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Performance Reviews: How to Retain Your Top Talent



Author’s Note: I wrote this blog for Philly SHRM in February, 2012 and based on what I’m observing, it’s even more relevant in our current talent market as it was ten years ago.

It’s that time of year people managers seem to dread, because they dislike facilitating discussion and providing feedback for performance evaluations. Hands down, performance management is one of the most important processes that companies can deploy and embrace. First, it ensures that members of the organization are working on the right things and second, it ensures that the organization is rewarding the right people.


When we think of performance management reviews, first we think of the dreaded “form.” But the focus needs to be on capturing objectives or goals linked to company strategy, measuring the outcome or the results against those goals and identifying development opportunities for the employee. This helps tell us where limited salary budget dollars should be spent. The form can be distracting, but, I prefer to focus on the benefits of this process:


1. Accomplishing business strategy

2. Developing talent

3. Rewarding appropriately


Accomplishing Business Strategy


Today, it’s imperative that all employees have objectives or goals directly linked to the goals or strategy of the company. This ensures that everyone is working on the right tasks at the right time, to keep the company moving forward and move the needle. Having objectives that are not linked to strategy is akin to throwing money out of the window. This offers a tool to measure performance, holds people accountable and provides clarity for their roles.


Developing Talent


Every organization must ensure they have the talent required for their future growth. One way to accomplish this is to have a robust development plan for every individual in the company. The marketplace is constantly changing, which means that to surpass the competition, you must have a ready workforce. Great care and future thinking are required to ensure you have the skills and experience required for the future.


Rewarding Appropriately


What should be an enjoyable, fun part of the job for people managers often creates a bit of discomfort. If the first part was properly aligned (objectives linked to business strategy and holding employees accountable), this step should be easy. “But I have limited dollars,” you may be saying. You can reward everyone, but you must give those limited dollars to those who contribute the most. Employees should not be rewarded for just coming to work every day. Best practice management demands that we stop communicating and demonstrating that showing up, instead of performance is all that is required.


Often news headlines warn that no one is hiring. But companies are hiring—especially YOUR high performing employees. That’s why it is important to reward the right people. My favorite Wall Street Journal article is, “Only the Employed Need Apply” which discussed organizations’ bias against the unemployed at every level. These companies are filling their job openings with employed individuals.


The result of some compensation/reward processes is to slice the small pie equally across the organization. However, contribution is seldom equal. It is important that the right decision is made for the right reasons.


When thinking of compensation decisions, data should include:

  • How was performance against stated objectives, including metrics?

  • Were appropriate successful behaviors displayed?

  • Does the employee have skills that are hard to replace?

  • Is this a high potential employee who is part of your bench strength?

  • What is the level of contribution and impact?

Remember, it typically costs more to replace your high performing employee. Not only because of the cost of recruiting, but typically a company ends up paying more in compensation to the new employee. So be sure to make a positive statement by telling employees how much you appreciate their contributions and reward the ones who delivered.


If you need assistance in linking your strategies to a performance management program and appropriately rewarding your team, let’s talk. We can assist you in customizing your plans.

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