Performance Appraisals: “Fine Tuning” Your Employees

How to Make the “Hard” Talk Easy

By: Chuck Sujansky

You know that sinking feeling! Your boss casually mentions that “it’s time for your annual performance review” and sets a date and time for that discussion. On most employees’ list of unpleasant experiences the annual performance review must rank somewhere near the bottom, just ahead of root canals and tax audits! But it doesn’t have to be that way.

Dealerships couldn’t function without performance standards for their vehicles. The National Highway Traffic Safety Administration determines safety rules for vehicles. The US Environmental Protection Agency sets standards for pollution. And Corporate Average Fuel Economy (CAFE) regulations set the standards for engine efficiency and low fuel consumption. Yet too often organizations in the automotive industry, particularly dealers, fail to set standards of performance for their employees. As management expert Peter Drucker pointed out, “You can’t improve what you can’t measure.”

That Dreaded Conversation

The performance review is a valuable process that can clarify expectations, establish goals and prevent problems from getting out of hand. But the reason it causes so much dread – probably as much for reviewing managers as for employees – is because it’s conducted so badly by so many people. You’d be hard pressed to find an employee who didn’t have a performance review “horror story.”

Why are performance appraisals so dreaded by employees and managers alike? For one thing many employees fear being judged and criticized. Too often the discussion seems to focus solely upon the employee’s failings or inadequacies. And those employee fears may be justified if the manager bases the discussion on a worker’s personality instead of his or her actual performance on the job. Plus, when the manager’s expectations for the employee are unclear (or unexpressed) the discussion automatically seems unfair to the worker.

In many cases the problem is a lack of clear and objective means of measuring the employees’ performance. In that situation the discussion becomes entirely subjective and seems totally unfair to the employee. Too often employees harbor negative feelings about performance appraisals because they associate them with criticism, demotions, lost opportunities and even lost money (should they fail to receive a raise).

The concept of rewarding employees for performance through raises and bonuses seems logical on the face of it, but unless the employees are commissioned sales representatives it can be difficult to measure their performance. Yet, while it may be more challenging to measure employee performance on the service side of a dealership, it’s well worth the extra effort.

Measuring Employee Performance by Department

The performance of employees within the F&I Department could be measured in terms of Gross profit per retail unit (new and used), extended service contracts sold, lease penetration or total F&I gross profit (among others). For sales personnel the metrics could include the number of units sold, the number of demos, the closing ratio of ups to closed deals, the number of appointments scheduled, and wholesale profit/loss or Internet sales leads closed.

In the parts department measureable performance could consider calculations like wholesale parts sales, counter sales, repair order sales, and gross profit margins, among others. In the service department employee performance could be calculated by measuring

For the service department reviewing managers can take into consideration technicians’ flat rate hours produced or clock hours worked, the hours per repair order by advisor, the number of appointments scheduled or the number of carryovers.

Dealerships typically track metrics like these, although not always in such detail per employee. But these variables are “track-able” behaviors and measures that can turn an employee’s performance review into a productive, informative discussion. While it’s important to track performance by the entire department, discussing an individual’s track record is the most effective way to improve individual efforts and sustain overall growth.

How Not to Conduct a Performance Appraisal

At all costs managers should avoid the tendency to base performance evaluations solely upon personal characteristics. It’s too tempting for managers to:

  • Base reviews on the employee’s personality instead of his or her performance.
    “Your not a hard worker – or – you’re not a team player!”
  • Avoid describing his or her specific expectations and standards.
    “You just need to work harder!”
  • Speak in generalities and abstractions.
    “you’re too introverted” or “you’re not aggressive enough”
  • Gloss over an employee’s real problems.
    “You’re still new here. You’ll catch on sooner or later”
  • Compare employees with each other.
    “Bill used to be just like you, but look at him now.”


An Organizational Tool

The performance appraisals can be so much more than just an excuse to critique employees once a year, or used as a justification for giving (or withholding) pay increases. Employee performance appraisals provide managers with the tools to make a powerful impact on their organization. Specifically, managers should consider the following points:

  1. Annual appraisals should not contain any surprises – managers should provide feedback on a regular basis.
  2. The employee’s goals should be made clear.
  3. Appraisal meetings should be a chance to clarify and modify goals or standards.
  4. Appraisals should include a plan for the next review period.
  5. The manager can take the opportunity to do some coaching.
  6. And perhaps most important … document, document, document!

For Additional Information

For more details about the manager’s roles and functions within performance appraisals, readers may order the eBook From Renter To Owner: Performance Reviews That Transform Employee Attitudes by Dr. Joanne G. Sujansky (a KEYGroup publications) by visiting Select the “Products” option.