This article looks at developing a performance appraisal system that is equitable, efficient and useful. It covers creating a program that meets your company's performance objectives, objectively assessing performance, and providing feedback that is useful and achievable. Following these strategies will benefit both the organisation and its employees.
The process of performance appraisal explained
Companies and organisations use performance appraisals to assess an employee's job capabilities. Performance appraisals provide an opportunity for managers and employees to discuss performance and identify any areas for improvement. The process typically involves setting objectives, gathering feedback from both employees and managers, and setting goals.
The annual performance appraisal is an important event for employees, as it's often the most formal occasion for them to receive feedback on their performance. It's important to remember that this is an important touchpoint and milestone in the employee journey, and as such, it needs to be treated with care and respect. The feedback given in the performance appraisal should be used to motivate employees and provide them with direction on how to improve their job performance.
Performance appraisals and salary reviews
Another important aspect of performance appraisals is that they can help organisations identify top performers and reward them for their good performance. The performance appraisal process and the salary review process are closely related, and the results of the performance appraisal can be used as a basis for determining salary increases or bonuses.
The specifics of how the annual performance appraisal process and the salary review process relate to each other vary. But in any case, it is important to have a clear and transparent link between the performance appraisal and the salary review, to make sure employees understand how their performance is evaluated and also how their future performance will affect their compensation.
The process of performance appraisal in HRM (Human Resource Management)
In Human Resource Management (HRM), performance appraisals play an important role in evaluating employee performance and helping the organisation reach its goals. Performance appraisals help HR departments identify problems and knowledge gaps within their organisation. Regular performance appraisals also help ensure that employees are held accountable for their performance and that any issues are addressed in a timely manner.
8 steps to improving your performance appraisal process
The first step to improving your performance appraisal process is to identify the strengths and weaknesses in it. You need to look at all aspects of the process, from the structure and format to the communication between employees and managers. Evaluating your current process will help you determine where improvement is needed.
Make sure the performance appraisal process is aligned with the goals and objectives of the organisation. Ensure that employees are evaluated on the things that truly matter.
Use measurable and objective criteria to evaluate employee performance. Ensure that the performance appraisal process is fair and unbiased.
Provide regular feedback to employees throughout the year, rather than just during the performance appraisal. Help employees understand their performance in real-time.
Encourage employees to participate in the performance appraisal process by allowing them to provide feedback on their own performance and to set their own goals.
Use multiple sources of evaluation, such as self-evaluation, peer evaluation, and supervisor evaluation, to gain a more comprehensive understanding of an employee's performance.
Use performance appraisal software to automate the process, track progress, and store historical data.
Provide training to managers and supervisors on how to conduct performance appraisals effectively. Ensure managers have the necessary skills to evaluate employee performance fairly and objectively.
Continuously evaluate and improve on the performance appraisal process to make sure that it's fair and efficient.
It's essential to be aware of the impact that the performance appraisal process has on employee morale. If employees feel that the process is unfair or that their feedback is not taken seriously, it can lead to a decrease in motivation and productivity. Taking the time to evaluate the process and make necessary changes can help to ensure that employees feel valued and respected.
Regularly scheduling performance appraisals
To ensure your performance appraisal process is effective, it's important to not only regularly scheduled annual performance appraisals. Regular one-to-ones throughout the year help ensure that employees understand how their performing and get the chance to address any issues.
When scheduling performance appraisals, it's important to be flexible and take into account any other commitments that employees may have. It's also important to give employees sufficient notice of upcoming appraisals so that they have time to prepare.
Incorporating 360 feedback in the performance appraisal process
To improve the effectiveness of performance appraisals, it's can be beneficial to incorporate feedback not only from the manager, but also from peers and direct reports. When incorporating 360 feedback into appraisals, it's important to keep it constructive and focus on how employees can improve their performance. Feedback should be given in a respectful manner and should not be used as a tool for criticism or punishment. It's also important to ensure that feedback is timely and relevant to the employee's current performance.
Recommended reading:360-degree feedback in performance reviews
Establishing objectives and setting clear expectations
Once you’ve identified the strengths and weaknesses of your performance appraisal process, it’s time to set objectives and establish clear expectations. Setting objectives helps employees to understand what’s expected of them and provides a framework for measuring progress. Additionally, setting clear expectations helps to ensure that everyone is on the same page regarding what needs to be achieved.
When setting expectations, it’s important to make sure that they are realistic and achievable. Additionally, when communicating expectations, it’s important to be clear, concise, and consistent. Having a documented set of expectations helps ensure everyone is working towards the same goals.
It is also important to provide feedback to employees on their performance. This feedback should be timely, specific, and constructive. Providing feedback helps to ensure that employees are aware of their progress and can make adjustments as needed. Additionally, it can help to motivate employees and encourage them to strive for excellence.
Setting performance goals and measuring progress
Setting goals is a fundamental part of any performance appraisal process. Goals provide employees with direction and something to work towards. Goals also help managers assess progress. Setting specific, measurable goals helps to ensure that everyone is clear on what needs to be achieved and allows progress to be easily tracked.
Recommended reading: SMART goals – how to set them and how to reach them
When setting goals, it's important to be realistic and take into account any external factors that may affect an employee's ability to achieve them. Additionally, it's important to regularly monitor progress and provide support when needed. This helps to ensure that employees stay on track and remain motivated.
How do OKRs relate to performance appraisals?
OKRs (Objectives and Key Results) is a framework for setting and achieving specific, measurable, and time-bound goals. They are used to align individual goals and team goals with the goals of the organisation. Performance appraisals, on the other hand, are used to evaluate employee performance and identify areas for improvement. OKRs is not a performance appraisal method.
Recommended reading: OKRs - A complete guide to objective and Key Results
OKRs and performance appraisals are related, but should not be confused. OKRs can help set specific, measurable, and time-bound goals for employees, which can be used when evaluating performance in the performance appraisal process. This is a good way to can provide a link between an employee's individual goals and the organisation's overall goals.
For example, during the performance appraisal process, an employee's OKR progress can be reviewed, along with other metrics like attendance, teamwork, problem solving skills and customer satisfaction. Letting employees set their own OKRs and then evaluate their progress in performance appraisals, can help to foster a culture of accountability and drive progress.
In other words, OKRs can be used to help set and track progress toward specific, measurable, and time-bound goals, which can then be used to evaluate employee performance during performance appraisals. This can help organisations make sure that individual efforts and team efforts align with the overall goals of the organization.