A Simple Framework for Powerful Employee Evaluations

Welcome back to the Business Builder newsletter! In today’s issue, I’ll introduce you to the staff appraisal framework we use at my consulting firm.

Estimated read time: 3 minutes

Quarterly One-on-One Meetings

Regular feedback from managers is essential for effective employee development. Our appraisal process includes structured one-on-one meetings every quarter. Here’s how these are typically conducted:

• Annual Review: This is a formal, documented meeting that offers a comprehensive evaluation of the employee’s performance over the year.

• Quarterly Check-ins: These informal, verbal updates help track progress and address any immediate concerns, keeping employees on track.

• Off-Site Meetings: We hold these off-site to make the process feel normal and to remove any anxiety employees might have about being fired.

The 5-5-5 Framework

At the heart of our appraisal process is the 5-5-5 framework, which ensures a thorough evaluation of each employee’s performance.

1. 5 Core Values

We use the People Analyzer to assess how well employees align with our core values. Each value is scored with a plus (+) or minus (-). The number of core values can range from 3 to 5. The standard is that a person must align with at least three out of five core values, or with two and show moderate alignment (=) with a third if only three core values exist.

(Read more about the People Analyzer here.)

2. 5 Key Responsibilities

Each role comes with five key responsibilities. To ensure that the right person is in the right seat, we use the GWC tool (Gets it, Wants it, Capacity to do it) from EOS:

• Gets it: Do they understand all the ins and outs of the position?

• Wants it: Do they genuinely want to do the job?

• Capacity to do it: Do they have the mental, physical, time, and emotional capacity to perform the job effectively?

(Learn more about the GWC tool here.)

3. 5 Rocks

The final component of the 5-5-5 framework is reviewing progress on the company’s rocks — the key goals or projects set each quarter. While “5 Rocks” is used, the actual number can vary from 3 to 7 for simplicity. These rocks help align individual performance with the company’s strategic objectives, and progress on these rocks is documented in the annual review.

(Read more about the EOS rocks here.)

The 3-Strikes Policy

To address consistent underperformance, we use a straightforward 3-strikes policy:

• First Review: The manager provides feedback on areas for improvement.

• Second Review: If there’s no improvement, a second warning is given.

• Third Review: If there’s still no change, employment is terminated.

Each area of improvement must be supported by 3 specific examples. For instance, if an employee is consistently late, the manager should cite 3 instances to illustrate the pattern. This approach ensures the feedback is concrete and defensible.

I’ll continue sharing more actionable insights to help improve your business processes.

Stay tuned for next week’s issue.