We are fast approaching the very end of another interesting and challenging financial year. The buzz words in most organizations would soon be ‘Met Expectations’ and ‘Needs Improvement’. The atmosphere in some work places are reminiscent of school days when kids return to their seats collecting their mark-sheets or report cards, some elated and some crestfallen. However, the tension in the air during the appraisal season is sustained for a longer period, than what we experienced with report cards in our school days. The whole process can be extremely stressful to all parties involved. A better understanding of the objective, processes and key elements of a performance appraisal would make the experience for all more worthwhile and less stressful.
What is Performance Appraisal?
It is a formal and structured evaluation method to elucidate the performance of an individual or a group/team and the potential for development.
Objectives of Performance Appraisal:
There could be a plethora of objectives for conducting a performance appraisal based on the difference in job profile, profile of employee, organizational objectives etc. The following are the most common objectives for conducting a Performance Appraisal.
- Employee Confirmations: The idea is to evaluate the employee performance against the expectations set forth while the individual joined; and to find out if he is ready to be confirmed as a permanent employee.
- Employee Promotions & Compensation: Here the employee appraisal gives a clear insight on whether the individual is ready for taking up bigger responsibility and linking the performance to the percentage increase in compensation.
- Need for Training and Development: Performance Appraisals and performance dialogues identifies those areas which needs improvement in an individual/group and suggests action plans to address these gaps through Training and Development.
- Employee Feedback & Grievances: The appraisal is also used as a platform to understand the factors that contributed towards deviation from expected performance and understanding the support the employee requires in to meet future expectations.
The following table gives a simplistic view of the objectives of Performance Appraisal:
Feedback on performance
Identifying areas of improvement
Identifying areas of strength
Better understanding of future expectations
HR systems evaluation
Identifying gaps that hinder achieving business objectives
The Process of Performance appraisal
Step 1 – Objective Definition of Appraisal
Have a clear understanding of what the Performance Appraisal will achieve
Step 2 – Establish Job Expectations
Have clarity in what is expected both qualitatively and quantitatively from the job entrusted.
Step 3 – Appraisal Program Design
Create a plan with respect to the when and where and how the appraisal is going to be conduted. This includes the tools that are going to be used. Even 360 degree feedback and 360 degree performance appraisals are used
Step 4 – Evaluate
The information collated about the performance is now evaluated by comparing it to the established job expectations.
Step 5 – Performance Dialogue
This step involves meaningful conversations that both appraiser and the appraisee has towards understanding the evaluation and discuss action plans.
Step 6 – Final Data for Action
In this step the results of the appraisal are documented for further action.
The key to the success of any performance appraisal is in the quality of the performance dialogue. The performance dialogue determines the future relationship of employees/team with the management. This is critical for individuals/teams to be motivated to achieve the business objectives for the coming financial year.
Some Current Performance Appraisal Methods
- Assessment Centers: This is a method of performance review that was first developed and used as early as 1943 in countries like USA & UK. The objective of this method is to put employees in simulated environments that require employees to display behaviours and patterns that are typical of a working environment in order to gauge employee performance. Trained assessors observe these displayed behaviour and rate them on set parameters. The results drawn from these observations and analysis helps the management to decide on the readiness of an employee to take up new assignments, higher responsibility and also the areas of improvement that needs to be addressed in doing so.
- 360 degree Feedback: It is a method in which all stakeholders like manager, peer, customer, subordinate, other departmental staff, including self gives feedback on an individual’s performance. This technique gives a broader perspective to the developmental plan of the individual and allows them a 360 degree performance appraisal. Some of the areas that can be appraised through this technique are interpersonal skills, customer service skills, meeting timelines etc.
“It is an immutable law in business that words are words, explanations are explanations, promises are promises but only performance is reality” – Harold S Geneen
Every manager would serve their organization well if they understood that the essence of performance appraisals does not lie in intimidating an employee but in mutually agreeing on what needs to be done to accomplish business objectives. This is also something that should be focused on in performance appraisal training.