Effective performance appraisals are the key to team and individual performance and growth. When carried out effectively, performance appraisals offer positive benefits including improved motivation, better working relationships and the ability to undertake succession planning.
What are performance appraisals?
Performance appraisals provide a forum where employees can discuss their past performance and future development opportunities with their manager. They also open up a dialogue between manager and employee where team and business objectives can be discussed and linked to the employee’s personal goals.
During the appraisal, the employee may wish to request additional support or express an interest in future promotion opportunities. The manager can use this opportunity to consider whether their request is appropriate and identify any resources required to fulfil this.
On paper, performance appraisals appear vital to organisational success. But in recent years, the value of carrying out annual performance views has been subject to scrutiny, with many employers opting for more frequent, informal conversations regarding work performance. A study by i4CP found that only around 52% of all companies conduct annual performance appraisals. Furthermore, only 55% of employees would describe their employer’s performance appraisal process as effective.
Traditionally, performance appraisals include:
- A face-to-face meeting between the manager and staff member. This is used to discuss past performance and expectations for the future
- A review of any previously set objectives
- Setting new objectives for the employee to work towards over the next review period
- A written record of the discussions between manager and employee
Appraisals are often used in conjunction with other performance assessment tools, for example:
- Self-appraisal or personal evaluation - the employee is asked to answer questions relating to their own performance
- 360-degree appraisal - Feedback on the employee’s performance is sought from multiple sources, usually a colleague, direct report and non-direct manager or supervisor that the employee regularly works with. You can find out more about how to implement 360 feedback within your organisation here.
- Employee ratings - A standardised rating or grading system is used to assess against defined criteria such as competencies, behaviours and personal traits
- Assessment centres - A group of employees are asked to take part in a combination of exercises designed to find out more about their personality and working methods
Whichever performance management method your business chooses, the opportunity to exchange feedback with staff is invaluable and should remain an important priority.
What are the benefits of a performance appraisal?
Performance appraisals can be beneficial to both the employee and the organisation and when done correctly, they can provide the kind of feedback that is constructive to all the parties involved to perform better and develop better working relationships.
Here are some of the benefits of performance appraisals and reasons why organisations should place value in them:
- Creates career growth by giving employees the opportunity to express their professional development needs and plan a course of action for a long-term development of their role and moving within the organisation.
- Improves performance achieved by providing feedback and helping employees get motivated to work harder when their manager shares positive feedback. Appraisals are usually in line with bonuses or promotions, so this can be used to motivate for better performance.
- Increases employee engagement by giving the opportunity for the employee to be involved in their own evaluation resulting in a desire to stay within the company long-term. Once an employee can see how their actions affect company results or objectives, they are more likely to stay within the organisation for a longer period because they can see their own value.
- Identifying areas for further training and development as a performance review can show where there are weaknesses and address wider training needs for a team.
- Clarifies expectations from managers to employees at regular intervals. If the employee is underperforming or not doing their job to the standard expected, a performance appraisal is a good time to raise this as it can be done in a constructive way.
- Allows for conversations which usually wouldn’t be able to take place in a normal working environment or in the day. There are no distractions and managers are better able to provide assistance and feedback to specific issues and clear any problems that may otherwise be brewing.
- Evaluates goals by giving employers the tools to see if the employee has achieved the set goals and provide feedback as to what is required for the next period.
- Provides documentation on an employee's work performance over a specific time and see how they are developing within the organisation.
- Gaining insight into your workforce strengths and weaknesses in order to address potential opportunities as well as remediating any issues that could provide issues in the future.
- Strengthens team bonds by helping managers to align their priorities and brainstorm together. Peer reviews and recognition can help show employees how much they are valued.
- Resolving employee grievances by actively listening and acknowledging issues whilst also finding ways to solve issues that could be structural or personnel issues that need to be addressed.
- Informed succession planning
What makes an effective appraisal?
