Driving Performance Excellence: Unleashing the True Value of Performance Appraisals

Last updated Oct 16, 2023
  • To reap the benefits of performance appraisals, clarify expectations, set frequent goals, provide year-round feedback, and demonstrate active engagement in your employees’ performance.
  • Enhance performance evaluation methods by combining traditional, collaborative, self-assessment, peer review, customer feedback, 360-degree feedback, assessment center, human resource accounting, behaviorally anchored rating scale, and negotiated appraisal methods to provide comprehensive and objective assessments for employees of all levels and industries.
  • Use technology, such as digital performance management systems and data analytics, for real-time evaluation and objective insights in performance appraisals.
  • In performance appraisals, fostering a culture of continuous learning and improvement through encouraging a growth mindset, implementing regular check-ins, and addressing skill gaps is essential for employee development and organizational success.

A performance appraisal is a process where a manager evaluates and provides feedback on employee job performance, including steps to improve or redirect activities as needed.

Commonly seen as an important way to help staff members improve their performance and as a platform to present rewards and recognition, it seems surprising that most employees and managers dread them.

But what is it about a performance appraisal that gives it such a bad rep? Could it be down to the way they are conducted? 

In this blog post, we briefly discuss performance appraisals and how you, as a manager, can take advantage of them to benefit yourself, your employees, and your organization.

Negative feelings…

For many employees, a face-to-face performance review is the most stressful work conversation they’ll have all year. For managers, the discussion can be just as tense for them. According to Joel Myers (Memphis Business Journal), in many organizations, performance appraisals only occur when management is building a case to terminate someone, and being far and in between, there can be a lot of anxiety to the lead-up of one. Furthermore, according to SHRM, second only to firing an employee, managers cite performance appraisals as the task they dislike the most, being uncomfortable in the role of judge. With these ideas in mind, it’s no wonder that the result is a mutual dread of performance appraisals.

So why do them?

Appraisals are made to help companies identify good and poor performers. Organizations can use performance appraisals to determine who should be rewarded with raises and promotions, which employees need more training, and who should be terminated. Many professionals believe that the appraisal process can become the most valuable instrument in the manager’s toolbox if done correctly. The few hours a manager invests can impact an employee’s performance for an entire year.

The ideal performance appraisal is an opportunity to praise employees who’ve done exceptional work, help those who’ve slipped to get back on track, and have a real dialogue to clarify expectations, offer solutions to problems, and set goals for the future.

According to CIPD, performance appraisals are an essential function of worker motivation – they aid in minimizing employees’ perceptions of uncertainty and establishing and supervising employees’ career goals.

Here are a few tips to help reap the benefits of Performance Appraisals:

  • Clarify Expectations. Employees should know how their performance will be assessed before the review. During an appraisal session, staff should be told about good/poor performance when it happens – the performance review should not contain “new” information. Ideally, whenever you hire an employee, you should explain the details of the performance review process — how often these meetings occur, how they are conducted, and what the employee can expect during the discussion. Put these details in writing for easy reference. This way, the review conversation will have a structure that is clear to both you and your employee.
  • Set and reset goals frequently. Companies that set performance goals quarterly generate 31% greater returns from their performance process than those who do it annually – those who do it monthly get even better results (Bersin, 2013).
  • Provide feedback all year. Yes, performance appraisals are annual, but that doesn’t mean performance management is. Performance appraisals are only a part of, or a tool for, performance management. As a manager, you must provide ongoing feedback and practice having honest conversations daily. Most managers dread writing performance appraisals because they take time and effort. However, you can conduct shorter meetings to address targeted performance areas when the process is a year-round activity. Take the opportunity to discuss and record accomplishments, successes, and challenges as they occur, this way, the details are fresh in your mind. This will save you time and show your employees that you care about them and that their performance hasn’t gone unnoticed.

How to Enhance Performance Evaluation Methods?

Indeed listed the 10 most common performance appraisal methods. These are:

Traditional Method

The traditional performance appraisal method involves a manager providing employee performance feedback. 

