Performance appraisals are usually not enjoyed by managers nor employees. They can, however, be very helpful to those same managers or employees if prepared and conducted correctly. They are also helpful if used as a positive tool to assist employees, not punish employees.
Smaller companies do tend to keep the process informal, but this should not translate into poor record keeping and lack of follow-up. As a company grows, it becomes quickly necessary to formalise the process.
What are the six steps in a performance appraisal?
There are generally six main steps in the performance appraisal process. The steps are:
Measurement of Performance
How do you conduct staff performance appraisals?
Starting with step 1, it is vital to set and clarify standards of performance that are fully aligned to the company’s strategic goals.
Moving onto step 2. Goal setting is done jointly by setting goals that are measurable. These, too, must be aligned to the company’s strategic direction. In addition, these must be aligned to the job analysis and the job description.
The performance standards and the jointly set goals must be clear, and they must be objective. Both, or all, parties must be able to understand them and be able to individually measure them individually.
The manager must have crystal understanding of what their expectations are of their employee in terms of work performance. Only then are they able to correctly and effectively communicate these expectations to their employees. With both parties clearly understanding the expectations, it creates an easy and amicable next step.
This next step is the reaching of a mutual agreement on the specific job performance requirements, how it will be measured, and that the appraisal will be based on their performance against these agreed measurements.
Personnel / H.R. departments are usually the ones that set up performance standards of employees in larger companies.
The measurement of performance is step 3, which determines what the employee’s actual performance was in predefined areas, general areas and specialist areas if relevant. The appraiser should take great care of how they obtained information on the performance. They should also be concerned about observing themselves and about how they are measuring as well as being certain they measure the correct part of the performance.
These performance measurements are discussed with the employees as their input to these measurements is vital.
This feeds directly into step 4, which is the comparison. This fourth step acknowledges the agreed final measurement of the performance and compares it against the standards or business benchmarks.
Together with the employee, the personnel manager or direct manager notes the deviation between standards or business benchmarks and the performance of the employee. The standards and business benchmarks must be clearly understood by the employee before you can proceed to the fifth step in the process of the appraisal with the employee.
Step 5 of the performance appraisal process, viz. discussion, can occur simultaneously with step 4. The discussion, however, is usually clearer and more focussed if step 4 is fully completed first and step 5 is executed sequentially.
The discussion of the appraisal with the employee is an important part of any type of appraisal, and good management skills and EQ are important here. The discussion can have negative consequences, and if not handled correctly, this can damage an employee’s future performance. Suppose this performance appraisal is part of a disciplinary hearing, preferably called performance management. In that case, it is especially important that management does not become part of the problem of low productivity, for example.
The discussion, however, can also have positive motivational consequences whereby the manager praises performance, contribution to the company and to the team. It is also beneficial for the manager to explain how seemingly unmeasured performances (e.g. helping others with their work) is noticed and contributes to overall measurements.
The toughest part of an assessment is when an employee’s contribution is insufficient yet they are performing at the best of their ability. In a standard performance appraisal, this outcome would then need to feed into a different process, viz. performance management process, whereby the staff member is potentially redeployed into another position. Their inability to execute the job means that the manager has done a poor job in hiring and should not sit fully on the shoulders of the employee, if at all.
The comprehensive discussion will lead into step 6 which covers the setting and agreement of any corrective action required. The agreed corrective action is also initiated in the final step via different methods. There are two high-level types of actions. One type is immediate action which is where the manager deals mainly with symptoms. The second type is where a process is put into place to seek out the causes of poor performance or, for example, an agreed set of appointments are put into place with a therapist, training officer etc.
Some managers refer to the “immediate corrective action” as ‘putting out fires’, whereas the second type of action is a medium to long term treatment or action plan.
You will recognise immediate action as it corrects something immediate e.g. a slow computer, insufficient remote data, and gets things back on track quickly and will minimal effort or intervention.
Medium to long term corrective action asks the questions: how and why with regards to the deviation from the performance. A successful manager will recognise the value of investing time in analysing the how and why today. The benefits derived from this will be evident in the time saving achieved in the upcoming days and months. The additional benefit is that it stops the problem from growing out of proportion when it could have been avoided with earlier intervention.
What are appraisal techniques?
Consider this case study as an example:
In the example of a business operating as a manufacturer, there usually comes a time when the manufacturer needs to procure new machinery for expansion purposes or for upgrading purposes. These machines, in this example, need machine operators. The manufacturer will need to establish a job description, an operating procedure and a performance measurement framework for the machine operators.
To do this, the manufacturer will first have to do a job analysis to determine the elements of the job and weight their importance in the execution of the job. As an example, these might be adjusting machine settings, making parts that are produced by the machine, inspecting the machine and parts quality and so forth.
This then facilitates the next step, which is the setting of performance standards or benchmarks. This might include the operator’s ability to correctly do the machine’s settings or the operator’s ability to manufacture the parts and their ability to consistently and effectively inspect the finished products.
Valid performance measurements would be unscheduled inspections of machine settings, verified counts of parts/units produced by the operator, and unscheduled inspections on parts quality.
The next step is establishing the desired level of actual performance for the machine operator. Remember, perfection is impossible, so an actual performance of 98% accurate machine settings, for example, could be the top level expected. Additionally, 40 units of parts produced per hour could, for example, be a measurement, and a quality correctness level of 93% might be the top level achievable.
The operator’s actual performance is then measured against these benchmarks/standards. The manager provides feedback to the operator, and rewards or corrective actions are concluded.
Measuring is easier for some jobs than others. Jobs that include large portions of non-tangible, soft skill components, such as a Manager’s jobs, are ambiguous. Ascertaining performance criteria and benchmarks and tangibly measuring actual performance can be complex and may need multiple forms of quantification.