Over a large number of years working with businesses and searching for indicators of what will predict success, I believe I have stumbled on a unique measure. It may surprise you – it’s not a typical finance metric, or growth metric, or even market share indicator. It is likely something you haven’t even considered before: the gap between manager assessments and employee self-assessments.
Yes, we are discussing performance appraisals, where employees rate their own performance as do their direct managers. Here is the punchline: when the results of these assessments are close – when employees and managers have a shared view of how well employees performed the overall firm is almost always performing well. And conversely, when there is a large gap, the firm is almost never performing well. If you believe this is true – it seems so simple. And it is!
The basic premise here is that employees need a clear understanding of what they are being asked to do: this includes having quality position descriptions and goal-setting. Employees need to be in contact with their managers to understand if they are on track, how they can perform better, etc.: quality feedback. If this is all in place, their tends to be tight alignment between final employee and manager appraisals. And that usually means that either employees are delivering on expectations, or that if they are not, employees understand where they are missing the mark, and are in a position to course correct or improve.
Imagine the converse – employees self-assessing as doing an outstanding job, and managers not agreeing. Can you imagine this scenario taking place at a high performing organization?
So, if you are in HR and you want to drive your firm towards higher success, take a moment and look over the typical gap between employee self-assessments and manager assessments. If they are typically tight, you are doing something right. If they aren’t, there is a real opportunity to add value. Get better position descriptions, set better goals, give better feedback. When the gap is closed the business gets stronger every time. Improving this metric will not be on any CEO’s balanced scorecard, or indicated as a firm priority, but it is quite likely the most reliable indicator of success. If you need help closing the gap, let’s talk. It isn’t hard to do.
Meritarc enables your business to realize the full value your people can create. We are a human capital software company and provider of advisory services, specializing in financial services, fintech, and consulting firms. Our job architecture, performance management, and reward tools anchor business strategy in all people processes. Visit our website to learn more.