We are fast approaching the end of another exciting and challenging financial year. The buzzwords in most organizations would soon be ‘Met expectations’ and ‘Needs improvement’. The atmosphere in some workplaces is reminiscent of school days when children return to their seats to collect their grades or report cards, some elated, others downcast. However, the tension in the air during grading season lingers for a longer period than we experience with report cards on our school days. The entire process can be extremely stressful for all parties involved. A better understanding of the purpose, processes, and key elements of a performance appraisal would make the experience worthwhile and less stressful.
What is the Performance Evaluation?
It is a formal and structured evaluation method to elucidate the performance of an individual or a group/team and the potential for development.
Objectives of the Performance Evaluation:
There could be a plethora of objectives to conduct a performance appraisal based on the difference in job profile, employee profile, organizational goals, etc. The following are the most common objectives for conducting a performance evaluation.
- Employee confirmations: the idea is to evaluate the performance of employees against the expectations established while the individual joined; and to find out if you are ready to be confirmed as a permanent employee.
- Employee Promotions and Compensation – Here the employee evaluation gives a clear picture of whether the individual is ready to take on more responsibility and links performance to the percentage increase in compensation.
- Training and Development Need: Performance appraisals and performance dialogues identify those areas that need improvement in an individual/group and suggest action plans to address these gaps through training and development.
- Employee Feedback and Complaints: The appraisal is also used as a platform to understand the factors that contributed to the deviation from expected performance and understand the support the employee needs to meet future expectations.
The following table gives a simplistic view of the objectives of the Performance Evaluation:
individual understanding
Performance Feedback
Identification of areas for improvement
Identify areas of strength
Better understanding of future expectations.
organizational understanding
Salary review
HR systems evaluation
Retention/confirmation/termination/promotions
Identify the gaps that hinder the achievement of business objectives
Documentation
The performance appraisal process
Step 1 – Objective definition of appraisal
Have a clear understanding of what will be achieved by the Performance Appraisal
Step 2 – Set job expectations
Be clear about what is expected both qualitatively and quantitatively from the work entrusted.
Step 3 – Evaluation program design
Create a plan regarding when, where, and how the evaluation will take place. This includes the tools to be used. Even 360-degree feedback and 360-degree performance evaluations are used
Step 4 – Evaluate
Collected performance information is now evaluated against established job expectations.
Step 5 – performance dialog
This step involves meaningful conversations that both the evaluator and the evaluator have to understand the evaluation and discuss action plans.
Step 6 – Final data for the action
In this step, the results of the evaluation are documented for further action.
The key to the success of any performance appraisal lies in the quality of the performance dialogue. The performance dialogue determines the future relationship of employees/team with management. This is critical for individuals/teams to be motivated to achieve business goals for the next financial year.
Some current methods of performance evaluation
- Assessment centers: This is a performance appraisal method that was first developed and used in 1943 in countries like the US and the UK. The goal of this method is to place employees in simulated environments that require employees to display behaviors and patterns typical of a work environment in order to measure employee performance. Trained evaluators observe these displayed behaviors and rate them on established parameters. The results drawn from these observations and analyzes help management decide on an employee’s readiness to take on new tasks, increased responsibility, and also areas for improvement that need to be addressed in doing so.
- 360 degree feedback: It is a method in which all interested parties such as manager, peer, customer, subordinate, other departmental personnel including oneself give feedback on the performance of an individual. This technique gives a broader perspective to the development plan of the individual and allows them a 360 degree performance evaluation. Some of the areas that can be assessed through this technique are interpersonal skills, customer service skills, meeting deadlines, etc.
“It is an immutable law in business that words are words, explanations are explanations, promises are promises but only performance is reality” – harold s geneen
All managers would serve their organization well if they understood that the essence of performance reviews lies not in intimidating an employee but in mutually agreeing on what needs to be done to achieve business goals. This is also something that performance appraisal training should focus on.