Your HR office is your organization's authority on what you should do and say in employee performance reviews. But it may be that - with HR's approval - you can customize your reviews to specific credit and collection performance. We asked George Huyler, who is vice president, Human Resources, of Management Adjustment Bureau, Inc. (Buffalo, New York), and a recognized expert on credit and collection staffing issues, for his advice. As we expected, Huyler began by emphasizing that the key to getting the most out of performance reviews is preparing for them.

"The most unfair and uncomfortable reviews," he says, "tend to be those in which the supervisor or manager failed to take the time and follow the steps to prepare in a thorough way." Beyond thorough preparation, Huyler offers these six suggestions:

1. Maintain a file of "kudos and bruises." "A common problem managers have when conducting performance reviews is thinking primarily of how the collectors have behaved during the past few days just before the review," he explains. This "recency effect" often provides a very biased and narrow view of employee behavior over the past year. "If they did something great or something wrong a day or two before a review, that can have an effect on the rating you give them for the whole year."

   To eliminate this problem, Huyler maintains what he calls a file of "kudos and bruises" over the course of the year. Here's how it works:

   • When an employee does something particularly positive, it can generate a formal recognition event. This information goes in the employee's file so that Huyler will have access to it as he is planning that employee's annual review.
   • Conversely, when an employee does something particularly negative, it can generate a progressive discipline meeting. This, too, is filed in the employee's file.
   • However, Huyler keeps track of other behaviors employees engage in - behaviors that are positive and negative, but not so much so that they warrant either formal recognition or progressive discipline. He records these events on slips of paper and also files them in the employees' personal files.

   When it is time for a review, Huyler has immediate access to a year's worth of notes related to positive and negative behaviors that he can use to create his review and to discuss with the employee individually.

2. Schedule a specific time and place for the review. Tell the collector when and where the review will take place. This gives the collector time to make a list of any questions, problems, concerns, or opportunities he or she may want to discuss during the session. "It allows the employee time to adequately prepare," explains Huyler.

   Should you encourage collectors to review themselves prior to the session, and combine that perspective with yours? Huyler is familiar with this concept, which many other companies practice. While he believes it can have benefits, he cautions managers who want to consider using it.

   "From what I've seen, some managers allow employees to evaluate themselves as a way to get out of developing their ownevaluations of their employees," he cautions. In sum, if you plan to ask employees to evaluate themselves, don't short-change the employee. Spend just as much time developing your own evaluation as you would if the employee were not evaluating himself or herself.

3. Don't ignore unsatisfactory performance. Using what is called the "central tendency effect," many managers tend to rate all their employees about equally (usually "slightly above average," with a few "above average" and a few "average").

   If you want performance reviews to have real meaning, according to Huyler, you need to take into account any and all actual and significant differences among collectors. Furthermore, if you are concerned that you might have to terminate an employee at some point in the future, an "acceptable" performance review may be an important document for that employee in bringing a wrongful termination suit in court.

   "You're doing no one a favor by ignoring problems during a performance review," argues Huyler. "You don't have to 'kill' a person during the discussion, but you do need to identify specific problems and agree on some ways to solve them."

4. Isolate and identify specific events and behaviors. Generalizations have little or no place in performance evaluations. You want to be able to back up each and every statement and rating with specific incidents to which you can refer. This serves at least two purposes:
   • It helps the collector understand that you are really providing a fair review.
   • It helps you overcome the tendency to generalize, which may be inaccurate. "Some employees give the impression of being very efficient and fast workers," says Huyler. "Others give the impression of being inefficient and slow. Yet, with some investigation into details and actual measurements, you may find out that they are actually equal performers. The quantity and quality of their work may be exactly the same."

5. Prepare for the next review. The time to prepare for the next performance review is during the current review. "A good performance review focuses as much on the future as it does the past or more so," suggests Huyler. "That is, it should report on the past, but primarily be a guidepost for the future."

   Huyler recommends setting specific performance objectives for the collector for the coming year, broken down quarterly if possible and and stated in meaningful terms. "Always start performance objectives with verbs--such as 'prepare,' 'assess,' 'implement.' You might, for example, set an objective to 'Assess some new skip-tracing tools by the end of the first quarter that we might use to take the place of the costly one we currently use.'"

6. Schedule a follow-up. It is your responsibility to provide an accurate and comprehensive performance review. It is then the collector's responsibility to begin carrying out the recommendations and goals to which you both agreed. However, it is then your responsibility to schedule a follow-up session (roughly two months later) to discuss progress and any roadblocks the collector might be experiencing related to the projects assigned, as well as to assess improvement n any problems areas that were discussed.

Editor's Note: The above article originally appeared in the Credit & Collection Manager's Letter, published by Prentice Hall's Bureau of Business Practices, which Credit Today purchased in 2006.