For a lot of people, an appraisal can feel like it either doesn’t achieve much or that in some work scenarios, it can equally feel like a criticism. For many, they can feel rather unpleasant or that an organisation is trying to catch them off guard.
This is what happens when you don’t communicate the benefits of an appraisal and show what they can achieve to help both themselves and the employer.
The strategy then has to become what does an effective appraisal look like? What do you need to do to create a system that gets employees to buy in but equally, works to help the organisation in identifying opportunities and threats.
The structure and outcomes of an effective appraisal, include the following;
- Effective and comprehensive coverage of employee performance
What has the employee achieved? What do they think they have achieved? What could they do better? What might their peers think are their strengths and weaknesses?
These are the types of questions you want to ask. They will help establish an overall view of an employee's performance or how to better shape it for improvement.
- Identification of next steps to improve and progress in their current role
What are the things that can be done better? What is required by the management team for the organisation to improve? What can be done to help the employee improve and develop in their role?
Getting an insight into what the future holds for both the organisation and the individual is essential to hit targets and get the organisation as a whole to work.
- Gain insight from the employee on their satisfaction with their role and performance
What is it that the employee is satisfied with in their role? What about their general performance? Are they achieving what they want to achieve or can they do more? Where is the career path for them?
By getting a better, clearer insight into these elements, the organisation can build a tailored program to address issues, ongoing concerns but equally, develop a training plan that can allow for the person to grow within the role and the business.
- Actionable next steps for both employees and managers to further the employee's performance
What has been decided? What are the timescales? How will it be evaluated? Understanding what is needed and how it can be measured gives everyone a fair opportunity to develop and grow in the business.
Why some people hate performance reviews and why they shouldn’t
Effective performance appraisals offer a useful way to motivate staff to achieve their personal objectives, measure performance against team goals and give praise. But for many, the thought of having to undergo (or indeed undertake) annual performance reviews fills them with dread. After all, the idea of an awkward, formal discussion about personal performance is unlikely to appeal to either party.
A recent study by Leadership IQ confirms that the feeling is mutual across the board - just 13% of managers and employees believe their organisation’s performance appraisal offers value. And when it comes to CEO’s, only 6% believe that the performance appraisal system within their organisation is useful.
Some of the key issues employees raised in relation to performance reviews included:
- Over 50% of respondents said their performance appraisal was “never” or “rarely” “open, honest and meaningful”. This suggests there are issues relating to the communication style adopted by the appraising manager.
- 40% of respondents said their leader “never” or “rarely” recognised their accomplishments. This suggests that managers are failing to offer thanks and praise for an employee’s contribution during the appraisal discussion.
- 36% of respondents said they “never” or “rarely” knew whether their performance was where it should be. This suggests that managers are not being specific about their expectations of staff during the performance review.
There are many reasons why managers hate performance appraisals, although in truth they are often linked to their own performance or management style. For example, a failure to set objectives to staff in the past could mean there is little tangible evidence for the manager to appraise at the annual review. Equally, if they are unapproachable, afraid of giving negative feedback or haven’t received the appropriate training to deliver effective employee performance reviews, this will have an impact on how positive they feel about the appraisal process.
What should a performance appraisal include?
When conducting a performance review, it is essential to think about a few key areas in order to make them beneficial to the employee and the organisation. A well structured performance review should include the following things;
Performance analysis
- Covering areas such as communication, teamwork, ability to meet targets, quality of work, attendance, reliability
- Think about the overall contribution to the organisation from the employee.
- Are they adding or taking away from achieving the key objectives of the organisation? What has to be improved in order to achieve the key objectives of the business?
Employee potential and career progression milestones
- Contribution to the company, employees aspirations within their current career path, etc
- Where do they see themselves in a year? Five years from now? What can be done to help facilitate that progress?
Employee areas of improvement
- Identification of new training opportunities, areas of general performance to improve, etc
- What has changed in the industry?
- What is needed to have a competitive advantage and workforce?
- What soft skills are required to develop more within the team?
