Performance appraisals: why and how?

When someone passes a good comment about your work, it acts as a morale booster and you rarely forget it. When someone criticises your work, although you might, at first, take this criticism negatively, this should also serve as a morale booster...

If your performance improves, your boss at work will be satisfied, your colleagues will also be satisfied and, at the end of the day, so will your own personal satisfaction.

Performance appraisals are certainly an essential element of the effective management and evaluation of staff. Appraisals help develop individuals and improve organisational performance that feed into business planning.

Formal performance appraisals are generally conducted annually for all staff within an organisation. Each staff member is appraised by his/her line manager in a head-to-head meeting.

What is the objective?

Performance appraisals enable effective management of the staff at work. They are also used to monitor standards and to agree, on an individual basis, with personal expectations and goals based on the objectives the company has set in its business plan for the following period.

The appraisals also facilitate the delegation of responsibilities and tasks to each member of staff following an evaluation of specific skills. During this one-to-one meeting, the manager also assesses, together with the member of staff, his/her performance during that year.

Performance appraisals generally review each individual's performance against objectives and standards for the trading year, agreed at the previous appraisal meeting. They are essential for career and succession planning and are important for staff motivation, attitude and behaviour development, communicating organisational aims, and fostering positive relationships between management and staff.

Regular appraisals also provide a formal, recorded, regular review of an individual's performance, and a plan for future development. In short, performance appraisals are vital for managing the performance of people and organisations.

Each company has a specific way of creating this tool, depending on the evaluation, the individual, the assessor and the environment in which it is being conducted, among others.

The objectives the manager and the individual set together must be smart: specific, measurable, achievable, relevant and time based.

What does it mean for the employer?

Performance appraisals should be a positive experience. The appraisal process provides the platform for development and motivation, so organisations should foster a feeling that performance appraisals are a positive opportunity to get the best out of people and the whole process. Organisations should ensure that there is a climate conducive to a positive perception about performance appraisals. This will help maximise their effect.

But why should employers invest in performance appraisals? First of all, staff performance appraisals establish individual training needs and enable organisational training needs analysis and planning.

In some cases, performance appraisals data feeds into the salary and grading reviews and can be used - in most cases - for business planning the next trading year.

More importantly, performance appraisals may be used to ensure that the employee is retained because of job satisfaction.

Through such a method, employers would be in a position to distinguish between high and low performers within an organisation.

The human resources department, the manager and the individual can then together look into the results of the last appraisal and draw up a plan to assist those rated as low performers.

Methods of assisting low performers include assigning a mentor, providing more training and evaluating the real cause of demotivation. Performance appraisals can also be a tool to help identify and uncover a personal problem. At times, performance appraisals may also be used to identify conflicts within a working team or demotivation as a result of an individual not seeing the possibility of ever getting a promotion.

Moreover, performance appraisals could be used as a motivational tool since bonuses and promotions are usually linked to appraisals. Even if no bonuses or promotions are handed down, appraisals could be used to get the individual to exceed his/her own expectations and perform much better than before.

In an ideal scenario, performance appraisals could be very motivating because they urge the individual employee to actually make an effort to eventually achieve better results.

Through performance appraisals an employee is more aware of where he/she stands and what areas to improve. They could also be a guideline as to what is expected from each individual employee and how this could help him/her achieve better results.

Regular meetings

Holding regular informal one-to-one review meetings greatly reduces the pressure and time required for formal appraisal meetings usually held on a yearly basis. There are several benefits of reviewing an employee frequently and informally.

The direct manager is better informed and more up-to-date with his staff's activities and more in touch with what lies beyond, like customers, suppliers, competitors and markets.

Difficult issues can be identified, discussed and resolved quickly, before they become more serious. Help can be given more readily - people rarely ask unless they see a good opportunity to do so - the regular informal review provides just this.

Training can be broken down into smaller, more digestible chunks, increasing success rates and motivation.

Relationships and mutual understanding also develop quicker with more frequent meetings between manager and staff.

Staff members can be better prepared for the formal appraisal, giving better results and saving management time.

The tip is not to make it a one-off occurrence. Having a regular one-on-one 'mini-review' would reduce measurably the anxiety created at the end of the year and eliminate the surprise that is sometimes experienced. The company would be in a better position to correct what was needed to be corrected earlier on.

The downside of performance appraisals

Employees often find them subjective. Managers sometimes regard them as a nuisance - that something extra in their already busy schedules. Both parties have been known to dread them and the endless form filling associated with them. This is the problem with performance appraisals: they might be subjective due to prejudices against them.

Performance appraisals, while potentially a valuable tool for companies, have attracted much criticism, with some academics proclaiming that they nourish short-term performance, butcher long-term planning, build fear, demolish teamwork and encourage rivalry and politics.

Yet, if used effectively, appraisals have the potential to boost the overall performance of a business and those individuals who work for it. Indeed, research has shown that companies that manage the performance of their people effectively are more likely to outperform than those that do not.

To this effect, it must be highlighted that successful performance management can also help companies plan better, retain top performers and align individual goals with those of the organisation.

However, recent studies have revealed that although performance management is widely embraced in many companies in Malta and abroad, its use remains problematic and companies struggle to implement it successfully.

But why can it be so subjective? Strictly speaking, the manager is the do-all and end-all in this whole process: he/she has the final say. There may well be a personal grudge against an employee or a manager prefers one employee to another.

There might also be the 'you-scratch-my-back-I-scratch-yours' element or the element of personal favours. For example, an employee goes to the CEO and praises the manager. The manager might then feel obliged to give this employee a good performance rating because of that particular positive comment.

There might also be character incompatibility or an element of fear: the manager might be scared to give a negative rating fearing that the employee in question might not perform well in the long run or because it will demotivate him/her.

Other problems encountered when compiling performance appraisal information is leniency or what is sometimes called the 'central tendency zone', whereby a manager tries to avoid extremes of scale. This is considered to be a safety net so employees do not get offended (rating them as five instead of two out of 10).

How can subjectivity be reduced? One may introduce self-appraisals whereby employees are asked to rate themselves. How did I perform this year? Could I have done anything better? What stopped me from performing better? These are the type of questions that need to be asked.

360-degree appraisals

A powerful method is 360-degree appraisals, which are quite different to traditional manager-subordinate appraisals. As such, a 360-degree process does not replace the traditional one-to-one process - it augments it, and can be used as a stand-alone development method.

These type of appraisals involve the appraiser receiving feedback from people - named or anonymous - whose views are considered helpful and relevant. The feedback is typically provided on a form showing job skills, abilities, attitudinal, behavioural and some sort of scoring or value judgment system. The appraisers should also assess themselves using the same feedback instrument or form.

Respondents of 360-degree appraisals could include appraiser's peers, up-line managers, subordinate staff, team members, other staff, customers and suppliers - anyone who comes into contact with the appraiser and has opinions/views/reactions of and to the appraiser.

CSB Recruitment Agency has been supporting the local business community with its services since 1987. For further information you can write to us at Vincenti Buildings, 14/19 Strait Street, Valletta VLT 08, call us on 2122-5800 or 2124-6543, fax: 2123-0520, e-mail: jobs@vacancycentre.com, or visit www.VacancyCentre.com