Through performance management, managers and supervisors are able to know the capability of his or her team members.
With this system in place, managers and supervisors are able to find the most suitable plans of action to help underperforming employees improve their performance.
Companies of different business natures employ different types of performance appraisal system.
Even though these systems are unique and exclusive to the company’s business, every performance appraisal system share the same objective – measure and evaluate performance of the workforce to ensure quality and standard are met while at the same time help employees to strive for the best.
How does a business conduct performance appraisal? What are the things that go into an appraisal system? And how is this system efficient in ensuring consistent quality towards driving business excellence forward?
Objectives of a performance appraisal system
When designing a system or conducting an appraisal, it’s important to remember these objectives so that the parameters included in the system will align with what the company’s mission, vision, goals, and objectives.
Keeping these objectives in mind can help a manager or a supervisor to have an efficient and resourceful system and/or appraisal.
1. One of the main objectives of a performance appraisal system is to keep track of an employee’s performance and record them for the purpose of wage structure, increment, and references for promotion considerations.
2. This system serves as a systemic collection and record of an employee’s areas of strength as well as areas of development. These elements are important for the employee’s development in the organization.
3. With a performance appraisal system, it allows managers and supervisors to assess an employee’s potential from several aspects so he or she could be groomed for further growth based on his or her strengths.
4. Through this system, managers and supervisors can professionally communicate the performance level to the employees, as the performance appraisal system is quantified and calculated through measurable parameters.
5. Acting as a tool to influence an employee’s work habits, etiquette, and attitudes, a performance appraisal system is effective in motivating an employee to strive harder and work for a more positive improvement.
6. Since an appraisal system requires the managers or supervisors and employee to communicate directly, it’s also an effective tool to convey and record feedback from both parties concerning any aspect of the job and/or organization.
These objectives need to be the foundation of a performance appraisal system, as employees will need to fully benefit from it. Even though it’s in place to drive business excellence forward, it should serve to motivate, encourage, and push employees to leave their comfort zone and challenge themselves to greater heights.
Performance appraisal system needs to include the following, but not limited to only them since it needs to match the business nature and needs of an organization.
Methods of evaluating employees’ performance
There are several methods that can be employed when evaluating an employee’s performance. Often, these methods are either interchangeable or used collectively in an employee’s performance appraisal system.
Here are some of the common methods of evaluating an employee’s performance.
• Straight Ranking
As the name suggested, this type of evaluation typically involves a numbered parameter that reflect the employee’s ability to complete a task or achieve an objective of the job required. This method ranks the employees within a predetermined set of items that are required for the business needs and growth. Employees are required to satisfy these predetermined parameters and failing to do so will drop the employee lower down the rung.
For the parameters to be quantified, this type of evaluation usually has a system in place to calculate and quantify the employee’s performance and then refers to it to compare it against the accepted standard of performance.
• Grading and Checklist
This performance appraisal system places the employee against a list of criteria to satisfy. The grading system that is commonly used for this system is either by alphabetical i.e. A for Excellent, B for Good, C for Average etc. or by situational parameters i.e. Exceptional, Satisfactory, Average etc.
The checklist will list all the items that the employees should and should not do. This straightforward system is efficient when the items listed are tangible and easily measured. At times, certain items on this checklist are complemented by the grading system stated earlier to help the manager or supervisor better describe the employee’s performance.
• Behavior- and Merit-Focused
This system is often employed for employees’ soft skills appraisal. Many soft skills are subjective and require further discussion in order for it to be communicated effectively. Behavior- and merit-focused system will be supported by employees’ CSR efforts, the extra miles the employees have gone through, and additional ad hoc projects completed.
This system is often used by organizations that centered on customer service. However, due to the evaluation can be and tend to be bias from time to time, it can prove to be inefficient to the business development and excellence if the manager or supervisor chooses to rate the employees simply with a “Satisfactory” evaluation.
• Management by Objective
Before the evaluation is conducted, the manager or supervisor and the employee agree on a set of objectives to be achieved at the end of the evaluation. This system is suitable for higher-level employees where his or her contribution is significant to his or her work unit as well as to the organization.
In order for this type of evaluation to be successful, the manager or supervisor and the employee need to rely on productive discussion, constructive feedback, and mutual agreement to achieve the set objective as well as follow up goals thereafter.
Performance appraisal needs to be conducted consistently. Commonly, there is a monthly appraisal done with the employee’s direct manager or supervisor and a bi-annual one with the head of work unit, and sometimes for the annual appraisal, the session is conducted with the head of the department or process.
