A best-in-industry performance/employee evaluation begins and ends with a compelling governance-leadership commitment that human capital is an organization’s most important asset—the big differentiator, especially in the service industry.  Without this, the program is just more expense that will fail to deliver value.

The other elements of the evaluation plan—the muscular structure—should include:

• Thoughtful assessment of every senior executive, manager and supervisor
• Development of a depth chart showing every member of management with notes on each individual’s knowledge base, skills, flexibility to oversee other divisions, promotability, etc.
• Creation of robust metrics covering all aspects of performance, satisfaction, and service
• An ongoing evaluation system that incorporates input on critical indicators from the supervisor, peers, subordinates and customers
• Development of an ongoing, real-time measurement system that provides support of the talent evaluation process
• Comprehensive quarterly performance reviews of operations and people
• Investment in people development at all levels

This approach to talent evaluation should produce meaningful results, not only in the more effective use of this critical corporate asset, but also in measurable and sustainable improvements in quality, safety, service, and financial performance.  It must be supported by real investments in an incentivized compensation plan, the technology and training to ensure that this powerful tool is appropriately utilized, and ongoing commitments to invest in the power of the people for education and other professional development programs.

A core element of an effective program is the depth chart, something akin to what NFL coaches use to evaluate draft picks and existing team members through spring training and throughout the course of the year.  In the old days, some corporations created a dedicated room for this comprehensive white board chart, and physical access was limited to the CEO, the Chief Human Resource Officer except, for times of performance evaluation meetings with divisional executives.  Today, these white board rooms are virtual, with drop down folders providing additional detail on each member of management.  Regardless of the approach, having this in-depth information is essential.

A best-in-class performance evaluation program must be designed to make the program a major responsibility of the CEO and the senior leadership team.  The CEO must lead and allow adequate time for detailed discussions regarding performance and what can be done to move to the next level.  A CEO who feels that he or she cannot afford the time for such in-depth reviews or loses interest might as well walk the halls and tell employees they are not that important. 

This systematic approach to performance and employee evaluations effectively destroys the current “silo” evaluation process used by far too many hospitals in the U.S.  These programs typically begin with a supervisor completing a form, and ends with an executive signing off on it.  This approach precludes or limits meaningful talent management.  Far too often, the employee is rewarded for, in effect, surviving another year.

Key performers should be identified and the senior leadership team should know what must be done to retain them, either through future promotion or professional advancement.  Discussions should include Plan B strategies if key members of management or clinical services teams leave the organization—who is being developed within the organization to step in on an interim or permanent basis, how will the recruitment be done if internal resources are not available?

In developing a system, designers should focus on positive improvement, a belief in the quality of each employee and with an overarching desire to retain them.  It should shy away from any evaluation hurdle that predetermines that each year a certain percentage of employees should leave the organization because they fall into some category designation—as in “Cs”—and require too much investment for improvement.  

Over the years, an annual termination trend line may emerge, but if employees learn, or think they have learned, that the percentage is predetermined, or that some calculation for termination was factored into the program design, the program will lose credibility.  That was the case for former Ford Motor CEO Jacques A. Nasser, when the unions alleged that the organization’s performance system, roughly based on GE’s highly successful plan, incorporated such a predetermined elimination target that discriminated any certain of their members. 

A gold-plated evaluation program that includes a stepped up emphasis on performance—and accountability—will have enough detractors who would like to avoid both.  There is no reason to give them an easy target to undermine such an important program.

 © 2012 John Gregory Self