Regular performance appraisals can significantly improve business performance by identifying the strengths and weaknesses of each employee and motivating them to improve their skills and achieve more challenging goals.
To successfully achieve these outcomes, it’s essential to use a system that fairly and accurately measures performance and to deliver feedback in a way that avoids confrontation and inspires the person to make any necessary improvements.
The Purpose of Appraisal
The main purposes of appraisal are: (a) to evaluate performance and provide feedback and (b) to identify training and development needs (c) to create an action plan, including development and performance targets.
Appraisals usually involve some form of rating scale, where the lowest rating means the required standard has not been met and the highest score indicates that performance exceeds expectations. For example, in a 1-3 rating system, the ratings might be defined as follows:
3 - Consistently delivers excellent work and does more than required in the job.
2 - Fully meets expectations and shows potential for additional responsibility.
1 - Performance does not meet required standards. Requires close supervision.
It’s important to ensure that all those involved in the appraisal process apply the ratings consistently.
The results method measures whether a person has achieved specific goals or targets which are important for their role. For example, a car salesperson might have a target of selling 30 cars per month. The targets are set at the beginning of the appraisal period, giving the employee greater clarity about what they need to achieve and providing feedback on actual results.
A consultative approach to the goal setting process is usually more successful, with managers and team members agreeing on challenging, yet achievable targets.
Attitudes and Behaviours
In addition to achieving results, high performing people demonstrate the right attitudes and behaviours for their role. For example, a salesperson needs great customer service skills to trouble-shoot any problems relating to a sale and generate ongoing business from that customer. A rating system for attitudes and behaviours can be developed by describing the behaviour that matches each rating. For example, a rating system for customer service skills might look like the following:
3 (Exceeds expectations)
Makes an exceptional effort to keep customers satisfied. Works long hours to fix problems.
2 (Meets expectations)
Gives friendly, cheerful service and corrects problems promptly.
1 (Improvement required)
Gives the minimal required service. Reacts defensively to customer complaints.
Some companies use a standard appraisal form which rates everyone on the same characteristics or traits. A disadvantage of this approach is that some traits may not be relevant for all jobs. People are less motivated by feedback that is not relevant to their role.
Some traits apply to most jobs, for example:
- Meeting deadlines
- Quality standards
- Technical skills
Other traits are more relevant for some jobs than they are for others. Some examples are:
Designer: Innovation and creativity
Accountant: Analytical skills
Secretary: Efficiency and attention to detail
When setting up an appraisal system, it’s important to ensure that the most important aspects of performance are being measured for each role so that all everyone receives relevant and meaningful feedback.
For an example of a performance appraisal form, please go to the Resources page of the Peoplekind website.
One of the most challenging aspects of carrying out performance appraisals is talking to people about areas where improvement is required. If a supervisor confronts a team member bluntly with criticism about their work, it's likely that person will become defensive and will not acknowledge that any problems exist. For example:
“Your attitude to customer service is not good enough. You’ll have to improve it.”
A more effective approach would be fore, the supervisor to create a discussion with the person, using objective evidence and examples, and encouraging them to identify their own areas for improvement. A person is more likely to take ownership of a problem that they’ve identified themselves and will be motivated to take action. It’s essential that any negative feedback is supported by specific and clear examples. For example:
“We’ve received 10 customer complaints about your work in the last 6 months. What can you tell me about this?”
The following steps can be taken to ensure that supervisors have the right skills and attitude to make the appraisal process successful:
- Provide training in evaluating performance and delivering feedback.
- Reward supervisors for improving the performance of their staff.
Key Steps to Successful Appraisals
An effective appraisal system will develop and motivate people to produce the best work they possibly can and identify and resolve performance problems early on. To achieve these results, the following steps are necessary:
1. Implement an appraisal system that measures relevant aspects of performance for each role.
2. Create an environment where people can talk openly and honestly about their performance.
3. Set goals which are specific, challenging and agreed to by team members.
4. Ensure that supervisors are knowledgeable about their team members' roles and performance and comfortable with the appraisal process.
5. Provide regular on-the-job feedback to reinforce goals set in the annual appraisal meeting.