Why employee contribution management matters more than performance reviews

The strategic intent of an employee contributions management process is to facilitate a work contribution conversation that is not designed to find fault but to develop better talent and, as a result, a better company.

Corporate America limits its approach to PMP, which stands for performance management process.  They do this because it’s easier to rate performance than to connect what the employee does that contributes to business results.

Too many corporate managers use their PMP processes as a forum to unload on an employee about what they don’t like about them.  They don’t see it as a management process that helps those who report to them develop the talents they need to contribute more to the business tomorrow than yesterday.

As a result, too many employees are subjected to poorly handled performance evaluations.  Whenever they hear the phrase, “it’s time for your evaluation,” negative feelings about what’s coming emerge.  The driver behind these negative emotions is how big bureaucratic HR departments are more interested in scoring than developing an employee.  The problem lies in HR leaders not orienting the process to creating value for the business and those subjected to the performance management process.  For them, it’s about scoring employees to justify future personnel decisions involving promotions and wage increases.

Most employees want to be seen as contributors to the success of a business.  They want to do good work that is appreciated and recognized.  They are not looking for busy work or work that doesn’t matter.  They are open to being shown how to work smarter and more efficiently.  Small businesses that use the contribution management process are more interested in helping their people become better contributors to the sales and profits of their company than they are checking any boxes.

The process starts with employees knowing their specific accountabilities through a Job Description or Tasks and Duties Lists.  A well-written description of what’s expected of an employee in their job is how you help each employee see how their work contributes to business sales, profits, and cash flow.  Once this is understood, the next step is fact-driven feedback through scheduled evaluations of their contributions to business results.

A mutually beneficial contributions management process allows management to recognize individual contributions to business results and the employee to be recognized for contributing to business results.  They do this when supervisors and subordinates openly discuss what they do well and design improvements where areas of contribution are substandard.  Evaluating an employee’s contributions to business results is not an easy task, nor is it always a pleasant one, especially in unacceptable employee contribution discussions.

The primary responsibility of each Supervisor to those who report to them is to help each employee understand where and how well they are contributing to business results.  Failure to evaluate and discuss the quality of job contribution on at least a quarterly basis means each employee has to figure out whether the hours they put in each day, week, and month contribute to business profits or not.

The goal for each contribution discussion is to keep it positive.  Even a substandard review can be viewed as positive by the employee if the employee perceives it to be about helping them improve their work contributions.  Keeping it on what they need to do differently or better to help contribute to company results prevents these conversations from becoming a discussion of what the manager doesn’t like about the employee.

The contribution management process exists to accomplish the following main objectives:

1. To help each employee see where they are contributing to business results.
2. To acknowledge specific areas of contribution strengths.
3. To recognize definite areas for contribution improvement.
4. To form positive behavioral change goals to build on strengths and mitigate weaknesses.
5. To determine the short and long-term potential of the employee.

The formal contribution management review enables the following:

1. Informs the employee how their Supervisor rates their job performance and what performance expectations the supervisor has for them during the next review period.
2. Enables the employee to comment on their evaluation, their job, and future with the company.
3. Provides a documented assessment of employee contributions for career development, training, promotion, and wage increases.
4. Provides progressive discipline documentation should the employee’s performance be so poor and improvements so minimal that separation from the company is the result.
5. For those offering performance incentives, it establishes what the employee contributions should earn them in bonus.

A formal contributions management process is foundational to reinforcing your org structure

Not only is your contributions management process a foundational part of your structure, it has a significant influence on your company culture and, ultimately, your business profitability and cash flow from operations.

Don’t underestimate the power of informal contribution discussions

Contribution management is intended to be continuous and must not be restricted to a formal, annual written performance evaluation.  The best Supervisors have regular informal discussions with their subordinates throughout the year.  Progress is formally summarized in the annual evaluation.  If there are surprises in the annual evaluation, then you know informal contribution discussions aren’t occurring.

The informal discussions establish a shared understanding of how the job is going, what problems, if any, exist, and specific employee expectations over the next few months.  The informal discussions form a natural progression culminating in the annual contribution evaluation.  This eliminates any “surprises” for the employee when they are formally evaluated.

When informal contribution discussions aren’t occurring, it puts undue emphasis on the formal contribution evaluation.  This is why it is often an uncomfortable experience for the supervisor and employees in large corporations. Anytime an employee is surprised by their supervisor’s feedback and performance score, it is a management failure.  Every supervisor’s responsibility is to ensure that no surprises happen during the formal discussion of contribution through continuous coaching and continuous feedback.

Do you have the measures in place to help your employees contribute more than they are paid?

Click here to see how you can use financial metrics and ratios from your business to jump-start a meaningful contributions management process that leads to a higher return on the sizeable investment you make in your employees.

Within thirty-six hours of receipt of the multi-year P&L Statement and Balance Sheet, you will receive back by email your free sampling of financial metrics ratios you can start to use immediately in working with your management team to improve your business results.