share the following characteristics:
The performance evaluation program is formal and in writing.
Ratings are reviewed to ensure that high and low ratings are documented with information demonstrating what the employee did or did not do to earn the rating. Reviews also look for statistical patterns of adverse ratings and evidence that a supervisor needs more training rating employees.
The evaluation relates to the particular job in question. This means that employees are not rated on items that are irrelevant to job performance. An evaluator who must use a preprinted form that is not specific to the job should have the option of checking “not applicable.”
The evaluator is familiar with the employee’s job duties and actual performance. Evaluators should be allowed to state or check “not observed” when necessary.
Employees must read their evaluations, sign the evaluation to acknowledge their reading of the evaluation, and have the opportunity to provide written commentary on the evaluation.
Evaluations are not final until employees have the opportunity to comment.
Higher-level management reviews all evaluations.
Supervisors receive training in evaluating employees.
Evaluators receive clear written instructions as to the implementation of the evaluation.
Evaluation forms are as clear and simple as possible.
Definitions and examples are included to clarify the scope and meaning of various rating categories.
Standards or expectations are identified clearly for each aspect of performance and are communicated to the employee.
Employees have input in setting performance expectations.
The relative importance of each aspect of performance is communicated.
The primary goal of the evaluation is to enable employees to improve. Evaluators help an employee recognize strengths and weaknesses and help employees develop plans for improvement.
Open enrollment season can be a stressful time of year, but it doesn’t have to be. The team at Launchways has put together an open enrollment checklist that will help make sure your team has a smooth enrollment experience.
Planning ahead for enrollment season
Conduct employee surveys to determine workforce healthcare and benefits preferences. Leverage survey results to make relevant changes/additions to your benefits program.
Consider offering additional benefits beyond healthcare and life insurance. These might include telemedicine, a student loan assistance program, employee discount program, or a financial wellness platform.
Consider offering new benefits, even if they’re 100% voluntary. Many employees highly value the option to partake in voluntary benefits.
Work proactively with your broker on plan design changes to ensure all changes are completed well in advance of open enrollment time.
Consider leveraging an online benefits enrollment software. Benefits administration software allows your enrollment to go paperless and provides educational tips to help your employees pick the right plan for their family’s needs.
Make a list of all new changes that will enhance your benefits program and/or enrollment process. Make a plan to communicate these key highlights with your team.
Create an enrollment communication strategy. Determine all the communication channels you will use and what materials you need to create for open enrollment.
Ensure your employees receive all the necessary communication materials including:
• Open enrollment schedule
• Statement of current coverage
• Plan-specific changes and rates
• Plan-specific summaries
• Open enrollment guide and forms
• Deadline for open enrollment
• Contact information for key contact in case employees have questions or need additional help
Plan Design Issues
• Confirm that your plan’s out-of pocket maximum complies with the ACA’s limits for 2019
• For HDHPs (high deductible health plans), confirm that the plan’s deductible and out-of-pocket maximum comply with the 2019 limits.
• Communicate any plan design changes to employees as part of the open enrollment process.
When in doubt, ensure the following key pieces of information are being communicated to your team during open enrollment time:
• Enrollment deadlines
• Where/how to enroll
• Healthcare provider information
• Changes from the previous year
Remember that the key objective of open enrollment is to get all your employees enrolled on-time for the benefits plan that’s best for their family’s needs. A strategic communication plan can ensure employees know when and how to enroll, and can even help them pick the best benefits plan for them. Keep in mind that minimizing confusion during open enrollment time is key. This is why proactively communicating plan changes is important.
If you’re interested in a more in-depth guide on how to conduct a successful open enrollment, make sure to register for our upcoming webinar “How to Have a Successful Open Enrollment.”
Healthcare costs are rising with an 8% increase year over year. One innovative method employers are using to control costs while improving healthcare delivery is telemedicine. Telemedicine is an emerging technology field which facilitates two-way digital communications between patients and doctors. While a few years ago telemedicine was hardly on the radar of most businesses, it has become increasingly prevent in modern companies.
Since 2015, there has been a 26% increase in employers who offer these services. And according to the Mercer National Survey of Employer-Sponsored Health Plans, almost 60% of America’s large employers currently provide telemedicine.
Diversifying your business’ healthcare offering will not only help you remain competitive in the quest for top talent, but also help you build a happier, more productive workforce. Telemedicine is a great place to start in addressing the changing needs of today’s healthcare consumer. In today’s post you’ll learn:
What is telemedicine?
How does telemedicine work?
What are the benefits of telehealth services?
