Performance Appraisal Guide

The performance review, performance appraisal, or performance evaluation is a critical part of every company’s process. Every employee, periodically throughout their employment, must have their performance evaluated. This evaluation is an essential tool for various purposes, so you must understand what it involves, what it’s used for, and how to perform one if you’re in any way involved in the process.

Today, I hope to demystify this process by defining it, explaining how it’s used, and providing some examples.

Let’s get started!

The Definition of a Performance Appraisal

While there are many different terms for a performance appraisal, they all reference the same event. A performance appraisal is a meeting, typically between an employee and their manager or department head, and potentially involving an HR manager, a C-level executive, or another member of upper management.

This meeting is traditionally an evaluation of the employee’s performance since their last review (or their first review since they were hired).

Definition of a Performance Appraisal

These are:

  • Planned meetings. Performance appraisals are planned meetings. Employees need to be aware of them, prepared for them, and aware that they exist. Given their importance in the professional growth opportunities, compensation, and other aspects of the employee’s career, they should not be surprised by a review.
  • Regular meetings. Appraisals need to be held on a regular schedule. Typically, performance appraisals happen once or twice per year, though some organizations may process them quarterly.
  • Formal meetings. A performance appraisal is a precise process as part of the management, organization, and bookkeeping for the company. They are recorded and kept on file, used to chart the overall progression of an employee, and can be used both to guide the employee towards improvement and to diagnose issues with the team, department, or company as a whole.
  • Standardized meetings. Performance appraisals are only as valid as the data they harvest. If they are informal or inconsistent, the information they provide cannot be accurately compared to past evaluations, and thus their value is diminished.
  • Impartial meetings. A core element of an effective performance appraisal is that it is neutral. In particular, if an appraisal is used as grounds for termination, it may become evidence in an accusation of discriminatory termination, as has happened often in the past.

The performance appraisal evaluates the job performance of the employee in question. Thus, the related question is, what is job performance? From AIHR Digital:

“Job performance is the degree to which an employee fulfills the tasks of their job description. People with good job performance fulfill all the requirements of their job, achieve the objectives of their jobs, and meet the criteria for performance. This is also referred to as in-role job performance.”

In addition to in-role job performance, an employee may also be evaluated or commended on their out-of-role performance. Out-of-role performance includes behaviors that benefit the organization as a whole, the employee’s team, or the company brand. Employees are going above and beyond the requirements of their job, stepping out of their way to facilitate onboarding or mentor a new hire, or other “organizational citizenship” behaviors all fall under this heading.

It’s essential to maintain the distinction between the two. Once an employee’s extra-role performance becomes commonplace and evaluated as the baseline, it becomes an incentive to either withdraw from that performance or leave the role. Employees who do not feel appreciated for going above and beyond will not go above and beyond, to put it simply.

What Are Performance Appraisals Used For?

A performance appraisal has many purposes.

 The appraisal helps the employee maintain awareness of their performance. An employee cannot adjust their behavior if they are not aware that their behavior is incorrect. The performance appraisal is a way for the manager or supervisor to offer feedback to the employee, letting them know if they’re doing well or doing poorly, if they have issues, or if they are right on target.

Performance Awareness

That said, an appraisal should not be a surprise. In a modern organization, one of the core pillars of employee satisfaction and effective management is transparent communication. Employees should be aware of shortcomings long before their review, through more information sit-downs and ad hoc meetings, and given feedback to address issues long before they become problems.

The performance appraisal is merely a way to formalize and codify regular employee performance reviews and serve as an impartial guide to measure that performance.

 The appraisal helps notify an employee of issues they may not recognize as issues and helps guide them towards a resolution. Sometimes, an employee may not know how much of their feedback is personal or straightforward requests from a manager and how much of it is more critical business-related feedback.

Appraisal Issues

These mistakes are often a failure of communication, but the performance appraisal can help drive home the importance of appropriate feedback. One single review is rarely grounds for termination but can lead the employee to re-evaluate their behavior and work responsibilities to adjust their course before subsequent reviews.

 The appraisal praises the employee for their satisfactory and exemplary performance to encourage further performance. However, performance appraisals should never be entirely negative. Every employee has redeeming qualities, or else the organization would not still employ them. Thus, a good performance appraisal balances negative feedback with positive feedback. Specifics of both should be mentioned in their review and used as examples. They need to know what they should be doing more of and what they should avoid.

Appraising Employees

No one is perfect. Performance appraisals should rarely be wholly positive, but neither should they be relentlessly negative. Purely negative performance evaluations can hurt your employee morale, make them less likely to work to improve, and more likely to find alternative employment before they are terminated and have a black mark on their record.

 The appraisal helps the organization determine its budgetary disbursement for bonuses, raises, and other benefits. A vital element of the performance appraisal process is the ability of the company to use an unbiased and consistent approach to determine the disbursement of financial incentives and other employee compensation.

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Performance Indicators

Budgets are limited, and it’s worthwhile to reward exemplary performance as an incentive to encourage further outstanding performance.

 The appraisal can establish grounds for the termination of a chronically underperforming employee. No manager enjoys terminating an employee. However, if an employee consistently underperforms or makes disastrous mistakes, the evaluation must determine if they are doing more harm than good.

