Hi there, welcome back to our blog on performance management. Last time we discussed an overview of performance management, which briefly touched upon performance appraisals. This week we will delve deeper looking at performance appraisals by detailing exactly what an appraisal is and the keys to creating an effective performance appraisal for your organization.
An organization’s success is built on the people within it, and the better the employees are managed to achieve the goals of the organization, the better the chance of success. This is what performance appraisals can help accomplish.
An Overview
Performance appraisals, also known as performance evaluations, are periodic reviews of employee performance in relation to their contribution to an organization’s set goals and objectives for that time period. Performance management then involves aligning work activities and rewards with employee needs and values.
A performance appraisal measures and gathers information on individual employee behavior and skills in order to help employees improve their performance. It also involves providing employees with discretion over how they do their work, while giving adequate training and resources so that they feel confident in their ability to perform well. Appraisals are useful records of performance, which can later justify decisions such as promotion and firing. This information will also support Human Resources as they make decisions.
Appraisals are a central part of the performance management process. Appraisals typically occur once or twice a year in line with the performance management process. Think of appraisals as a cycle, consisting of assessment, performance, development, planning, and review, where each process affects the other.
Two Types of Performance Appraisals
Examples of performance appraisal systems:
- Balanced Scorecard is a strategic method that divides an organization’s objectives into four categories: financial, customer, operational, and people. The objectives will be listed under each category and will give the organization and employees a visible guide on performance goals. It ties objectives straight to the organization’s vision and forces managers to really think about performance management.
- 360 degree feedback is another type of strategy that is based upon providing employees with confidential, private, and anonymous feedback from managers and coworkers. Around eight to twelve co workers will give feedback about the employee’s performance through an anonymous feedback form that contains questions on workplace competencies. Questions will be asked through a rated scale and written comments can be added.
Keys for Successful Performance Appraisals
Setting Goals
Successful performance appraisals are a joint partnership between the manager and the employee. For this reason many managers are put off by performance appraisals because of the time involved and the difficulty to evaluate close employees — these challenges are outweighed by the positive outcomes from a performance appraisal.
Starting a performance appraisal begins with the manager and employee discussing and setting goals for the year. Goals that are measurable are the best goals to work towards, as it easy to comprehend the performance measures required.
The job description can be a great source for an employee’s goals for the year. Take the tasks which are aligned with the organization’s goals and develop quantifiable and measurable employee milestones. For example, a graphic designer’s goals could look like this:
- Increase number of design briefs by 10 percent.
- Decrease time spent on small client projects by 5 percent.
- Improve proofreading to an error rate of less than 2 percent.
The main point is for the manager and employee to work in agreement to determine practical goals for the employee to aim for and ones that the manager is then able to evaluate.
Structure
Whichever type of performance appraisal you decide best fits your organization, the salient feature should be the comprehensive structure it allows:
- A structure that includes specific performance dimensions and criteria for assessing an employee’s performance on these dimensions.
- Employees are often judged by someone (e.g., direct supervisor) on these dimensions and scores are typically assigned, making it easy to interpret their level of performance, compare against cut-off scores, and compare across employees.
- Employees receive feedback based on their scores.
Motivation and Rewards for Achievement
A performance appraisal will measure performance to reward employees appropriately. Understanding how employees are internally motivated is pertinent to performance — well-designed appraisals will include a strong motivational aspect. Appraisals have the power to motivate and drive effort from employees.
Research suggests that performance management involves strategies aimed at increasing employee motivation. This is based on the notion that people have a certain amount of effort that they can exert, and they will be most motivated to exert effort on the job when they perceive the following:
- If they exert effort they will perform well.
- If they exert effort they will be evaluated highly.
- If they are evaluated positively they will receive a reward.
- The reward is of value to them and satisfies their needs in a way that is meaningful.
- Rewards are distributed fairly.
Appraisals speak to the emotional and psychological need of recognition that all people seek. A system that recognizes achievement and effort is a huge motivation for employees and goes far in enhancing performance.
That’s it for this week. Join us next time as we look at the guidelines for developing a performance appraisal system in our tips for performance management series.
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