Appraisals are an important tool for any business. Agreeing appropriate objectives and making effective use of appraisals can improve your business and help you assess how well employees are working. Appraisals not only help employees identify and focus on specific tasks and company goals, but can also enable staff to feel valued and motivated. In this article Duport looks at the issues surrounding appraisals. These include how to set up a good quality appraisal system, the objectives and benefits of appraisals, how to prepare for and conduct the actual interview and the follow up action which should be taken afterwards.
What are appraisals?
Appraisals regularly record an assessment of an employee’s performance, potential and development needs. It is a great opportunity to look at work content, work loads and praise staff for their good work. You can also address any problems, discuss apparent weaknesses and find solutions. Equally important, it will give the opportunity to define further objectives for employees.
What are the benefits of appraisals?
Benefits can be numerous. They can improve job performance by identifying strengths and weaknesses. An appraisal system can develop greater communications and give employees an opportunity to talk about their ideas and expectations. Shy employees may make valuable suggestions they would normally not make and performance and potential can be reviewed with a greater degree of consistency. Letting people talk about their ideas and expectations, and telling them how well they are progressing, can improve general communications. In turn, this usual encourages a better performance from employees. When communications improve there is increased mutual understanding and the quality of working life also improves.
How do I set up a good quality appraisal system?
To save time and money the appraisal system should be simple, and should work equally well for large or small companies. Everyone should have an appraisal, and it is usually carried out by an employee’s immediate manager. However, good practice will include a system which allows immediate superiors to carry out the appraisal with an opportunity for senior managers to comment on the report. This helps senior management keep in touch with the progress of all staff and ensure systems are consistent. Some argue that appraisals should be carried out at a more senior level to allow employees an opportunity to talk with top management. It really depends on your company set up, and what you are comfortable with.
Employee appraisals should be a continuous process, and you should determine how frequently they occur depending on your business needs. For example in a fast changing, high technology organisation where objectives change quickly, annual appraisals may not be enough. In such cases a series of short, informal meetings every three months or so may mean new issues can be identified early on.
Whatever system you choose it will only work if you implement it properly. There are four key elements to a good appraisal. Firstly look at the aims of your company and make sure you set objectives that are specific, measurable, achievable, and realistic and time based (this is known as the SMART system).
The second key element to a good appraisal is to manage performance (give employees the tools, the training and resources to work well), thirdly carry out the appraisal effectively and finally provide rewards for good work and/or decide how to tackle poor performance.
A good appraisal system can motivate employees. Motivated staff work harder and more effectively, and if you decide to pay bonuses or other incentives they will be even happier. How you structure rewards needs to tie in with the appraisal system. Staff will be particularly interested in the rewards system!
Adventurous companies could consider what is known as the 360-degree appraisal, where a variety of people who come into contact with the employee give written feedback on their performance. Managers, colleagues, even customers could be involved, and although it is time consuming – and possibly daunting for the employees involved – it can be an excellent way of avoiding the often subjective thoughts of one manager. It can also be a great way of getting feedback from customers on what they really want.
Whatever system you choose, make sure all managers are committed to it and discuss it with employees before you implement the system. Ensure you know exactly what an employee’s job includes – use their job descriptions if necessary. It can be useful to appoint someone internally to administer the system.
What are the objectives of a good appraisal?
The objectives of the appraisal scheme should be determined before the scheme is designed in detail. Usually the main objectives are to review performance and potential as well as identifying training and career planning needs. Financial rewards should also be included as an objective.
Both managers and employees can discuss how employees are progressing and what sort of improvements can be made or help given to build on their strengths and help them perform more effectively. You can look at what the employee will be capable of in the future and how they can be best developed to help your company (and their career).
Sometimes performance is hard to measure. If this is the case you could look at an employee’s level of competence in, for example, leadership skills, team working, initiative and flexibility. You can add other indications relevant to your specific business. Score employees from one to six on their level of competence.
How do I carry out the appraisal interview?
