Here’s How an Agency Can Make Its Staff Performance Reviews Less Arbitrary

The Media Kitchen created transparency and an even playing field

Two years ago, we weren't able to give everyone at The Media Kitchen a meaningful year-end bonus, which was always our tradition. I had to decide if I wanted to give a few people a good bonus or everyone a token. I decided to give a few people a good bonus, and I decided that the people who contributed most to revenue would be the beneficiaries. Those individuals were not surprisingly the most senior staffers and included the three highest-ranking job titles: group director, associate director and senior strategist. The lowest two levels, strategist and associate strategist, would not get bonuses.

Barry Lowenthal

While this thinking is fairly typical when prioritizing staff and often reflects the way bonuses are awarded in most companies, I took it one step further and managed to put my foot in my mouth, which we'll discuss in a second. But that experience led us to become incredibly transparent in how we award bonuses and salaries, review staffers, and even provide feedback.

We went from a process that was fairly opaque to one that provides staff with data on their overall performance around 10 criteria that everyone is evaluated against. Now every staffer is fully aware how they measure up and why.

But let's rewind a bit to when I decided to only give bonuses to the top three levels. At the time, I decided it was important to gather the bottom two levels together and explain my reasoning. I figured they'd eventually learn they weren't going to get a bonus, so I might as well tell them my rationale directly. It's incredible how quickly word spreads in an agency, and it's remarkable how easily millennials talk about how much they're earning. I'm a Gen Xer, and we never told anyone our salaries.

So, in this meeting, I explained that I didn't have enough money to go around, and I decided to give a bonus to those people who were most closely connected to driving revenue, the most important people in the agency and the most important people to me, the agency president. Since the bottom two levels were not as close to revenue, they were less important to me and therefore were not going to get a bonus. It's easy to look back on that statement and see where I made a mistake. No one likes being told they are less important than someone else even if they know they earn less than their colleagues and are less senior.

I went on to explain that not everyone contributes equally in an organization, and those people who contribute the most are being awarded. Again, while this may all be true, in the absence of clear performance criteria, which we didn't have, people felt like they didn't know what they needed to do to become one of the individuals who are "most closely connected to revenue."

The junior staffers wanted to know what they could do, apart from aging, to earn a bonus.

I thought I was being an enlightened leader by bringing people together to have a hard conversation about priorities and money, and I thought I was brave to address conflict head-on. Instead, I made people feel like they weren't important.

This experience encouraged five brave junior staffers to sit me down and ask me what it takes to get ahead at The Media Kitchen. They wanted to know how raises were decided and how star performers are rewarded.

First, I described the process we go through for determining raises. I explained that at the start of every year, we figure out how much money the agency has to generate to deliver its growth targets. The difference between our current revenue and our revenue goal is called our "blue sky," which is achieved either through winning new business or growing existing business (i.e., increasing the fees we're paid by clients).

The revenue goal includes expenses and profits. Salaries are the biggest expense for an agency, so the more we pay our staff, the more revenue we have to generate. Given that we operate in a very competitive business climate, there is always pressure to give out smaller raises. Our finance team initially recommends a raise pool, which I can allocate as I see fit—it's my P&L to manage. Typically, I review everyone who is up for a raise in a given year and award raises based on how much it would cost to replace each individual, their reputation and the individual's past performance.

Past performance is described in an annual written qualitative performance assessment prepared by managers with input from the entire team. Inevitably, the raise pool handed down from finance and my raise wish list are very different, and I work with finance to find a middle ground that doesn't put too much pressure on our overall revenue targets and still satisfies the staff.