How to implement a telehealth program at your business
What is telemedicine?
Telemedicine, also known as telehealth, can be defined as electronic two-way real-time communication between a medical professional and a patient. This communication might happen over a phone call, video call, or even a mobile chat. With telehealth services, your employees can speak with a medical professional on-demand via computer, phone, tablet, or a digital app on a mobile phone.
How does telemedicine work?
Telehealth is simple to roll-out and even easier for your team to being taking advantage of. Through a mobile or desktop telemedicine app, an employee initiates an appointment. The employee can select a phone call or video call. The telehealth app then directly connects the employee with a board-certified doctor. The doctors collects the necessary information, makes a diagnosis, and overviews next steps for the patient’s treatment. All the medical professionals employees access through telemedicine are board-certified doctors and are fully licensed to prescribe treatment and medications directly through the app.
What are the benefits of telemedicine?
Telemedicine affords your business and your employees many benefits including:
Reduced healthcare costs for employees and employers. Unnecessary doctor and ER visits cost both employers and employees millions of dollars a year. In fact, studies show that almost 75% of all doctor, urgent care, and ER visits are either unnecessary or could be handled safely via telehealth. Research estimates that telemedicine could potentially deliver more than $6 billion a year in healthcare savings to U.S. companies. The estimated return on investment for a telemedicine program was about $3.30 in cost savings for every $1 spent on program implementation, according to the Geisinger Health Plan study.
Reduced absenteeism. Employees frequently miss work for doctors appointments or illness. Telehealth helps combat this by providing 24/7 access to doctors, on-demand. In many cases, telemedicine eliminates the need for in-person office visits for simple ailments like the flu, ear infections, and sinusitis. In one survey, 21% of patients said not having to travel to the doctor’s visit was the top benefit of telemedicine.
Happier employees. Research shows that employees highly-value access to a telemedicine solution. A recent survey found that of those who have experienced real-time telehealth communication with a mobile app, 80% prefer this method to a traditional in-office medical visit.
Empowered employees. Telehealth services help empower employees to take charge of their health. In one study, 53% of patients felt that telemedicine increased their involvement in treatment decisions.
Healthier employees. As with any healthcare benefit, better health outcomes are the ultimate goal. Significant research has been done to determine telehealth’s effect on patient outcomes. A study on the Geisinger Health Plan, found that patient readmissions were 44% lower over 30 days and 38% lower over 90 days for patients enrolled in a telemedicine program.
How to Implement a Telehealth Program at Your Business
Many healthcare providers are now including a telehealth program along with their healthcare network. Another option is to roll-out a dedicated telemedicine program through a telehealth app provider, such as HealthiestYou. In most cases, a dedicated telehealth provider has better technology and much higher employee utilization rates than the telehealth features rolled into provider plans.
The right benefits broker can help you analyze your existing healthcare offering and determine the best plan to integrate telehealth services. Here at Launchways, we partner with Teledoc, HealthiestYou, and Best Doctors to help our clients roll-out high-impact telemedicine programs.
Key Takeaways
In today’s post we explored what telemedicine is, the key benefits it brings your workforce, and how to roll-out a telehealth program at your business. Here are some key takeaways:
Telemedicine is an emerging healthcare trend many employers are adopting to attract top talent and cut costs on healthcare spend
Telehealth services give your employees real-time access to board-certified doctors via a phone, desktop, or tablet
Telemedicine can help your organization cut healthcare costs while also improving healthcare outcomes for your team
Many healthcare providers offer a telemedicine feature, but a dedicated telehealth solution typically has better utilization rates
Your benefits broker can help you determine how to integrate telemedicine into your benefits program
Is your team using telemedicine? If not, do you plan to roll out a telehealth program this year? Let me know in the comments below.
Your management team’s emotional intelligence level can make or break your ability to build a thriving business. Emotional intelligence, a.k.a. “EQ,” is someone’s ability to understand and harness the power of emotion to build strong relationships, foster trust, mitigate conflict, and more. Teams with a high EQ enjoy higher productivity, better morale, and improved employee retention. On the other hand, teams with a low EQ can suffer from poor work ethic, high turnover rates, and low motivation.
In today’s post we’ll explore emotional intelligence and why it’s important to your business’ success. We’ll also provide strategies you can leverage to improve your EQ. You’ll learn:
What is emotional intelligence?
Why is emotional intelligence important in the workplace?
Strategies to improve your emotional intelligence
What is Emotional Intelligence?