Circumstances can lead to a drop in performance. There are often multiple options to assist in an employee’s circumstances before resorting to termination. For example, do they need more medical leave, training, access to therapy, or another system you can provide to address their issues? Is there a disagreement between your team members, or is there an outside factor that is poisoning your work environment? A performance appraisal can be an opportunity to discuss the problems on the record and then turn the discussions towards individual team members. Once you’ve identified the root of the issue, you can work towards resolving the pressures that force job performance into the back seat.

How is a Performance Appraisal Performed?

There are many different forms of performance appraisal, and none of them are perfect:

Self Evaluations

 Self-evaluations are a common way employees can offer their perspective of their position, but they are not suitable for an official performance appraisal. However, they can be an excellent preliminary tool to help management understand what an employee does and doesn’t recognize about their situation.

Behavioral Checklists

 Behavioral checklists are a format wherein a form is created with a list of behaviors, typically specifics about duties and performance. These are often a simple yes/no checklist. This format avoids over-generalizing behaviors and is very quick to fill out. However, the format removes nuance and the ability to discuss goals, and the chance to go into detailed analysis.

360 Degree Feedback

 360-degree feedback is a form of performance evaluation that delivers feedback to the employee, not just from their supervisor or manager, but from others on their team, in their department, and in upper management who may be involved in the process. As a result, they can provide good, comprehensive evaluations of the bigger picture. However, not everyone is capable of delivering constructive feedback, especially peers. Additionally, people involved in the process but who do not directly interact with the employee may not have much to contribute.

Rating Scales Chart

 Rating scales come in several forms. They may have a +1 – 0 – -1 scale of “exceeds, meets, fails to meet expectations.” They may have a poor-to-excellent, 1 to 10 scale. Regardless of scale, the goal is to set specific behaviors, attributes, and qualities to evaluate. Additionally, each one is weighted as to how important it is in the overall scheme of things within the organization. This way, low ratings on minor behaviors do not counteract high ratings on more essential qualities.

The primary drawback of these scales is obfuscation, complexity, and misunderstanding. It can be difficult for an employee and even a manager to grasp, at a glance, what is considered a “good” result and what isn’t. Additionally, these scales – particularly the broader 1-10 scales – are more subjective and can lead to biased results. Management may think that an employee is doing excellent work and award them with a score of 8/10, but that employee may be worried that they are underperforming in some way. You can see the issue here.

Additional forms of appraisal may be used in specific circumstances.

For example, a critical incident appraisal can be a valuable point of feedback for how an employee acts during an unusual but severe incident. These are not a replacement for regular performance evaluations but can be an accessory to help showcase unusual behavior during a crisis.

What Metrics Should a Performance Appraisal Measure?

It’s essential to develop a performance appraisal prior to performing the evaluations. Establishing precedent for what is important and worth monitoring is critical. What, then, should your appraisal measure?

Performance Appraisals Measure

  • Core job competencies. These are the skills, abilities, and performance attributes everyone within the department (or the company) needs to succeed — for example, the ability to communicate within and without their department.
  • Role competencies. These are the skills, abilities, and attributes the employee needs to succeed in their specific role. For example, these could include fluency with a ticketing system for a support agent, fluency with a type of software for a developer, or ability with a coding language for a programmer.
  • Role expectations. What is expected of the employee, and how well do they meet or exceed those expectations?
  • How well is the employee collaborating with their team and the rest of the company?
  • How reliable is the employee in terms of their attendance, performance, and other aspects of their role?

These are just some of a large number of possible qualities your evaluations can examine. Performance appraisals are, by necessity, customized to the company, the department, and the role of the employee, within a general framework. Not all aspects will apply to all roles; an internal developer does not need to be judged harshly for lack of customer service skills if they are not in a service position, for example.

What Do Good and Bad Performance Appraisals Look Like?

When developing performance appraisals, it can be helpful to see what good appraisals look like. More importantly, it’s valuable to see what bad appraisals look like, to avoid falling for the same mistakes yourself.

  • This post from Valamis includes four examples, two good and two bad. It showcases common pitfalls, such as over-generalized, under-specific, and overly-personal performance reviews. It also showcases how to do negative performance reviews in a personalized, helpful way, without accusatory phrases, overt negativity, or other common problems.
  • This post from Business News Daily showcases five examples of user-submitted anecdotes, performance reviews that were among the worst submitted.
  • This post from Venngage offers a series of formats and templates for generic (but useful) performance appraisal documents. They have sample text filled in, and the post also includes advice from an HR manager. Overall, it’s a good resource to start building your evaluation process, at which point you can customize it for your company.

Overall, it’s difficult to show examples of unequivocally good or bad performance appraisals because, by their very nature, they are customized to the company, department, and role. As long as they can accurately measure an employee according to work-relevant qualities and behaviors, they are often good enough. Just make sure your appraisal process meets the qualities above – regular, planned, formal, impartial, and standardized – so that they can be used to accurately judge your employee performance.

How do you feel about performance appraisals? Do you have any questions for me? Are you already implementing these in your organization, or are you planning to? Please share with us in the comments below! I make it a point to reply to every constructive comment that I receive, and I’d love to hear from you!

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