Employee feedback
- Providing employees with the chance to share their views on their performance over the last period, and any other general feedback
- Give time for them to discuss these areas and issues.
- What can be done to improve all of these things and move the business forward.
8 tips for delivering effective performance appraisals
- Brush up on your appraisal skills - if you haven’t received any formal training on performance management, now is the time to request it. Even if you have, consider asking for a refresher to ensure you’re up to date on company policy. Consider asking your peers for some honest feedback on your management style as this could affect your ability to undertake effective appraisals.
- Preparation is key - arrange a private meeting venue with as few distractions as possible. Give the employee sufficient notice (two weeks is ideal) and an overview of the process in advance. If your organisation asks staff to complete a self-appraisal form, ensure this is issued well in advance of the meeting.
- Encourage a two-way, open discussion - ask the employee open questions relating to their performance. Offer positive feedback, thanks and praise for areas in which they have excelled. If they identify any areas for development, acknowledge these and steer the conversation towards ways in which these might be improved through training or additional support.
- Remember to listen - it is vital to actively listen and consider non-verbal cues such as body language. Don’t interrupt the employee when they are speaking, although you may wish to ask probing questions to clarify meaning. Before moving on to the next discussion point, take a moment to summarise the conversation and check mutual agreement and understanding of future expectations.
- Incorporate the 7 drivers of employee engagement into your discussion - this will enable staff to reflect openly on how they are feeling within the workplace. You could ask employees to answer the following questions using a Likert scale, for example 0 (never) to 5 (always) - this is a good way to track any changes.
Freedom - do they have the flexibility to choose and make decisions?
Clarity - are there clear goals and a purpose?
Challenge - do they have enjoyable and relevant work?
Growth - do they have opportunities to develop?
Recognition - are they receiving praise and appreciation?
Togetherness - is there cooperation, support and trust within the team?
Voice - are their ideas and opinions respected?
- Offer regular feedback - give staff the opportunity to discuss their performance on an ad-hoc basis - not just at their annual performance review. Take the opportunity to discuss performance both formally and informally, ensuring training and development are regularly offered when required.
Avoid “saving up” feedback for the performance appraisal. There should be no surprises at the annual review, so if you have concerns about an employee’s performance or behaviour you should raise the issue with them as soon as possible. When offering feedback, remember to give specific examples. If you have had cause to discuss a particular issue with the employee previously, it is important to discuss this as part of the formal performance review process. Equally, don’t be afraid to celebrate success outside of the formal review process.
- Ensure objectives are SMART - specific, measurable, achievable, realistic and time-bound. Make sure the employee is in agreement with all of these points before finalising the objective, as they may have a different view. Objectives should also be aligned to overall business goals so that employees can see where they fit into the ‘bigger picture’ and how they can make a positive contribution. Consider taking copies of your own personal objectives, team goals and the business priorities over the coming months and years so they can be considered as part of the objective-setting process.
- Document a record of the discussion (either electronic or paper-based) - a copy should be issued to the employee as soon as possible after the meeting. Offer them the opportunity to suggest any required changes once they have had time to reflect.
Start Conducting Effective Performance Appraisals Today
Traditionally, performance appraisals have tended to reflect on past performance, but it’s equally important to focus on the future.
An effective performance appraisal is a two-way, personalised conversation between appraiser and appraisee. It should incorporate:
- Feedback on the employee’s contribution to individual, team and corporate goals
- Setting SMART objectives for the upcoming review period
- Discussion on training needs and potential development opportunities for the future
Your organisation may opt to conduct annual performance appraisals, but it is important to ensure this is not the sole opportunity for staff to discuss their performance. Managers should strive to offer regular performance feedback throughout the year on an informal basis.
To avoid performance appraisals being based on the subjective opinion of one manager, consider collecting 360 degree feedback prior to the appraisal meeting. The Thomas 360 Degree Assessment quickly and easily enables people to gather performance feedback from their managers, colleagues, team members and customers. They can then compare this with their own perception of their work performance.