Emotional intelligence is the ability to identify and manage your emotions and the emotions of others. In his book, Working With Emotional Intelligence, Daniel Goleman outlines five categories of emotional intelligence including:
Self-awareness: understanding one’s own strengths and weaknesses, recognizing the impact of one’s actions on others, and receiving constructive criticism well.
Self-regulation: expressing one’s feelings with restraint and control.
Motivation: driven by one’s own ambition, resilience, and optimism.
Empathy: having the compassion and understanding to connect with others on an emotional level.
People skills: the ability to build rapport and trust with others.
Research on emotional intelligence by Harvard Business Review more broadly segments EQ into the areas of self-awareness, self-management, social awareness, and relationship management. Within each of these areas are several skills which allow for exceptional leadership in business. The graphic below overviews each of these areas and the competencies that fall within them.
Why is Emotional Intelligence Important (in General)
People with strong emotional intelligence are better able to regulate their own emotions and navigate the emotional responses of others. They reap many benefits including:
Recognizing and understanding their own emotional reactions
Managing, controlling, and adapting their own moods, reactions, and responses
Leveraging their emotions to motivate themselves, take action, commit, and work towards goals
Identifying the feelings of others, understanding their emotions, and using this information to relate to others more effectively
Building strong relationships, relating to others in social situations, leading, negotiating conflict, and working as part of a team
Why is Emotional Intelligence Important in the Workplace?
Emotional Intelligence plays a crucial role in business leaders’ ability to effectively manage and grow their business. Workplaces are, by nature, relationship-driven environments. They are places with a wide range of personalities, interests, and communication styles. Having a good EQ can help business owners better manage their workforce. Leaders with strong EQ reap many benefits including:
Being able to provide genuine feedback to employees
Fostering trust with employees and customers
Resolving conflict between team members
Setting realistic expectations and standards for your team
Constantly improving your management style
Research by the Center for Creative Leadership (CCL) found that lack of emotional intelligence is a leading cause of failure in executive positions. It identified three main reasons for failure: difficulty handling change, ineffective teamwork, and poor interpersonal relations. Additional research by Egon Zehnder International found that EQ was stronger at predicting executive success than IQ or job experience.
More generally speaking, research by The Carnegie Institute of Technology found that only 15% of financial success is attributed to technical skills. 85% of a typical person’s executive success is attributed to EQ skills such as the ability to communicate, negotiate, and lead. Research by TalentSmart found that 90% of top-performers have good emotional intelligence.
In business, trust is key. Building trust with employees and customers is important for business leaders. In fact, research by Daniel Kahneman found that people would rather do business with someone they trust, even if it means paying a higher cost. High EQ is critical to building genuine relationships founded on trust and mutual understanding.
On the flip side, poor emotional intelligence can lead to a toxic work environment. Bad EQ in the workplace can be seen in bullying, harassment, turnover, and demotivated staff. It can manifest as insensitivity, arrogance, aggression, and volatility. Whereas a leadership team with high EQ can build a flexible environment, low emotional intelligence can lead to detrimental inflexibility and rigidity. In order to build a good company culture, emotional intelligence is crucial.
How to Improve Emotional Intelligence
At its core, emotional intelligence is effective communication between the emotional and rational parts of the brain. Unlike IQ, which remains relatively constant throughout your lifetime, EQ is something you can actively work on and improve. Some ways to improve emotional intelligence include:
Observe your feelings: as business leaders, work is extremely demanding. It’s easy to become so over-worked that you suppress or ignore your emotions entirely. It’s important to recognize that ignoring your feelings can cause these emotions to become stronger and less controlled over time. Rather than getting caught up in the day-to-day, when you’re having an emotional reaction to a situation, take a minute to recognize and address your feelings. Intentionally taking time to recognize and address your feelings can help build up your emotional intelligence over time.
Respond instead of react: recognize the difference between responding and reacting. Reacting is a knee-jerk response driven by emotions. Responding is a conscious, intentional process driven by understanding your feelings and deciding how to behave.
Be humble and keep things in perspective: having realistic expectations of yourself and others is a key part of EQ. If you think you’re better than others, you won’t be able to intentionally recognize and work on your own faults. You may also set unrealistic expectations for others, leading to disappointment. Instead, remain humble while recognizing your own unique set of strengths.
As you intentionally integrate these strategies into the way you think, your brain will begin to build new pathways and thought processes. Over time, your brain will adjust to use new EQ-driven strategies in your day-to-day work. Improving your EQ takes effort but is critical for anyone in a leadership position.