Preparation
Prepare well. Give employees adequate notice of the appraisal interview and give out self-assessment forms to help them prepare. This can help a person focus on their strong and weak points, what they see as barriers to effective performance, plans for the coming year and their training and development needs. Self-assessment forms do not have to be shown to the person conducting the appraisal – they are to help the employee. Make sure they know what to expect and ask them to prepare in advance.
Keep the paperwork simple. The form should have room for basic personal details, such as name, department, post, time in job, job title and job description. There should also be space for a detailed review of the individual’s performance against a set of job related criteria, plus space for overall performance rating and general comments by a more senior manager. In addition make sure there is room for the employee to comment and space for a plan for development and action.
The manager should consider all aspects of the employee’s work, including the overall results attained. Focus on appraising the skills and not the person. Have results been significantly greater or lower than expected, are there reasons for fluctuations in performance? The interviewer will find it easier if they have kept notes throughout the year of the employee’s successes and failures, and any performance related developments beyond the employee’s control.
To make the appraisal meeting as productive as possible, make sure you allow at least one hour. The seating should be comfortable and arranged to create an informal atmosphere and the interview should be free from interruptions.
The interview
Explain the purpose and scope of the interview and discuss the job in terms of its objectives and demands. Put the employee at ease with fairly casual, routine remarks and start by discussing strong points first and place emphasis on good work already done. Start with positive comments and encourage the employee to discuss his or her strengths and weaknesses. One way to do this is to allow the employee to name something they felt they did well in the past year as well as something they had difficulty with. Criticism should be constructive. Try to ask open questions and avoid leading questions or questions which only require a yes or a no answer. Decide exactly what you want from an employee and agree these objectives with them. The idea is to set objectives which may stretch the employee, but not de-motivate or make them feel out of their depth. Do not simply pile on extra work.
Make sure any objectives you agree are specific, measurable, achievable, and realistic and time based (this is known as the SMART system). For example, use exact numbers and targets – e.g. instead of a rather woolly aim of “improving sales”, specify “improve sales figures by 10% within 12 months”. This is a measurable target, but make sure it really is achievable, depending on market conditions.
Make sure you provide rewards for good work and/or decide how to tackle poor performance. How you structure rewards needs to tie in with the appraisal system. You might consider one off bonus payments (based on a combination of a percentage of salary and how far the employee has achieved his or her objectives for the year), or a pay increase (e.g. no increase for below average performance, 2% for average, 3% for above average and maybe 5% for excellent performance). Other rewards could be shares in the company. However be very careful. If some are given greater rewards than others the system can backfire. The rewards must be fair and all employees must be treated equally. Do not discriminate against particular employees. It can be easier to use job evaluations which help give a clearer pay structure by ranking each job and setting salary brackets accordingly.
One common trap managers often fall into is to concentrate on recent events, which can distort the appraisal. Managers need to keep running records of the performance of staff and of actual events which are evidence of work performance. An informal half-yearly report can help avoid these problems.
If there are problems and it is necessary to improve performance you must address these. This should be a joint discussion, where you both discuss weaknesses openly and encourage suggestions to improve performance. Glossing over problems in order to keep the interview as friendly as possible will help no-one. Make sure agreed plans for the future are summarised, and that the employee understands any next steps, such as a pay review or training programme.
After the interview
Shortly after the interview the manager should summarise in writing the main points of the discussion and any action and new objectives. Give the employee a copy and keep one in their personal file. The employee has a right to access appraisal or performance review notes and it is good practice to give the employee the right to appeal if they do not agree with the appraisal. This should be noted on their file.
The appeals procedure should only be used in exceptional circumstances.
It is crucial managers follow up any points arising from the interview and carry out agreed action. For example, if training has been offered, follow through with information and dates it will take place. Some companies conduct anonymous staff surveys to assess the effectiveness of appraisals – and those that do find staff appreciated praise as well as being given the chance to express views and address issues.
Remember an appraisal system should be used in addition to reviewing performances on a day-to-day basis. To keep everyone happy and motivated employees should be aware of their strengths on a regular basis, and weaknesses should be addressed when they occur and not at the annual appraisal.
