How Effective Are Performance Appraisals?

November 24, 20158:00 am3152 views

How often does your organisation conduct performance appraisals? Do you find them really effective to motivate employees and encourage workforce to perform better? According to new research from staffing firm OfficeTeam, there are mixed reviews from workers on the current performance appraisal system.

To streamline processes and standardise procedures for performance appraisal, some companies like Infosys have done away with the bell curve model of performance evaluation.

The research findings from OfficeTeam reveal, 79 percent human resources (HR) managers interviewed schedule performance appraisal meetings at least annually.

One in four (25 percent) employee’s feel the assessments do not help improve their performance. This contrasts with 89 percent of HR managers who believe their organization’s performance appraisal process is at least somewhat effective.

More than a quarter (27 percent) companies hold performance reviews at least twice a year, a 9-point jump from a similar survey in 2010.OfficeTeam_PerformanceAppraisal Infographic

“All performance appraisals are not created equal. Companies need to determine the format and frequency of these assessments that works best for their employees,” said Robert Hosking, executive director of OfficeTeam. “Aside from formal reviews, regularly checking in with staff and providing feedback throughout the year can keep everyone on the same page.”

Here are five tips for managers to streamline processes when conducting performance appraisals:

  1. Get a head start. Check in with your HR representative regarding forms and guidelines for the meeting. Take time to reflect on employee achievements and whether expectations were met.
  2. Have others weigh in. Seek feedback from colleagues who regularly work with the staff member to receive the full picture. You may uncover new insights.
  3. Encourage active participation. Let workers know what to expect from the performance appraisal and how they can prepare in advance. Ask employees to compile a list of accomplishments, obstacles and goals for the discussion. Remember, it’s a two-way conversation.
  4. Choose your words carefully. When critiquing worker performance, give specific, constructive feedback, as well as suggestions for improvement. Also acknowledge the employee’s recent successes.
  5. Focus on the future. Reach an agreement on objectives for the coming period and regular checkpoints for assessing progress. Discuss any resources or support the worker needs.

See: Calling Death of the Annual Performance Reviews?

In another PwC’s ‘2015 Performance Management Research’ there has been an increasing frustration observed from both employees and managers with the year-end appraisal programs. This leads many organisations to focus on creating a continuous feedback culture and take the emphasis off the year-end appraisal.

Commenting on employee rewards and recognitions, Alastair Woods, director in PwC’s reward team, said: “There have been a number of high profile global organisations getting rid of year-end performance reviews and ratings and we are aware of a number of other companies considering this move.”

“While this may be the right answer for some, the focus on ratings is a red herring – it is how performance management is carried out that really counts. Organisations should be focusing greater attention on equipping managers with the appropriate skills to deliver effective and motivational performance conversations on an ongoing basis and creating a culture where employees can grow and develop.”

Hosking further added: “Love them or hate them, performance discussions can be an effective tool, as long as both managers and workers properly prepare.”

Wood provides a noteworthy advice: “Companies need to be careful not to throw the baby out with the bath water. Without the year end rating, the danger is that the distribution of pay and bonuses can become even more of a dark art as shadow systems evolve without proper governance and infrastructure behind them.”

Research findings suggest that when performance appraisal system is done well, with a balance between rewarding past performance and considering future development needs, the performance conversations can really motivate employees. And many employees appreciate the clarity that an effective formal assessment provides.

Also read: Fixing Your Poor Performance Reviews: Step by Step

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