Key Take-Aways
In today’s post we explored what emotional intelligence is, why it’s important, and how to improve it. Here are some key take-aways:
Emotional intelligence is made up of several components including self-awareness, motivation, and social skills
Emotional intelligence provides many benefits including stronger relationships, better control over feelings, and improved ability to resolve conflicts
In the workplace, EQ is a stronger indicator of business success than IQ or technical skills
Unlike IQ, EQ can be actively worked on and improved over time
There are several strategies you can use to better leverage EQ-driven thought processes
Your employee compensation strategy is an important component of your company’s overall hiring strategy. You already understand that compensation is very important to be able to hire and retain top talent. What you might not know is that there are some simple strategies you can use to increase the value of your compensation without increasing base salaries. In today’s post I’ll explore how to understand your total compensation package and offer six unique strategies to increase the value of your total compensation offered.
Understanding Total Compensation
When considering making changes to your compensation strategy, it’s important to first understand the difference between base salary and total compensation.
Base salary is the amount per hour or year an employee is paid. This is the figure that appears on the employee’s paycheck. This number does not include bonuses, benefits, or any other perks.
Total compensation is everything that an employee receives in exchange for working for your company. This figure includes base salary, bonuses, incentives, benefits, on-site amenities, and any other perks you offer.
Some typical benefits induced in total compensation:
Health insurance
Vision and dental insurance plans
Retirement plans
Performance bonuses
There are many creative ways that companies add additional value to their total compensation package. Here are just a few:
Gym memberships
On-site child care
Casual dress code
Flexible schedules
Creating Goals for Your Compensation Strategy
When you’re considering making changes to your company’s compensations strategy, there’s a couple of key things to keep in mind:
First and foremost, employees must feel they’re being compensated fairly. If employees don’t feel this way, high turnover is inevitable.
Your compensation strategy should ensure employees are invested in the long-term success of the company.
Communicating your company’s benefits and perks programs to employees will help them better understand the value of their total compensation package.
When creating your total compensation package you should set one or two goals. This helps make sure that as you add incentives to the package, they’re in-line with your overall compensation goals. Here are some examples of goals related to total compensation:
Recruit great talent
Motivate employees
Reward top-performers
Reduce employee turnover
Improve your career brand
Six Creative Compensation Tactics
Now that you understand total compensation and have set some goals for your compensation strategy, you can get to work building your total compensation package. Here are six unique compensation tactics you might opt to include:
1. Delayed signing bonuses
Many companies offer a large signing bonus as a particularly enticing component of the compensation package. However, a highly-effective yet often-overlooked compensation strategy is to offer a deferred bonus. For example, offer a $5,000 signing bonus up front with an additional $5,000 bonus granted at the six-month mark. This way the signing bonus works not only as a compensation tool but also as an employee retention tool.
2. Think Beyond Cash Incentives
Rather than offering a performance-based cash incentive, consider offering a different incentive such as an annual company trip. Other great ideas for incentives include: bonus vacation time, sports-related activities such as group outings to a game, or free catered lunch. Any of these incentives can add variety to total compensation and provide tangible incentives for employees to work towards.
3. Employee Stock Ownership Programs (ESOPs)
In an employee stock ownership program you offer employees stock in the company as a benefit or performance-based bonus. This program helps align an employee with the long-term company vision, as they become personally invested in the company’s growth.
4. Phantom Equity
Unlike ESOPs, phantom equity does not transfer any of your company ownership to employees. Rather, it’s a contractual agreement which gives your employees a right to a certain percentage of the profits/proceeds of your company. This process allows you to incentivize long-term commitment and high performance without giving up any ownership of the company.
5. Employee Discount Program
An employee discount program is a great way to provide additional incentives beyond an employee’s base salary. Employee discount providers will partner with your organization to offer your employees competitive discounts on retail goods, phone bills, hotels, and much more. Studies show that Millennials, who are often on a tight budget, are particularly enticed by attractive employee discount programs.
6. Paid Training Stipend
Including a training stipend in an employee’s compensation package accomplishes three things:
Shows your employees that you want to invest in them and their career success. According to a study done by Deloitte, most loyal employees believe their company offers a lot of training and support.
Develops your employees, so they can perform their job more effectively and become strong leaders.
Increases the total compensation value of your employee benefit package.
Employee Compensation Key Takeaways
Here are some key take-aways from today’s post:
When thinking about compensation, you must consider the total value of your compensation package, not just the employee’s base salary.
When discussing compensation strategy, it’s important to have clear goals in mind.
A competitive compensation strategy will help your company attract, develop, and retain the best talent.
Continuous communication around the total compensation package is key.