The manager considers various factors such as output, meeting deadlines, attendance, and work ethic. They may suggest strategies for improvement before the next appraisal. 

This method applies to businesses of any size and industry. It helps mitigate unconscious bias by considering the employee’s impact on colleagues and customer responses, leading to a more objective review.

Management by Objectives (MBO) Method

The MBO method is a collaborative approach to performance appraisal. Managers and employees work together to set specific, measurable, achievable, relevant, and time-based (SMART) goals. 

They regularly meet to discuss progress, evaluate goal attainment, and establish new objectives. 

Achievement of goals may result in bonuses or promotions, while further training can be encouraged for those who still need to meet their targets. 

The MBO method suits businesses of all sizes and evaluates employees at any career stage. It focuses on tangible goals and fosters career growth and regular interaction between managers and employees, particularly for assessing hard skills.

Self-Appraisal Method

The self-appraisal method encourages employees to analyze their performance. They share milestones, strengths, and weaknesses through self-appraisal forms. 

Managers review these forms and conduct one-on-one meetings to discuss them. Strategies to overcome weaknesses and achieve more milestones are planned during these meetings. 

The self-appraisal method is suitable for businesses of any size and industry. It promotes employee reflection and improvement, making it ideal for employees with experience who understand their job requirements well.

Peer Review Method

The peer review method involves colleagues evaluating an employee’s performance. 

Colleagues who work closely with the employee provide valuable insights into their strengths, weaknesses, and contributions. 

This method effectively assesses team members, as it reveals positive relationships within the team and equitable contributions. Gathering multiple opinions helps overcome bias within the company.

Customer or Client Review Method

The customer or client review method collects feedback from customers or clients regarding their experiences with a specific employee. Managers review the responses and discuss them individually with the employee. 

This method is particularly useful for evaluating customer-facing roles in retail, sales, and hospitality sectors. It provides insights into external perceptions and whether an employee meets or exceeds customer service benchmarks. 

Collecting multiple reviews helps overcome potential biases.

360-Degree Feedback Method:

The 360-degree feedback method involves gathering feedback from everyone interacting with the employee, including managers, colleagues, and customers. 

This comprehensive approach combines traditional peer review and customer/client review methods. It suits businesses of any size or industry, providing an unbiased assessment through multiple perspectives. 

Objective feedback received can motivate employees to improve their performance, although the quality of feedback may vary based on the reviewers’ ability to provide constructive input.

Assessment Centre Method

The assessment center method evaluates employees through various tasks and exercises. 

Employees receive pre-assessment information, engage in ice-breaker exercises, and participate in role-playing, informal discussions, and decision-making challenges led by a coordinator. 

Post-assessment, the coordinator reviews the employees’ performance. This method suits service-oriented businesses, manufacturing firms, educational organizations, and consulting firms. 

It helps identify future business leaders but is more time-consuming and costly, making it better suited for larger, successful companies. 

The exercises can be customized to test different skills and reveal aspects of an employee’s personality, providing real-time insights into performance and external perceptions.

Human Resource Accounting Method

The human resource accounting method compares an employee’s performance to their cost to the business, demonstrating their value.

Work quality, interpersonal skills, and service value contribute to the assessment. The employee’s salary and the cost of recruitment, hiring, training, and development are considered. 

This method is suitable for businesses with limited budgets, such as small companies and startups, to ensure employee performance aligns with cost.

Behaviourally Anchored Rating Scale (BARS) Method

The BARS method assesses employees’ qualitative and quantitative contributions by ranking their behavior against predefined statements. 

This method helps set clear standards and provides objective results. It can be applied to businesses of all sizes and industries. 

Automating the process with a performance management system increases efficiency.

Negotiated Appraisal Method

The negotiated appraisal method involves a mediator facilitating a meeting between the manager and the employee. 

The manager provides feedback on strengths and constructive criticism, while the employee can respond and seek advice for improvement. 

