The performance appraisal is intended to assess an employee’s job performance and increase productivity. It establishes a means of feedback for the employee in relation to the manager’s and the company’s expectations, and provides justification for decisions regarding pay raises, promotions, transfers and terminations. Performance appraisals can also serve as supporting evidence in numerous formal actions such as unemployment claims, charges of discrimination and employment-related litigation.
Traditionally, managers sit down with staff once a year for a formal review of the employee’s performance, and new employees are often reviewed at 30, 60 or 90 days. These meetings are frequently dreaded by managers and staff alike as difficult, unnatural conversations, usually forced upon them by the human resources department and company policy. Faced with the daunting task of reducing an employee’s annual performance to a few ratings and written statements, many managers resort to avoiding the task, delivering a positive appraisal regardless of the employee’s performance, giving generic ratings or focusing on only the last 30 or 60 days of the year.
But these approaches can do serious harm to the organization and the employer-employee relationship. Inaccurate feedback never improves performance and has the potential to negatively impact employee engagement, as well as encouraging litigation.
For example, an employee may believe a negative employment action can’t possibly be based upon performance if all of their performance evaluations have been positive. Additionally, high performers within an organization may become discouraged and disengaged when they see poor performers receive the same evaluation scores that they receive.
Due to the liability of having employee files containing inaccurate performance appraisals, many companies have eliminated traditional annual, manager-based performance appraisals and replaced them with individual dashboards, 360-degree reviews, peer assessments or regular coaching or supervisory meetings.
Individual dashboards are generally straight metrics that the employee either meets or doesn’t meet, with all subjectivity removed. Metrics are usually reported on a monthly basis, rather than once a year. They can, and should be, incorporated into the annual performance appraisal and if used properly, the employee is never surprised by the annual ratings.
The main weakness of dashboards is that some aspects of a position can be difficult to break down into numeric ratings. An employee may meet all metrics regarding productivity but have severe issues with interpersonal skills such as working as part of a team, interacting with customers or taking direction from managers. Unless these skills can be captured by measurable data (such as internal-external customer service ratings) the use of dashboards alone may not accurately capture the employee’s full performance.
360-degree reviews take into consideration the employee’s complete range of interactions within the organization, usually on an annual basis. The organization determines which managers, peers and subordinates will be involved in the evaluation of an employee. All complete formal evaluations and the employee is provided a summary.
Again, there is often an issue of subjectivity of the items being evaluated, but that can offset by the number of individuals involved. The biggest disadvantage of the 360-degree review is the cost associated with involving so many staff members.
Peer assessments resemble a subset of the 360-degree review and are common in fields in which skills evolve over an extended time such as in educational, clinical, legal or similar professional fields. They can be influenced by strong group norms that are not always in the best interest of the organization.
Monthly or weekly coaching or supervision meetings should, ideally, be used regardless of the organization’s decision regarding the traditional annual performance review.
Whether an organization decides to replace the traditional annual performance appraisal altogether, or to improve upon the concept, there are some recommended factors. Managers should provide regular, objective, accurate and documented feedback to all staff regarding performance. The frequency and level of the discussions should be based upon the individual position and the skill level of the employee.
All managers within the organization should receive training about the importance of providing accurate feedback, how to conduct difficult conversations and how to document the feedback.
Ideally, staff should always be informed how their performance and productivity relate to expectations. The more routinely this feedback occurs, the less unpleasant a traditional annual performance appraisal becomes.