As most companies grow and develop, there comes a point in time when the human resources and management teams need to consider moving to Focal Point Reviews to effectively manage the overall performance management strategy and compensation process. Depending on the size of the organization this can be a daunting task, but the benefits outweigh the negatives by fostering enhanced interaction, goal alignment, employee growth and equitable pay practices.
Anniversary Date vs Focal Point
Reviewing your employees’ wages and giving raises are essential for attracting and retaining the best workers. Additionally, aligning performance reviews with the merit increase process ensures that you are fairly compensating your staff. The two most common timing methodologies for evaluating performance and compensation are anniversary based and focal point.
Anniversary Date Reviews are conducted in line with the employee’s date of hire. The interval between employee reviews and compensation increases are the same, but the date is unique for each employee. The manager can focus on one review instead of many.
Focal Point Reviews, sometimes referred to as Common Date Reviews, are conducted at the same time for all employees. Thus, managers are evaluating all employees against each other at the same time rather than piecemeal throughout the year. The Focal Point Review allows HR to monitor the overall process, provides management with budgetary control over salary increases and gives managers the ability to accurately evaluate everyone on the team.
Benefits of Focal Point Reviews
Focal Point Reviews have many benefits; they have become the preferred evaluation method for many organizations today.
For HR Teams
- Easier Coordination The human resources team can better plan and monitor the process when all employees are reviewed at the same time. Any changes to the process happen at the same time each year ensuring all employees are evaluated equally. HR can stay on top of the process and remind managers to complete the process on time.
- Better Compensation Alignment Most compensation teams use salary market data gathered at a specific time of the year. By coordinating the merit review process closer to the time the survey data was conducted, you ensure that increases are effectively aligned with the most recent data.
- More Robust Analytics When everyone in the organization is reviewed at the same time, HR can analyze the data for consistency and equity across various demographics.
For Executive Management
- Goal Alignment Management can use this time to align and communicate the company’s business goals.
- Budget Setting With Focal Point Reviews, management can set strict budgets for various types of compensation such as merit budgets, bonus pools or equity allocations. This in turn will give greater cost control.
- Streamlined Process Rather than remembering when each employee review is due, all employees are evaluated at the same time.
- Fair Evaluations This allows for better comparison of employees by using the same measures of success that the company is focused on at that time. Compensation is better aligned with performance and salary ranges.
- More Frequent Check-Ins Perhaps less obvious, the Focal Review process can free up managers to have more frequent personal check-ins with staff since staggered reviews are not taking up time all year long. This allows managers to help employees progress and adjust priorities throughout the year.
- Fair Compensation Compensation changes are based on accurate salary data and performance, not changing business cycles.
- Better Communication When individual performance is aligned with company objectives, it becomes much easier to communicate what is going well and where someone may need improvement. It also becomes an excellent opportunity to discuss the employee’s role and career development goals.
Proration and Eligibility
When allocating salary increases to employees who have not been employed with the organization for the full year, it is important that you allow for a pro-rated increase to be applied based on their hire date.
Similarly, you must establish strict rules for who is eligible for an increase. For example, an employee hired less than 3 months from the focal review period may be ineligible for an increase.
Best Time For The Focal Review Process
Choosing the best time for your Focal Review is an important decision. Consider the organization’s most important dates, such as fiscal year, seasonality of the business or reporting periods. Some, like fiscal year may drive when the focal point review must happen for bonuses and budgets, but you may want to avoid periods where your business is busiest if possible.
What’s Best For You?
The selection of the review cycle that best suits your company should be your primary objective. Taking into account the size and needs of your business will impact your decision. Moving from anniversary based reviews has a host of challenges and should be planned accordingly in order to be successful.
One way to ease the pain of moving to a focal point review is to choose a best-of-breed solution like TalentComp. No matter what industry you are in, TalentComp makes it simple to import performance data, and salary market data along with all your employee data to set budgets and guidance for managers to make informed decisions. Manage any type of compensation changes, then use TalentComp to communicate to your employees via compensation letters or Total Rewards Statements.