The best peer reviews get staff members to pull together -- as Risk International can testify

Want to spot the stars and the slackers in your business? Don't ask your managers -- ask your employees. Coworkers often know more about their peers' strengths and weaknesses than supervisors do, and letting employees review one another is a great way for management to share in that knowledge.

Done correctly, peer reviews bring a host of other advantages. They generate more candid feedback, says one human-resources (HR) expert. Whereas supervisors tend to be Pollyannas, employees tell it like it is. "They give you the full range of good things, OK things, and bad things," he claims. Peer reviews can also help foster team building and help put HR issues -- such as skills improvement -- on the front burner.

The concept isn't new. Recently, businesses large and small have been putting it to work. The military has been using a similar technique for decades, partly because it builds camaraderie. But the hard part is knowing how to do it right.

One small company whose peer reviews really work is Risk International, a provider of risk-management services based in Akron. (The nine-year-old, $4-million company identifies liability exposures and liaises with insurance providers for Fortune 500 companies.) Chief executive David Hatch set up the reviews in 1990 as part of an overall annual appraisal process because, he says, "I wanted the employees to understand how their peers saw them and to learn that they are all accountable to each other. I also wanted them to have a chance to share input and to behave as team players rather than always looking good for the boss at the expense of the organization."

Risk International's peer reviews accomplish that with evaluation forms that pinpoint the attributes -- from personal integrity to the ability to minimize expenses -- that Hatch believes the members of a winning team should possess. (The criteria are equally weighted.)

The process works like this: Once a year, each of the company's 47 employees gets a packet of forms with a list of reviewees' names. At first employees reviewed everyone. But 18 months ago the form was rejiggered to allow them to rate only those they work with directly -- from 3 to 10 per reviewer. Anonymity is key, so the completed forms travel in a sealed envelope to a temporary worker, who inputs the data. When the results are in, each reviewee meets with his or her supervisor to discuss job strengths and create a plan to improve on areas that need work.

Much to Hatch's surprise, not everyone leaped at the chance to rate a workmate. Some felt threatened; others worried about confidentiality. Says Vera Baker, a research analyst, "I was real apprehensive that people would take out their petty disagreements with you in the peer review."

Baker doesn't think that now. She's one of many who like having a place to express their views. Says claim manager Adam Cook, "Everybody gets to state their opinion, good or bad. It's clear to employees that their opinions matter." Last year's reviews yielded concerns from employees that they were not kept adequately informed about the business's health. So Hatch launched monthly information-sharing get-togethers and biannual meetings at which everyone reviews the company's business plan.

Interdepartmental relations are also improving. The accounts-receivable staff, Hatch discovered, is markedly more responsive and willing to help than ever before. And the quietly competent workers -- sometimes ignored by bosses looking for stars -- are recognized.

With a staff that's outgrown its space four times since Risk International's founding, Hatch believes that giving employees their say has helped hold the company together. But creating a top-notch peer review hasn't been easy. Says Hatch, "To make all this feedback meaningful, you have to review what is said, compare it with the past, and come up with a plan. The supervisor has to be committed to sharing the results in a constructive way."

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Sample Peer-Review form: for all questions, answers are given on a scale of one to four (with one being highest), or "unknown"

Non-Managerial Performance Review - 1994

Note: As our company expands, there may be co-workers with whom you have little or no contact on a day-to-day basis. for these individuals, there may be questions you are not sure how to answer, therefore, use "Unknown" if you can't evaluate a competency.

