🔥 This Week’s Agency Insight

From Jordan Ross @ 8 Figure Agency

November, 26th 2023

If you don't have an annual review process, there is a strong likelihood your talent will leave for a company that does

Here is how to build this process from scratch to become a world-class organization 

Preface:

The purpose of an annual review process is to:

1. Drive development for employees

2. Compare performance year over year

3. Define how employees are performing

4. Rank employees and decide if they will receive a raise or promotion

Here is how to build and execute this process

Weekly Insight

1- Gathering data & information

A company cannot effectively conduct an annual review process without leveraging data

There are 3 types of data that need to be collected for this process

• 360 Reviews

• Qualitative data

• Performance Data

Before diving into each one, it's critical that your business have core values.

These are not just words that are said in a nonchalant way

The best organizations leverage core values to define the standards of the business, provide feedback, coach employees, and give promotions and raises

Company values

Company values will be the cornerstone of your 360 reviews and qualitative data

When we leverage values as the base of feedback across the organization, it further deepens their importance to individuals, creates more buy-in, and creates a common language 

Some Amazon examples for core values:

• Ownership

• Earns Trust

• Bias for action

• Delivers Results

360 Reviews:

360 reviews stand for 360-degree reviews. This means that talent gets feedback from people at all levels around them to provide the most comprehensive assessment of their capabilities. 

At Amazon, individuals have a minimum amount of people they need to complete feedback on and receive feedback from. A fair number to aim for is 5-10 people

When sending out your 360 reviews (internally), the questions should be formatted in the following way:

A- Which values are strengths to this employee? 

(Have a drop-down menu or multi-select display here) 

B- Which values does the individual have the opportunity to improve on?

C- Please write out feedback on 2-3 values this employee displays strengths in:

In this section, have 3 large boxes that team members can write at length in

D- Please provide feedback on 2-3 values this employee displays opportunities in:

Qualitative data

Once the 360 feedback is completed, it is the job of each employee manager to review the data and create a plan to present it to the employee and to the leadership team

Include an internal section in the 360 review for the manager to write trends and provide their commentary is  highly suggested 

Here is a short example of what a manager can say:

Adam displays effective use of ownership & delivers results. Both clients and team members view him as a subject matter expert and can rely on him

Adam has the opportunity to develop his ability to earn trust more. He focuses too much on performance exclusively and does not have the deep felt respect of his peers. A handful even resent him due to his “arrogant” attitude. 

Performance Data

The final piece of data collection is quantitative data.

This can be easily identified if the org chart & expectations are leveraged appropriately.

What % of goals were hit/missed?

What % of KPIs were executed annually?

At Amazon, it is the job of the individual to aggregate this information, provide it to their manager, and then for the manager to review it & and add missing information that creates a holistic view of wins/opportunities 

Once all data is collected, we move on to determine if employees should receive a raise/promotion

2- Determining raise/promotion

This may be the most sensitive part of feedback. It's critical that this component is done fairly and consistently. 

The objective of this section should be (if your business is large enough) to group employees into 3 categories:

High performer (Top 10%)

Effective performer (Middle 80%)

Low performer (Bottom 10%)

To standardize promotion and raises, each grouping can qualify for a certain amount of raises:

High performer:10%-15%

Effective performer: 3%-9%

Low performer: 1.5%-3%

What is important in this section is, if your company is large enough, to stack rank employees against one another to know where everyone stands.

Leadership in the organization should conduct an annual performance meeting (1-4 hours) to review each employee

In this meeting, each manager should speak on all their direct reports, their specific perspective on them, and where they believe they should rank.

After each manager shares their belief in ranking, the aggregate group votes in favor or against 

The initial round of rankings are created from this vote

From there, when every team member is evaluated, the managers will do a final comb over to ensure there is a fair and consistent ranking (10:80:10; high performer, effective performer, low performer respectively.

Managers will then evaluate compensation plans, raises, and promotions to end the meeting

3-Conducting the 1 on 1

Now that the rankings are finalized, it is each manager's job to present the findings to their team in a 1 on 1 format

My recommendation here is to have the employee present their beliefs of themself first and then to have the manager share their angle.

Presenting specific feedback from the 360 review and the quantitative data in this section is a must as well as using the company's core values in their language.

The meeting should end with a specific development plan. The plan should review how the employee can improve and grow over the coming year. 

Create specific goals, targets, and KPIs for the employee to shoot for and then get tracked over the course of the year

If an employee is a bottom 10% performer, the manager must enrol the employee in either a professional development plan or a performance improvement plan.

PIPs commonly give employees 30 days to improve their performance

If team members are unable to meet standards, there is usually a separation of employment.

It is important for your organization to decide how they want to handle Dev plans and PIPs

4- Year end meeting

Typically, promotions are not shared amongst the organization until January

It is relevant to share these during the Q1 company all hands meeting 

Employees who are receiving promotions should hold off on telling peers and allow promotions to be reviewed during this meeting.

This is a LOT

But don’t worry, I’ll keep making content to support you.

If you need help setting this up in your organization, Book a Call Now, we can help get this set up

Killer Content (My favorite pieces of content from last week):

• Podcast: Ultimate: How Asa Burroughs Added $20,000 MRR to His Product Design Agency

• Long Form Youtube: How This Overseas Staffing Agency Added $63,000 MRR in Just 120 Days!

• Short Form Youtube: How Time Can Decide the Fate of Your Ideas?

Stay Happy

Stay Hungry,

Jordan Ross

CEO & Founder @ 8 Figure Agency

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