Those who remember the former iconic Mayor of New York, Ed Koch, surely remember his signature catch phrase, “How’m I doing?”
It was part rhetorical question and part genuine inquiry. Human nature is such that we want and in fact, require, feedback.
With it, we feel empowered and productive. Without it, we feel lost, isolated and directionless.
Without feedback or a proper performance review process, an advisory firm may not be getting the best from its employees.
In order for a review process to be effective, it needs to be structured, regular and properly communicated. The feedback has to be balanced between positive evaluation and areas for development.
Without positive feedback, the employee will feel dejected, unappreciated and unmotivated. Without developmental feedback the employee will feel as if little time was put into preparing a thoughtful and honest assessment.
No one is perfect (or so my wife keeps telling me), and most good employees want to improve and look to their bosses for that feedback.
How a firm implements the right review process is dependent on several factors, including the number of employees, the compensation structure, the firm’s goals and its culture.
If it is just one principle and up to two staff members, a semi-annual review that is a bit more informal makes sense. This review should focus on how the employee performs the job; the employee’s attitude in the office and with clients; and how the employee contributes to the growth of the company.
Having the employee complete a self-assessment has tremendous value as well.
For firms with more than three and up to 10 staff members, the inter-personal dynamics begin to change, suggesting a different process. In this case, a modified 360 review could be just the ticket.
This approach requires the employee to do a self-assessment based on criteria established by the head of the firm; an assessment of the company, which helps provide feedback on how the company is doing; and an assessment of co-workers. A modified 360 review allows firms to root out issues between employees before they become detrimental to the culture of the firm.
For larger companies with more than 10 employees, a similar 360 review process should be employed, though it may make sense to bring in an outsider to conduct the reviews. Remember that the larger the company, the greater the challenge to maintain the culture and keep all the employees aligned, making a structured review process even more important.
Ed Friedman is director of strategic relationships at Dynasty Financial Partners in New York.
This story is part of a 30-day series on how to prosper as an advisor.