Are your employees a good investment?

I know that no one likes to be thought of as "just a number" and that we talk a lot about morale, mood and other feel-good aspects of the workplace on this blog. But at the end of the day, a business needs to make money - and if its employees aren't contributing to the bottom line, there's a problem.

The term ROI - return on investment - is bandied about quite often in financial circles. But what if you applied this same formula to your company's personnel? How valuable is Ken, Katie and Karl to your business compared to the cost of employing them (salary, benefits and other company-provided perks)? Do your employees' contributions outweigh the cost of keeping them on board?

While it's not always easy to put a dollar sign on a person's efforts and achievements, it can be an interesting exercise - whether at review time or any time. 

For example, is Ken in sales securing enough sales to cover his costs? While he may be pulling in great numbers, if his sales are spread around to multiple customers and require you to hire additional customer service representatives, his value isn't as strong. 

Or how about Katie, the customer service advisor who's great with her team but moody on the phone? If her snarky attitude has caused a handful of customers to take their business elsewhere, her value suddenly drops. How much did each of these customers spend a year - profit that you lost?

Then there's Karl in the warehouse. He's a solid, hard-working guy, but a bit accident prone. In three years, he's been in two workplace accidents that involved lengthy and costly workers' compensation claims. Your investment in Karl, then, involves more than just his hourly wages.

When it comes right down to it, you're looking at the same qualities you typically consider: attitude and actions. The difference with ROI is whether those qualities are advancing the success of your business, making each employee a worthwhile investment. Ideally, your employees bring in a positive ROI, making your "personnel" portfolio as robust as your personal financial investments.

Are your employees a good investment?

7 ways to rev up employee reviews

When it comes to managing employee performance, many companies miss the mark. And here’s why: Performance management means more than conducting reviews with employees once or twice a year.

If you only provide feedback at review time – sitting across a desk and going point by point through a rigid appraisal form – you’re overlooking many valuable opportunities to mentor, support and guide your employees.

For more relevant, results-driven performance management, you should:

1) Provide regular and immediate feedback year-round. To help employees learn from their mistakes and overcome their challenges, you need to share feedback that’s specific and timely. If you’re plugged into what your employees are doing day to day, and have worked to maintain an “open door” policy with them, confronting them with constructive criticism will be easier.

2) Set the right foundation at the beginning of the year. Create some structure around your expectations for the position and what a positive, productive year should look like. With the employee’s input, take the time to determine a handful of objective, measurable goals. Strive for goals that are challenging, but at the same time attainable.

3) Keep track of daily performance. A performance log lets you jot down notes about an employee’s good or bad behavior, as you observe it or hear about it. This information can be a handy reference for weekly or monthly discussions and certainly, a much more reliable resource at review time than your memory!

=> => OK, you’re keeping the lines of communication open with your employees and providing thoughtful feedback on a regular basis. But like most companies, you also need to complete a written appraisal and conduct a formal, one-on-one review. Here’s how to make the most of it:

4) Be prepared. This should be obvious, but make sure you’ve thought through what you’re going to say, and how you’re going to say it, before sitting down with the employee. Whether you use a standard performance appraisal form or some other written format for rating key performance factors, you still need to talk through the contents and fill in additional details.

5) Lead with the positive. Performance reviews can be as anxiety-inducing for the employee as they are for the manager or supervisor. Reinforce the employee’s strengths (with specific examples, of course) at the beginning of the review to set a positive tone and help put the employee at ease.

6) Make it a two-way conversation. An effective performance review is not a one-sided monologue by a manager. Rather, it should be an open exchange that allows employees to voice their concerns and offer new ideas. Creating this dynamic will help employees feel you value their opinions, which goes a long way toward increasing employee engagement and morale.

7) Focus on what matters to the employee. Job satisfaction plays a huge role in an employee’s attitude and performance. Just as no two employees are exactly alike, there’s no such thing as a “one size fits all” approach to reviews. An effective review should explore the issues that matter most to the employee, whether that means accepting new challenges, working on teams, taking on more responsibility or receiving additional training. If you know what makes an employee “tick”, you can tie more of those motivators into his or her goals and objectives.

7 ways to rev up employee reviews