Many employee performance evaluation processes or systems are met with some level of disdain by employees.

Common complaints include:

• I spent hours writing my self-evaluation and no one read it.

• Written evaluations seem to be used primarily to protect the employer from possible employee legal action.

• The evaluation meeting with my supervisor lasted only a few minutes and was basically designed to communicate the amount of an increase and bonus. There was little or no discussion of the long-term.

• Why go through an extensive written self-evaluation only to learn that the company or firm is only handing out small cost-of-living raises to everyone?

• I dread the amount of work involved in capturing an entire year of work and accomplishments in a single document.

• The evaluation process does not offer an honest assessment.

• HR seems to be more concerned about the latest trends in evaluation processes rather than focusing on what works for the organization.

• I am left feeling underappreciated and disrespected.

So, what is the best evaluation process for your organization? Each organization is different and the latest trend in evaluation processes may not be the best fit. The selection starts with an honest, introspective examination of the organization, focusing on the following questions:

1. Is employee evaluation a priority?

2. How much does the organization really value its employees? Is the refrain, “Our employees are our greatest asset?” just lip service, or can the employees believe it is authentic?

3. Is there a strategic plan for employee retention and promotion, or is the organization merely reacting to a short-term work crisis or client demand?

4. If there is an HR function, does HR understand the business? Are management and HR working toward the same goals?

5. How well does the organization communicate with its employees? How is criticism handled and communicated?

6. Does the organization allow its managers and supervisors to dedicate enough time to employee evaluations?

7. Is the organization dedicated to providing employee evaluation training to its supervisors and managers?

Project Evaluations

Many of the national firms have adopted systems that evaluate specific projects at the conclusion of the project as well as a full-year evaluation. This technique will also work well at smaller firms. These specific project evaluations are typically brief written evaluations in which employees self-evaluate their effectiveness on a particular project and the supervisor provides written feedback. Frequent evaluations (more than just the once-a-year type) are very effective tools to gauge employee development.

Employees appreciate contemporaneous feedback, whether positive or negative. The downside is the extra administrative work for both the employee and the supervisor. This can be especially challenging during extreme busy periods, such as tax season. Any system that becomes burdensome can be neglected and ultimately fail. I’m in favor of continuous evaluation and feedback, rather than an annual review. However, the evaluation system must be efficient, both in time spent and results.

If a firm or company adopts the project evaluation system, below are my suggestions for a successful approach:

1. Goals, budgets and other criteria need to be communicated to the employee prior to the start of the project. All too often, an employee feels proud of the work done, only to be reprimanded that the number of hours spent exceeds what can be billed.

2. Not every project needs to be evaluated. Some firms require that the project exceed a certain number of hours, such as 20 or 40 hours, for example.

3. The project evaluation should be in writing and initiated by the employee. It should be brief and in a format that is not another administrative burden. I would suggest a format that includes a one-line description of the project, a sentence or two on what was learned, what was accomplished, and what could have been improved. The supervisor then should provide a feedback in writing.

4. Time should be set aside to discuss the project and evaluation. Live discussion would also allow for other issues to be discussed before year-end. Live discussion also avoids the impression that this is just a fulfillment of another administrative task that can be checked off a list.

5. If worthy, an excellent job on a project should be accompanied by an immediate meaningful financial award—probably something more than a $100 gift card.

Periodic and Year-end Performance Evaluations

The firm I worked for had a mid-year review and a year-end review. This was a well-intentioned process, but the written forms were cumbersome and time-consuming. There seemed to be little depth to the feedback. The sit-down discussion occurred when the supervisor revealed a rating, and the amount of raise and/or bonus. In many cases, it was difficult to understand the correlation between my perceived performance for the year versus my employer’s perception and the amount of the financial reward. For me, the written self-evaluation task became just an administrative matter that I viewed as something the firm needed for the file and for liability protection.

To really work well, periodic and year-end performance evaluations need to be transparent, honest and meaningful. There needs to be frequent two-way dialogue that does not mask problem areas and is forward looking. Although time-consuming, I believe in frequent evaluations rather than just one at year end.

Here are some suggestions that should improve an employee evaluation system:

1. Although not always welcomed by either supervisors or employees, all evaluations should be in writing.

2. The written document should first be in draft form. After the employee submits the draft written self-evaluation, there should be a live discussion between the supervisor and employee to review what was written so there are no misunderstandings. The supervisor should also provide some critique and offer suggestions for performance improvement and suggestions for a rewrite. If there are disagreements at this stage, the supervisor should alert the employee and allow the employee to address any concerns in the final document.

3. After the final employee draft, the supervisor should provide written feedback, followed up by another live discussion. Most importantly, the discussion should address goals for the upcoming year, areas of improvement, advice as to a pathway for improvement, and a forward-looking two- or three-year plan for progression within the firm.

4. If the employee is struggling, and it is apparent he or she will not work out in the long-run, this fact needs to be communicated sooner rather than later to avoid misconceptions, hurt feelings and potential legal action. It will also allow the employee to begin to address the problem or look for other work.

5. I believe that the written self-evaluation form should avoid numerical ratings. Many employees are reluctant to give themselves the highest numerical rating for fear of appearing boastful or over-confident.

6. The firm should have a process or system, either formal or informal, for dealing with employee dissatisfaction with compensation. Without a system or at least some forethought, inconsistent treatment among employees could result, which further exacerbates the problem.

7. The written evaluation document should at a minimum include the following topics:

a. Description of the work and/or projects that were performed during the year. Copies of specific project evaluations can be attached to provide support.

b. Successes and accomplishments during the year.

c. Achievements in personal development and learning.

d. Areas for future learning and improvement.

e. Goals, aspirations and a vision for the future with the firm.

f. Supervisor feedback that encompasses comments related to past-year performance, areas for improvement and comments related to growth opportunities within the firm.

8. The firm should seek out consultation that will assist in communicating job performance (both positive and negative) to employees and develop evaluation techniques and methods that are specifically designed to work for the particular organization.

Paul N. Iannone

Paul N. Iannone

Paul N. Iannone, JD, CPA, MST, is the founder of Tax Career Advisor LLC and author of “Extraordinary Tax Career.”