This method enhances communication and relationships between managers and employees. 

It suits businesses of all sizes and helps review employees across various professions and experience levels.

Leveraging Technology for Performance Appraisals

Exploring performance management software and tools

The process of improving employee performance should be continuous rather than limited to an annual event. 

Digital Performance Management Systems have revolutionized this process by making evaluation and analysis of employee performance seamless, data-driven, real-time, straightforward, and objective. 

These digital systems can simultaneously collect performance data from various sources, enabling a comprehensive assessment of an employee’s overall performance and identifying areas that require improvement. 

Additionally, these systems assist organizations in devising tailored plans for employee training and development, ensuring targeted growth and enhancement of skills. 

By embracing digital performance management systems, companies can continuously establish a dynamic and effective approach to improve employee performance.

Leveraging data analytics for insights and decision-making

Objective and data-driven assessments play a crucial role in executive search. Leveraging HR technology, organizations can gather and analyze data from diverse sources to objectively evaluate an executive’s performance. 

As executive search professionals, this approach enables us to conduct impartial assessments, eliminating subjective biases and ensuring a fair and accurate evaluation of an executive’s capabilities and achievements. 

By relying on objective data, we can provide our clients with comprehensive insights into an executive’s track record, skills, and potential, helping them make informed decisions in their search for top talent.

Continuous Learning and Improvement are Important in Performance Appraisals

Encouraging a growth mindset and a culture of continuous learning

A LinkedIn post states the importance of prioritizing establishing and encouraging a learning and development culture. 

As part of performance evaluations, it should be recognized and appreciated when employees are dedicated to enhancing their skills, acquiring new knowledge, and pursuing self-improvement.

By assessing an individual’s proactive approach toward personal development, organizations can identify high-performing individuals who are invested in their professional growth and are likely to impact the organization’s success.

Performance appraisals highlighting the importance of continuous learning and growth send a powerful message to employees. 

It demonstrates that the organization values and supports their personal and professional development, creating a sense of loyalty and motivation to excel. 

Furthermore, such evaluations provide a platform to set goals, offer constructive feedback, and identify areas where additional training or resources may be beneficial, fostering a culture of improvement and excellence.

Implementing regular performance check-ins and progress reviews

Regular check-ins with employees provide several advantages, according to WorkStory.

First, they allow managers to deliver real-time feedback on performance, ensuring employees receive prompt and actionable guidance instead of waiting for an annual review. 

Second, check-ins create a space for employees to express concerns or raise issues, promoting open communication and teamwork. 

Third, these meetings facilitate goal-setting and progress tracking, assisting in monitoring performance against targets. 

Lastly, regular check-ins cultivate trust, enhance engagement, and deepen the mutual understanding between managers and employees. Shifting away from annual reviews to ongoing check-ins improves employee motivation and overall team performance.

Addressing skill gaps and fostering professional development opportunities

The significance of conducting a skills gap analysis in the context of performance appraisals must be considered. 

By identifying and addressing skill gaps through this analysis, organizations can greatly enhance the effectiveness of their performance appraisal process and foster continuous improvement.

Final Thoughts

When conducted effectively and with the right approach, performance appraisals can be a valuable tool for managers to enhance employee performance and drive organizational success. 

While negative perceptions and anxiety surrounding appraisals exist, it is essential to recognize their potential benefits. 

By clarifying expectations, setting and resetting goals frequently, providing feedback year-round, and leveraging various performance appraisal methods, managers can transform the appraisal process into a positive and constructive experience. 

Additionally, leveraging technology and data analytics and promoting a culture of continuous learning and improvement can further optimize the appraisal process. 

By embracing these strategies, organizations can create a performance-driven culture that nurtures employee growth, fosters engagement, and maximizes overall productivity and success.

What’s been your experience with performance appraisals? Either as a manager or an employee, were there certain experiences better than others? Why do you think so?

By: Curran Daly + Associates


Submit a Comment

Your email address will not be published. Required fields are marked *

Share This