1. Company Mission and Values

- Demonstrates high ethical standards and personal integrity

2. Customer Service and Quality Control

- Consistently sets and meets high standards of quality, gets the job done right the first time

- Responds quickly and effectively to clients' needs, goes the extra mile, exceeds clients' expectations

- Constantly looks for ways to add value to our services and/or products

- Supports the Quality/Productivity service team

3. Problem Solving/Judgment

- Sets specific, challenging and achievable goals and action plans

- Provides a logical and effective course of action for himself/herself to see that established goals are achieved

- Exercises sound judgment

- Visualizes and anticipates new problems and develops practical solutions

- Analyzes problems accurately; properly distinguishes their component parts and their separate relationship to the whole

4. Production

- Consistently completes expected workload on time

- Exceeds normal requirements when necessary

- Accuracy, thoroughness and effectiveness to not suffer as a result of completing work on time

5. Work Style

- Perseveres with enthusiasm

- Adjusts to new situations and deals well with ambiguity and stress

- Is a self-starter, takes appropriate independent action, finds solutions

- Supports change

6. Resource Management

- Seeks better ways to complete tasks

- Vigilant in minimizing expenses

- Effectively uses computer systems and other technologies

- Supports the Human Resource service team

- Supports the Information Systems service team

- Arranges work for most efficient handling

7. Communications Skills

- Identifies the right issues to be communicate, the appropriate audience, vehicle and time

- Writes clear well organized, logically developed memos, reduces issues to concise simple terms adapts to audience

- Makes effective and persuasive presentations, both oral and written

- Interacts effectively at all levels within the company

- Keeps others informed as appropriate

8. Business Organization Knowledge

- Develops competence in one or more professional discipline(s) and is increasingly recognized and sought by others

Understands the company's mission, products and services, organization and major information systems

- Understands the company's culture (e.g., values, people, relationships and procedures) and knows how to get things done within the company

9. Teamwork

- Develops effective working relationships with peers and superiors

- Invites information, constructive criticism and cooperation from others

- Positive influence with co-workers

10. Marketing

- Effectively shares information about the company with others

- Supports new business

- Develops and implements creative ways to market our services and/or products

- Supports the Marketing service team

11. Excellence Criteria

- Personal accountability

- Attention to detail

- Assessment

- Teachablilty

- Commitment to personal growth

- Risk taker

- Positive outlook

- Value driven

David Hatch describes his peer-review form:
There are four numerical categories. "Four" is unacceptable. "Three" means needs improvement; "two" is satisfactory; and "one" shows strength. Employees are told how they compare. The competency averages are compared from year to year, so employees can see their progress over time.

There's quite a number of "unknown" responses. If the reviewers don't know how a colleague has performed, I don't want them to guess. Our concern was that if we didn't explicitly tell them to circle an unknown in that event, they might feel forced to circle a number.

We want to evaluate whether the employees perform in ethical ways. A number one kind of person is honest. If a mistake is made on a project, the person owns up to it.

We have insurance renewals that need to be completed on time, or else there's a lapse in coverage. If the deadlines aren't met, it suggests that we don't have our act together. Once, an employee even broke into a roofless, burned-out barn in freezing, wet weather to complete a project because the client thought there was some documentation in there.

Employees have to be able to evaluate what coverage is triggered by which claim suits. It's a pretty complex process, so they have to be able to think logically.

Last time we moved we had just hired an employee to take over a lot of our administration. There are hundreds of details to address during a move, and she was our port in the storm through the whole thing.

One employee was surprised by what the review pointed out. It said she wasn't flexible with change. We had a new office, she had gone through a number of supervisors, and she was getting fed up, and it showed in her evaluation. She hadn't been aware of it. Now she goes with the flow more.

A "three" ["Interacts effecively at all levels..."] could mean that this person periodically displays impatience with others who are learning. Maybe the person is being short with an individual or giving a look of exasperation.

Our capital is our intellect. So it's real important for an employee to be known as an expert in certain industry niches. I want the business community to think of our employees and Risk International as being on the leading edge of learning, identifying new issues, and coming up with innovative ways to solve problems.

Much of the company is organized into teams. We need to be able to view others not as obstacles or competitors but as cooperative partners.

One employee's job is to provide claims-status reports, which can be fairly complex. The individual recognized she was not writing them as well as she could. She agreed to take some courses and work with her supervisor. She writes very effectively today.