The reality for most nonprofits is – even in a good year – salary increases for staff members often reflects a cost of living adjustment (COLA) only. Because the amount is small, this increase is typically distributed evenly among all staff members. In addition, many organizations are lax about providing formal performance reviews. In my opinion, these both represent “missed opportunities” for leaders to provide important feedback to employees.
Although performance reviews vary in type and frequency, it is important to have processes in place to provide feedback to all employees. The trend these days is less formal – and more frequent – conversations. For some organizations, it is an annual, written review done at the same time for all employees. No matter the method, providing employees with tangible feedback is essential. Keep notes on employees and be sure to share observations – both positive and constructive – in the moment whenever possible. Performance reviews should never contain an element of surprise; in other words, when you share comments in a performance review, it should not be the first time the person is hearing the message.
In addition, keeping notes helps to eliminate the “recent factor” of remembering and acknowledging performance from the most recent weeks or months and not reflecting the full year. While performance reviews are time consuming, they are important to the overall health and well-being of the organization. No matter how you decide as an organization to conduct performance reviews, provide leaders with training and set expectations regarding ratings. Often times, one manager will be a “strict rater” and the next will be a “rating inflater”. Employees do compare notes, even if they are asked to keep conversations confidential. Rating consistency also helps when it is time to determine pay increases.
Do your best to differentiate
Even if the percentage increase across the organization is small – say 3% – it is still beneficial to recognize your strongest employees. Take the time to work as a management team to identify your best performers, average performers and weakest performers. Then make adjustments accordingly. Perhaps your highest performers will get a 4% increase, your average performers will receive a 2.5% increase and your weakest performers won’t get an increase. You could also determine how many dollars you have to allocate (vs. the percentage) and make the decisions accordingly.
If your organization is on a budget freeze and you don’t have any funds for increases, it is even more imperative to provide feedback to your employees. In particular, recognize your top performers by acknowledging a job well done and thanking them for their dedication and hard work.
While many view reviews as a “necessary evil”, it is an important way to stay connected with employees and demonstrates that you care about their development and well-being. It’s worth the investment!