“How to Do Performance Appraisals”

Most managers know that employees want and need regular feedback on their performance. Even so, many supervisors and employees dread the appraisal process, and the result is often an exercise in futility. A 1996 survey by the Society for Human Resources Management found that more than 90% of appraisals were perceived to reflect employee performance inaccurately.

The typical appraisal focuses on recent problems, overlooks good things the employee did in the previous year, and works to intimidate, short-change, manipulate and demotivate the worker, says Bob Nelson, president of Nelson Motivation Inc., in San Diego, Calif.

The optimal appraisal plan involves continuous communication in which the performance of the supervisor and the worker are closely linked, says Chad Cook, a fellow with the Workforce Stability Institute in Greensboro, N.C.

In this Quick-Read you will find:

• The purpose of appraisals.
• Who should do the appraisal and when.
• What should be covered in the appraisal and how.
• What makes an appraisal work.

SOLUTION [top]

The purpose of appraisals

Among other things, employee appraisals provide:

• A means to reinforce, correct and reward behaviors.
• A tool that offers the potential to engage, excite and retain employees.
• A means to aid the employee’s professional development.
• An important element in promotion and pay-raise decisions.
• A way to document problems, so that if termination becomes necessary, the employer can establish "cause."

Who should do the appraisal and when

Traditionally, appraisals have come from the top down. Generally the employee’s supervisor leads the appraisal process. Other people — the human resources manager, coworkers, customers — may also be involved. A growing number of companies invite workers to review their supervisors to increase input and validity of appraisal results. The addition of peer and customer appraisal (360-degree feedback) is increasing for the same reason.

Some experts recommend appraisals no more frequently than every six months, with annual reviews to coincide with the employee’s date of hire. Companies experiencing rapid growth may want to use quarterly reviews, however, to keep employees aligned with the company’s goals. More frequent reviews can be less intimidating and are more likely to be coaching sessions than once-a-year report cards.

Some other options:

1. Involve other team members. In new, team-based organizations with project-driven work, appraisals should also involve other team members. Therefore, meet regularly and do long-range planning with your people. Delegate clear responsibilities and get out of the way. Build in individual and team assessment models.
2. Use reverse appraisals. Until recently, only 10%-12% of companies used reverse appraisals of managers by employees, but more should. Why? Ideally, a manager should be working to create optimal conditions for workers. An employee appraisal is, in a way, a review of the manager’s ability to provide the right work conditions.

CAVEAT: Good reviews don’t automatically equal good managers. Consider how good numbers might obscure managerial deficiencies that, if corrected, could lead to even better performance.

What should be covered in the appraisal and how

The appraisal should cover:

• What is expected of both worker and supervisor.
• How those expectations are being met.
• What the worker is doing to exceed expectations.
• A clear set of new expectations from both parties.

An appraisal should have at least these three components:

1. The employee’s self-appraisal. If this person has had a prior review, its identified needs and objectives should be itemized and discussed in the self-appraisal.
2. The supervisor’s appraisal of the employee, also working from elements in the most recent previous appraisal, if one exists.
3. Comparing notes from both. The supervisor and worker together consider trends from one review to the next, resolve differences and prepare a final appraisal that is then passed on to the HR unit and to the supervisor’s supervisor (who uses it in his or her appraisal of the supervisor).

What makes appraisals work and what doesn’t

Appraisals work best when they follow a simple structure: Plan, Do, Review.

• Plan. Having a detailed job description ahead of time for each position can help guide you through this process. Set job standards, goals and deadlines; establish measurement criteria; and clarify training or equipment needs.
• Do. This is where most managers fail. In this phase, the manager and the employee should be providing each other feedback. The manager should coach, train and positively reinforce good performance.
• Review. Managers should document performance that meets, exceeds or falls below targets so they don’t overemphasize recent incidents at the formal review. This is a day-to-day process that supports the annual appraisal. With ongoing review and appraisal, the annual review should be a piece of cake.

Appraisals fail when they become a snapshot in time. The manager may focus on a recent individual event and ignore the worker’s greater contributions. The worker is demoralized because performance that may be on track is underappreciated.

Annual reviews may be less relevant in some loosely structured organizations in which problem-solving teams form, work and disband within months. When a worker changes functions shortly before a review, e.g., moves from customer technical support to sales, reviews from two supervisors may be necessary to base pay-raise decisions on proven performance and to set job standards, goals and objectives appropriate to the new situation.

REAL-LIFE EXAMPLE [top]

At McMurry Publishing Inc., a $20 million company in Phoenix, Ariz., annual appraisals compare each employee’s performance to eight corporate values. Employees of the contract magazine publisher helped craft the values midway through its growth, in 12 years, from a staff of 4 to more than 70. New employees go through a six-hour orientation in values, such as "do the right thing" and "help one another" and "deliver raving customer service." They apply the values in a role-play based on a real experience.

"Before managers do the annual evaluation, they send out e-mail to the employee’s co-workers asking for feedback, and it’s built into the review," says Krisanne Elsner, McMurry’s director of Tremendous People. "The e-mail asks, what is this person doing well, and what could they do better. It’s confidential. In the review, we use a lot of examples to show how the employee has been living up to ‘the right thing.’" A recent survey of employees showed a strong desire for more feedback, so managers have committed to meeting weekly with each employee. Training helps people promoted internally take on management duties. "We encourage people to try things," Elsner says. "No one has ever been fired for making a mistake."

DO IT [top]

1. Take the time to plan goals and identify what employees need to achieve during the next appraisal period.
2. If you are in a traditional hierarchic organization, supervising six to eight employees at the next level down, plan to spend 70% to 80% of your time observing, talking with and responding to the needs of your staff.
3. To motivate outstanding performance, focus energy less on documenting problems and more on personally congratulating employees, recognizing employees’ accomplishments before their colleagues, celebrating group success, and writing personal notes of praise.
4. Meet one-on-one with employees at least once a month to review progress and needs.
5. If the annual performance review is used for rating, ranking, and compensation decisions, then it is fairer to schedule all the appraisals at the same time. If not, schedule the annual performance review on each employee’s hiring anniversary date to spread appraisals over the full calendar year and avoid a crush of hastily done appraisals.
6. If appraisals are used for determining promotions and pay rates, see that appraisal procedures are standardized and documented to keep their application as consistent as possible across departments.
7. Keep salary discussions separate from the performance review.
8. Don’t let the "need for speed" erode the time it takes to plan and execute a staff development and appraisal plan.

RESOURCES [top]

Books

Complete Guide to Performance Appraisal, by Dick Grote (AMACOM, 1996).

Internet Sites

Work911.com. Performance Management and Appraisal Article Library

Resources for Measuring, Managing and Improving Employee Performance. Zigon Performance Group

Performance Management Technical Assistance Center. U.S. Office of Personnel Management.

"How to Give Good Feedback," by Gina Imperato. Fast Company (September 1998).

“Giving a Useful Performance Review,” originally “Questionable Situation,” Idea 68 in 101 Great Ideas for Managing People from America’s Most Innovative Small Companies, edited by Martha E. Manglesdorf (Inc/Goldhirsch Group, 1999), 127-128.

Writer: Stuart Watson