Develop an effective performance appraisal process

Employees and employers often think of the performance appraisal as a once a year, one hour long (or less) meeting. However, the most effective program is one that is administered throughout the year and is a process rather than just a review.

The performance appraisal process will be more effective if you understand its underlying purpose—to provide feedback to employees. Yes, performance appraisals are important for documenting performance history. Many organizations also use appraisals as the basis for compensation decisions. But its primary purpose and value is to provide performance feedback.

Performance Appraisal Process

Performance Planning is the first step in an effective performance appraisal process. Simply stated, performance planning is setting guidelines and clarifying expectations for the employee. After all, if an employee does not know your expectations, how can he be expected to perform up to your standards? And how can you successfully appraise her performance when you have no basis for comparison?

Performance Management is ongoing. As the employee completes job assignments or works toward goals, the supervisor leads and directs these efforts by providing feedback and additional direction or clarification, if necessary.

Performance Assessment occurs just prior to the formal performance review. At this time, the employee’s supervisor gathers the documentation generated throughout the review period. This documentation could include positive feedback, such as a “job well done” letter from a customer or notes from ongoing performance discussions, to name a few.

Performance Review is the formal process of reviewing performance with the employee. The employee and supervisor meet to review and discuss the formalized assessment and then begin the process again by setting goals and standards for the next year.

There are several advantages for establishing a performance appraisal process rather than merely reviewing performance annually or only when there is a problem:

  • It can reduce or eliminate common appraiser errors such as:
    • Recency occurs when recent performance becomes the basis of the review as opposed to evaluating performance for the entire year
    • Halo Effect where the appraiser ranks an employee high in all categories regardless of actual performance, and
    • Horn Effect which results in ranking a less productive employee low in all categories.
  • It encourages an objective review process.
  • It can boost employee motivation, enhance job satisfaction, and improve performance. This creates a win/win situation for your company by increasing productivity and, ultimately, profits.

Regular Feedback

Regular feedback is also important because, for many employees, the absence of feedback creates ambiguity, uncertainty, and anxiety. However, to encourage good performance and effectively develop people, it is important to understand the proper use of feedback.

In its simplest form, feedback may be viewed as one of two types. Taken together, these two types of feedback help the employee achieve their performance goals.

  • Supportive feedback reinforces and encourages your employees to continue doing what they are doing well
  • Corrective feedback points out behavior that needs to be changed.

Many managers think that good performance and appropriate behavior are to be expected and the only time employees need feedback is when they are doing something wrong. Corrective feedback is necessary at times. In fact, a good manager addresses inappropriate and ineffective behavior and work performance issues in a timely fashion. However, an effective manager also provides supportive feedback and focuses on what employees are doing well. Behavior that is reinforced and encouraged tends to be repeated and become stronger.

Effective feedback is specific and observable. Have you ever told an employee “you have a bad attitude”? This corrective feedback will be far more effective if you said “your behavior was inappropriate when you yelled at Bob.” You can then focus on what steps must be taken to correct the behavior and clarify your performance expectations. Supportive feedback could be a statement as simple as “I appreciate the way you handled that unhappy customer by quickly solving his problem”.

Both forms of feedback are necessary and are important for encouraging effective employee performance. Continue to provide corrective feedback when necessary but increase your use of supportive feedback. Your employees will appreciate it and will repay you with successful performance. Throughout the year, look for something your employees are doing right—and tell them so.

Finally, the formal performance review meeting should not be the time to surprise your employee with a litany of performance issues. To the contrary, it should be a mutually beneficial discussion that summarizes the review period’s events, improves or encourages continued good performance, identifies areas that need development or improvement, sets goals for the future, and validates the fact that your employee is an important part of your organization.


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