While the frequency of performance appraisal varies depending on the organization, many managers and supervisors prefer to conduct one on regular basis. Some companies do not set a specific period for appraisals to be conducted, but rather as and when required. There are also companies that conduct appraisals after a significant project or milestone in the employee’s work unit.
Whichever way a company chooses to conduct its appraisal sessions, it’s good to remember that the most important part is how effective was the last appraisal or evaluation. Should an employee is able to carry out the action plans stated from the last appraisal, it’s wise to allow enough time to pass according to the agreed timeline. Should a manager or supervisor observes that an employee is not able to cope with the action plan, then immediate actions should be taken.
Since an appraisal system can be for reward appraisal, development appraisal, and performance appraisal, the frequency will depend on its type as well on how does the organization wants to fit these appraisals into its planning and budget scheme.
However, the most basic cycle for performance management should at least be conducted as follows:
• Permanent staff should receive at least one official appraisal annually. Many managers and supervisors prefer to conduct monthly one-to-one session to address immediate and most pressing issues and then proceed to have a year-end appraisal to cover the employee’s performance for said year.
• Probationary staff tends to receive varying forms of appraisal, as it depends on their performance leading to their confirmation. Usually, probationary staff is evaluated at the end of his or her probation period that can last any time between 3 months to 6 months.
• High-maintenance staff may require more often performance appraisal depending on his or her work quality and attitude. Underperforming employees may need to be placed under action plan and this requires frequent follow-ups to ensure the employee is able to cope with the set goals and achieve the agreed objectives.
Delivering an effective performance appraisal
Another important aspect that will determine if an appraisal system is effective or otherwise is the delivery method. An efficient performance appraisal system will be rendered useless if the manager or supervisor failed to deliver it in the right manner.
1. Be specific – Managers or supervisors need to be assertive when communicating performance goals to employee. Injecting seemingly motivational phrases such as “Try harder,” or “Please work on your sales target” is not going to help the employee achieve his or her goal as there is no definite form of measurable performance that is expected of them. Provide specific figures or numbers so the employee will have a vision of what needs to be done.
2. Honesty is the best policy – Delivering bad news to underperforming employees can be difficult. But it needs to be done. Employees can’t be mollycoddle about something he or she is terrible at. While choice of words and tone of voice play vital role in delivering bad news, managers or supervisors should never avoid it or try to sugarcoat it. An employee needs to know and deserves to know what he or she is doing wrong.
3. Be realistic – Setting high goals is a romantic notion. However, it seldom works. And it would only discourage the employee to try again because he or she feels unqualified for the job. Based the goals that want to be achieved on the employee’s strengths and skills. Even if the goals are set as steps to rectify areas of development, use the employee’s strength to realize these goals.
4. Be clear and complete – Under certain circumstances, an employee’s performance record can be used in the court of law.
While this can be isolated cases, it’s still important for an appraisal to be clear and complete so that should an outsider needs to read it, your evaluation is justified and easily understood. Furthermore, it needs to make sense to the employee so he or she will be able to understand what needs to be done in order for him or her to improve.
5. Don’t make it personal – Many employees tend to dread performance appraisal because they feel that their manager or supervisor is attacking them personally. While an employee’s personality does influence his or her work attitude, this should never be the basis of a performance appraisal.
Managers or supervisors need to focus on the work quality the employee displayed. Avoid using words that signify emotions and sentiment as this can cause employees to feel attacked.
However, it can be a good thing to play on the employee’s positive personality to encourage him or her to take charge in his or her work unit. This is why it’s important for the manager or supervisor to know and understand who his or her staffs are.
A performance appraisal system is not only an effective tool to help employee improve, but it contributes to the business’ growth and excellence as well. Used correctly, a performance appraisal should benefit employee at every level. Having it aligned with the business key performance indicators (KPI) will ensure that everyone is on the same page of the direction of the company. This sets the expectation on the employee on what is required of him or her.
An appraisal session should be a session that employee dread. It should be used as the perfect opportunity to discuss any work related issues.
Many successful companies have appraisal system that is not only efficient but also highly effective due to the commitment by the managers or supervisors when delivering an appraisal. The relationship and mutual respect between managers or supervisors and employees will facilitate an appraisal system and thus making it a highly productive one for both parties.
Developing an efficient performance appraisal system reflects on an organization’s appreciation of its most valuable asset – its employees.