Rita Keller

Performance Review Pitfalls

And how to avoid them.

February 22, 2011
by Rita Keller

In my interactions and conversations with thousands of CPA firm citizens during 2010, I found that most firms have some sort of process for conducting annual performance appraisals. Many of them succumb to one of two pitfalls, however: They either fail to make the most of the process or they focus too closely on one performance review and don’t take advantage of more frequent opportunities to address — and resolve — performance problems.

The Road to Avoidance

Many firm leaders admit to me that they do not always follow the established process. They often do not conduct the sessions, postponing them or skipping them altogether.

In other cases, last-minute reviews make it hard for meaningful change to take place. While most of the firms that do follow the process conduct their annual performance reviews in the summer, some still hold off until December or early January to give formal feedback on performance to their team members.

I have always believed very strongly that an annual performance review is an ABSOLUTE must and that people will sink into the land of poor performance and poor attitudes if they don't hear, hopefully more often than annually, how they are doing and if they are meeting expectations.

Feedback is so important that it should be given in a structured format at least three times a year. The process should involve gathering input from others, then meeting with the employee to discuss and scheduling two follow-up sessions to touch base on the current year’s goals. And please, don’t make the process or system so complex that everyone ends up dreading taking part in it!

Don’t Miss Daily Opportunities

While a regular performance review is necessary, immediate input is more important, especially if someone is new or needs specific improvement. It is much more effective than any formal, sit-down, go-thru-the-forms process.

Of course, daily positive feedback should be part of your culture, too, along with immediate conversations when something has gone wrong. All of this is called managing and most accounting firms need to do a better job in this area. Period.

I have conducted several “Helping Your Managers Really Manage” sessions for accounting firm managers during the last 12 months. All of these professionals, no matter what the size of the firm, struggle with being a more proactive, involved manager of people and blame lack of time as the culprit. That is always an easy excuse. What managers don’t fix now will take more of their valuable time later because they will have to fix things over and over again.

Carol Bartz, president and CEO of Yahoo, says she would rather skip annual performance reviews altogether in favor of telling someone right there, on the spot, when they perform poorly. She uses house-training a puppy as an example. “When the puppy pees on the carpet, you say something right then,” she notes. “You don’t say six months later, ‘Remember that day, January 12, when you peed on the carpet?’ That doesn’t make sense.” Bartz prefers an instant response. Simply tell the employee, “This is what is on my mind. This is quick feedback.” Then explain the situation and move on. Many young workers in particular prefer quicker and more frequent feedback than what an annual review affords them.

Manage your staff everyday by simply giving them feedback as they move through their projects. This means open, honest and immediate communication. It does not apply only to associates and administrative people, but to partners and managers, as well. The managing partner provides candid feedback to the partner group, the partner group provides honest, immediate feedback to the managers and so on.

If you are maintaining a dialogue about the work and giving feedback every day, then the performance appraisal meeting might no longer be a dreaded event.

Finally, as busy season unfolds, suggest to your partners and managers that they keep the following quote in mind:

Executives owe it to the organization and to their fellow workers not to tolerate nonperforming individuals in important jobs.

Peter Drucker, write and management consultant

We all know that every role in a CPA firm is important, which is why proper feedback on performance is so critical.

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Rita Keller is an award-winning and widely respected voice to CPA firm management. She is president of Keller Advisors, LLC and consults with firms across the country to embrace change, banish complacency and become more profitable.