People first, cows second.

Instead of spending money to upgrade your cows first, consider spending some time and energy to help improve your employees' performance. That's because good employees can help you exceed goals when milking average cows, while poor employees will hold you back.

General manager David Sumrall, of Aurora Dairy Corporation in Long-mont, Colo., believes that finding the right people to fill jobs is only the first step in running a successful dairy. As a manager, he says, "when I hire someone, my job is just beginning."

Part of that job involves evaluating employees on an on-going basis. Yet, that's the aspect of employee management that people are most likely to overlook.

"I've never run into an employee who doesn't want to know how he is doing, or what he could do to improve," explains Sumrall. Employee evaluations, now often called performance appraisals, are the one time when an employee has his manager's undivided attention. Coaching and feedback throughout the year is important, too, but only when you sit down for a one-on-one evaluation does that employee know that his performance is the most important thing on your mind.

Evaluations, when done correctly, help build strong relationships and success-oriented team members. Here's how to conduct a performance appraisal interview successfully.

Step 1. Relax, and set the tone.
Similar to how you would treat any other business associate, welcome the employee in and ask him to have a seat and summarize what you'll be discussing today. For example, "Come in Jim and have a seat. As you know, we're here today to conduct your performance appraisal. We'll evaluate your performance over the last six months, discuss your self-evaluation and then conclude by setting goals. Our discussions will probably take an hour or less. Do you have any questions before we get started?"

Step 2. Ask for the employee's input.
Start by asking the employee to evaluate his own job performance. Ask him to summarize his accomplishments and to list any areas where he'd like to improve, or gain additional training. If you had the employee do a self-evaluation form prior to the meeting, now's the time to get it out.

As a manager, your job at this point is to listen and take notes – written or mental. Give the employee your full attention, advises Tom Maloney, extension human resource management specialist at Cornell University. Show your interest by nodding agreement or encouraging him to continue without interjecting your thoughts. By listening attentively, managers often discover areas of concern they were not aware of, or gain a different perspective on a problem.

Step 3. Evaluate the employee's performance.
Once the employee has finished his comments, it's your turn. If you had the employee do a self-evaluation, then you should respond by sharing your comments for each category. Make sure your comments are performance-related and not personal, says Bernie Erven, professor of agricultural economics at Ohio State Univer-sity. For example, if you're dealing with an employee who is often late, don't say "you're a slacker" – that's personal. Instead, tell him that being late throws off the milking schedule, is frustrating to other employees and disrupts the overall routine.

Step 4. Be sure the employee understands.
When sharing a concern, be sure the employee heard and understood what you intended to convey, says Erven. When a person hears something negative about himself, it's easy to get angry or defensive and start thinking what his response will be – instead of listening. When this occurs, the person often doesn't hear the complete message. To avoid misunderstandings, ask the employee to summarize what he understood you to have just said. If he got the message as intended, great. If not, it gives you a chance to correct it before discussing ideas for how to overcome the problem.

Step 5. Resolve any differences of opinion.
When citing performance problems, be sure to back them up with specific examples. If your calf manager says his performance has been good, and you disagree, then you need to use specific examples – based on facts – to show the employee why you disagree. For example, "The calf mortality rate has risen to 10 percent. That's 6 percent above our average calf death loss and it is out of our acceptable range. What do you think the reasons are for the increase?" Chances are, the calf manager knows the mortality rate is up, but may have felt that it was beyond his control. By defining the problem and then asking for the employee's input to diagnose it and fix it, you start to get the employee more involved with solving the problem instead of dwelling on where to place blame.

Gaining the employee's input for correcting a problem makes him part of the solution, stresses Sumrall. And, you may discover that the employee has already thought about this problem and just never approached you about how to correct it because the opportunity to discuss it never arose.

Step 6. Agree to a final performance rating.
In discussing the areas where you disagreed, remember that you may need to make compromises. For example, in the case of the calf manager, if it turns out that the calf mortality rate increased, in part, because another employee didn't always clean and sanitize the calf pens between animals, you may need to consider altering your rating. Whatever the final rating written down, both parties must understand the basis for it.

Step 7. Set goals for the next six months.
Now that you've discussed all the successes and constructive criticisms regarding the employee's performance, you can focus on building for the future. Always try to have at least one area that you would like the employee to work on; otherwise, the evaluation process can lose credibility if everything is always "fine."

If the employee has done a great job and you honestly can't think of an area that needs improving, then ask the employee, "How can this farm business improve with your input or improvement?" That opens the door for the employee to bring up areas he may be interested in learning more about, or for him to share ideas he'd like to try out for improving his job and subsequent performance of his area. If you agree to let him work in those particular areas, first ask the employee to research the idea further and report back to you. Whatever goals or plan of action you agree to, write them down. Put one copy in the employee's file and give another copy to him.

Before you meet

In order to have a good performance appraisal interview, you must first prepare. Use these steps to get organized.

1. Make an appointment with the employee to meet at a specific time.

2. Select a place to meet that is neutral ground where you will not be interrupted. If you must use your office, do not accept telephone calls and set two chairs angled toward each other, or next to a table where you will both be on equal ground.

3. If you want your employees to do a self-evaluation, give them a one-week notice to complete the form or to write their comments on a sheet of paper.

4. Review your notes on the employee's past performance. If you haven't been placing performance notes in employee files, you might want to start. When putting notes into an employee's file, stick to the facts. For example, "George was late two times this week – once because of car trouble, the other because he overslept." Avoid writing statements such as "George is so irresponsible. He was late two times again this week."

5. Compare your performance notes to the employee's job description, or to his past evaluation which included a list of things on which to improve. If the employee is new, ask yourself if he has completed all of the required training or if any section of training needs to be reviewed.

Resources to check out
To learn more about evaluating employees, then head to your local library or bookstore and look for these books:

"Managing Human Resources in Small & Mid-Sized Companies," by Diane Arthur.

"How to Improve Performance Through Appraisal and Coaching," by Donald L. Kirkpatrick.