Year-End Review — Cash? Praise?

Mercer PeoplePro Blog Year End Review

Year-End Review Time

Cash Impresses, But Praise Endures

If asked during a year-end review, which I wanted, cash or praise, I would say both. Studies show that when both are used to reward an employee their engagement and productivity is greater. But, when used independently, praise had a more lasting impact. Why is this important? Because a year-end review is the usual time for both performance reviews and bonuses and, just maybe, we emphasize the wrong thing.

Despite the seemingly positive nature of both events, they often breed apprehension and fear in managers. Some may be uncertain about how to keep their top performers motivated. Others question how to improve the performance of those who have potential, while challenging the bottom performers. Given managers’ anxiety, I would suggest that you take this time to revisit your reward and recognition strategy for this upcoming year. Some thoughts to keep in mind:

  1. Ensure that you have manager buy-in on how the programs work and how their team will be evaluated and rewarded. Managers need to understand, not only the process, but also what behaviors you are trying to promote and why. You may need to remind them that bonuses are a reward for past performance and the performance review not only evaluates and praises past performance, but also sets the bar for future performance. Without this understanding, they will be at a loss to truly maximize your return on investment.
  2. Give your managers the tools necessary to make the most of your reward and recognition strategy and be clear about what they are designed to achieve. On an annual basis, publish talking points for managers reminding them of the importance of both and ensure that they discuss any needed performance improvement opportunities. Also, develop similar but more descriptive information about the process and why it’s in place for employees. Cover each program in your employee handbook as well. Keep job descriptions on file, make them accessible and up-to-date as they remind both the employee and manager what is expected of them and why.
  3. Have the manager and employee establish three or four objectives during the review discussion, allow the employee time to refine them and return them to their manager as this will instill ownership in the employee. Also, modifications can be more easily made on them if needed during the year. Use metrics in goal setting as this brings objectivity to the review and bonus processes.
  4. Encourage managers to regularly meet with each member of their team to discuss not only their performance, but also their challenges and to provide any support or tools necessary to meet their objectives. Encourage discussion and praise on accomplishments and things done well and how these same praiseworthy skills can be leveraged for further growth. Encourage open and free dialog with notes taken by both parties; thereby, reinforcing next steps. Year-end should not be the time to find out that your employee is failing as it is hurts all concerned and is unnecessary when corrective action could have been taken earlier.
  5. The year-end review process need not be form fitting as there is benefit to having it be unstructured, but guided by your hand as the manager will still need some tools to support the process. However, the review can simply be a clean piece of paper and a list of three or four objectives mutually agreed on from last year. The manager and employee should then discuss and write down what went well and why and where things could have been improved and how. This then sets the stage for drafting objectives for the coming year, which should get progressively more challenging.

Simple, don’t you think? And good to know that it’s not all about the rate of pay or year-end bonus, but more about knowing how and where they can make a difference and be appreciated for their continued contribution. Praise brings future success, so you’ll want to do it right!

HR Expertise On Demand

If you’re a small or emerging business and would like some expert help with a year-end review, revamping your reward and recognition strategy, writing job descriptions or communications for your managers, we’re here for you. Visit PeoplePro and schedule an appointment today— we’re ready to help so you can focus on what matters most.

Written by Mercer PeoplePro Pension & Savings specialist, Nancy Lazgin.

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