Need for Appraising Employee Performance in Organizations
There are several reasons to appraise subordinates performance. First, appraisals play, or should play, an integral role in the employer’s performance management process; it does little good to translate the employer’s strategic goals into specific employees’ goals, and then train the employees. Second, the appraisal lets the boss and subordinate develop a plan for correcting any deficiencies the appraisal might have unearthed, and to reinforce the things the subordinate does correctly. Third, appraisals should serve a useful career planning purpose by providing the opportunity to review the employee’s career plans in light of his or her exhibited strengths and weakness. And, last but not least, the appraisal almost always affect the employer’s salary raise and promotional decisions.
In reviewing the appraisal tools we discuss below don’t miss the forest for the trees. It doesn’t matter which tool you use if you’re less than candid when your subordinate is under-performing. Not all managers are devotees of such candor, but some firms like GE are famous for hard-hearted appraisals. GE’s former CEO, Jack Welch is of the opinion that, for instance, that there’s nothing crueler than telling someone who’s doing a mediocre job that he or she is doing well. Someone who might have had the chance to correct bad behavior or find a more appropriate vocation may instead end up spending years in a dead-end situation, only to leave when a tough boss comes along.
There are many practical motivations for giving soft appraisals: the fear of having to hire and train someone new; the unpleasant reaction of the appraisee; or a company appraisal process that’s not conducive to candor for instance. Ultimately it’s the person doing the appraising who must decide if the potential negative effects of less-than-candid appraisals on the employee’s long term peace of mind and on the performance of the appraiser and his or her firm outweigh the assumed benefits. They rarely do.
Appraising employee performance is both a difficult and an essential supervisory skill. The supervisor not HR usually does the actual appraising and a supervisor who rates his or her employees too high or too low is doing a disservice to them, to the company, and to him or herself. Supervisors must therefore be familiar with basic appraisal techniques, understand and avoid problems that can cripple appraisals, and know how to conduct appraisals.
The HR department serves a policy making and advisory role. Generally, the HR department provides advice and assistance regarding the appraisal tool to use, but leaves final decisions on procedures to operating division heads. In some firms, HR prepares detailed forms and procedures and insists that all departments use them. HR is also responsible for training supervisors to improve their appraisals skills. Finally, HR is responsible for monitoring the appraisal system and, particularly for ensuring that the format and criteria being measured comply with laws if any and aren’t outdated.
The performance appraisal process itself contains three steps: define the job, appraise performance, and provide feedback. Defining the job means making sure that subordinates agree on their duties and job standards. Appraising performance means comparing subordinate’s actual performance to the standards that have been set; this usually involves some type of rating form. Third, performance appraisal usually requires one or more feedback sessions. Here the two of manager or boss or superior discuss the subordinate’s performance and progress, and make plans for any development required.
The manager generally conducts the appraisal itself with the aid of a predetermined and formal; method like one or more of those described in this section. The two basic considerations in designing the actual appraisal tool are what to measure and how to measure it. For example, in terms of what to measure, we may measure the employee’s performance in terms of generic dimensions such as quality, quantity and timeliness of work. Or, we may measure performance with respect to developing one’s competencies as in the ability to use a particular computer programming language or achieving one’s goals. In terms of how to measure it there are various methodologies, including graphic rating scales the alternation ranking method and Management by Objectives (MBO).
Developing a Good Appraisal System
End of the year appraisals are always a matter of heartburn and disgruntlement among employees. It is only very rarely that all employees find the appraisal system fair and reflective of their real performance. For managements too, conducting such appraisals is a matter of trepidation. This is more so for companies that are still to develop a strong performance evaluation system. But appraisals have to be done and they are critical for rewarding and retaining talent. They are also important for attracting talent as good performance evaluation systems help to build the employer brand. This article offers a few suggestions as to how you can develop a sound performance appraisal system.
Here are some suggestions for creating and implementing a fair, accurate, and discerning employee review system:
- Document everything: In a good formal appraisal system everything should be written down. A good performance appraisal system should allow for providing supporting documentation so that when action is taken based on the appraisal, the fairness and relevance of the appraisal can be scrutinized and the entire process made transparent. There is already a lot of literature on how to develop a sound performance appraisal system and HR managers would do well to study them before launching any new system.
- Set clear goals: The key idea behind a good performance evaluation system is to reward rather than punish or meet legal requirements, help to lay down and communicate clear performance goals and measure progress, help identify laggards and whether they need any specific help in terms of training and mentoring that can enable them to improve, help identify bosses who are stifling talent or are in some way or the other standing in the way of better realization of an employee’s potential and on the whole lay down a solid channel of communication between employees and the top management. Any good appraisal system should take care of all these goals.
- Make the process user-friendly: The appraisal system should be simple, easy to understand and easy to use. Since a good appraisal system almost always require a participatory approach on the part of the boss and his subordinates, the paper work should be kept to a minimum and as simple as possible. A basic and standardized form is highly recommended as it would enable an open, transparent and uniform appraisal process for all employees. To take care of specific needs of specific departments, standardized forms for particular departments may be necessary.
- Allow for flexibility: Standardized forms and a uniform system can lead to too much rigidity. Hence, allow for flexibility even within the uniform format. This may be especially relevant in small businesses where one person may have several unique competencies and may be looking after several different functions of different types. Have a system that can take care of such situations so that even as it allows flexibility, it also minimizes the risk of arbitrariness.
- Make it participatory: A good appraisal system always allows employees to participate in the review process. Employees must be allowed to give their own self-appraisals by giving them an opportunity in the appraisal form to list their own strengths, weaknesses and goals for the coming year. During the review compare notes and finally try to come up, as often as possible, with an appraisal that has the employee’s consent.
- Set achievable goals: If you own a business it is likely that you will work night and day or for that matter do whatever it takes to make the business successful. But you can hardly expect your employees to have a similar attitude, although there are people who do show as much commitment. So be realistic and set such goals that are achievable. Try to customize goals to individual employees so that each have a realistic chance of meeting those goals. Nothing motivates an employee more than being able to meet goals and being recognized for the success. Goals that are too tough and which most are almost sure to fail to meet can only help to demoralize your staff instead of egging them on to raise their levels of performance. Instead if you raise the bar gradually and in a way such that more people succeed in meeting those goals than fail, over a period of time you will be surprised to find how much people have progressed.
- Adjust your business plan: A well-designed and well-executed performance appraisal process will enable you and your staff to arrive at clear and achievable goals that both you and your staff have agreed to achieve. Adjust your business plan accordingly so that the performance review should end up with giving you a far more workable business plan which will, more often than not, succeed while helping to retain talent by keeping employees satisfied.