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6 Ways to Effectively Manage Employee Performance and Performance Appraisal

How to drive employee performance management through regular feedback to ensure delivery of effective performance appraisals

I think it’s very important to have a feedback loop, where you’re constantly thinking about what you’ve done and how you could be doing it better.

Elon Musk, Tesla CEO

Managing employee performance effectively requires a number of processes and structures to be baked into the work environment. Fundamentally, this process should be a two-way street, where both parties clearly understand their responsibilities and are able to communicate clearly and consistently.

Goals and expectations should be clearly defined in the context of the organization’s overall strategy. At the same time, these goals and expectations need to be aligned so that the individual’s development is congruent with their professional growth.

There are 6 key steps to help effectively manage employee performance and performance appraisals. These are:

  1. Set clear expectations
  2. Make feedback integral to the day-to-day processes
  3. Conduct regular employee feedback surveys
  4. Build employee well-being and resilience
  5. Use performance management tools to track performance
  6. Conduct regular appraisals

Let’s examine each of these key steps in more detail.

1. Set clear expectations – coordinated between managers and employees

Managing employee performance and performance appraisal goes hand in hand. As such, this requires a coordinated effort between managers and employees. When appraisals come around, employees need to be crystal clear on the expectations so that managers are able to assess performance fairly and accurately.

Forbes magazine put together a panel of experts to discuss the core principles of effectively setting expectations with employees. Some of the highlights of this panel discussion include:

  • Aligning employees to the goals. Employee expectations and the nature of their role should be considered with respect to the overall strategy of the organization. By asking them directly what they think needs to get done, the employee becomes invested in the outcomes and better understands the process required to achieve them.
  • Leverage authentic accountability. Goals and expectations should be agreed upon through open dialogue. Such conversations should be geared towards encouraging employee commitment to these expectations, building a positive workplace culture structured around collaboration.
  • Act as editor of expectations, not creator. Allowing employees to act as the driving force behind the definition of expectations gives them ownership of the process. Managers should be there to help edit and refine these expectations rather than dictate them from the top down.

2. Make feedback an integral part of day-to-day processes

The trend towards frequent conversations between managers and their employees has accelerated rapidly since the crisis of 2020. With many companies operating from a remote working framework, making such feedback an integral aspect of day-to-day processes has become crucial. 

Without the advantage of spontaneous face-to-face encounters, managers need to ensure feedback is achieved via the available digital communications tools. Regular feedback typically manifests in a more informal manner, which in the workplace environment would consist mainly of verbal communication. 

Performance management tools bridge the digital divide and give managers and team leaders the tools to deliver this feedback across space and time to a remote-based workforce. 

Some of the tools which managers and team leaders can integrate into their performance management platform include:

Multichannel communications

Failure to communicate expectations clearly can lead to a complete breakdown of processes and outcomes. A multi-channel communications platform should be the first essential building block for organizations looking to effectively manage employee performance and appraisal practices.

Establishing a range of communications channels circumvents potential catastrophe by connecting the workforce regardless of where they are based. Desktop/laptop devices and mobile phones can all be interlinked and set up to receive email, SMS messages and in-app push notifications. 

Articles, blogs, worksheets and reviews can all be delivered with confidence and set to varying degrees of importance. For emergency comms, critical alerts can be used to make sure all members of staff have received and understood crucial updates.

Social intranet

Feedback between colleagues within a given team, department and organization is as important to overall performance as feedback between managers and individuals, Social intranets allow companies to strengthen a culture of feedback at all levels. Peer-to-peer training and collaboration can be coordinated via the social intranet so that the company’s talent resources can easily connect with one another.

Scheduled one2one check-ins

Regularly scheduled one2one check-ins are perhaps the most effective tool in a manager’s arsenal. They help to ensure that any issues are flagged and addressed promptly, with a regularity which means that any issues of concern are always fresh. 

All too often managers and employees alike can overlook these regular feedback sessions in favour of dealing with the day-to-day challenges of work. Scheduling these sessions via performance management software means they won’t be overlooked. Given their regularity, these sessions don’t need to drag on for hours, and by keeping to a schedule such feedback conversations will help to strengthen relationships and build rapport.

It is important that managers are clear that they are also receptive to feedback from employees. Effective feedback is about creating a series of ongoing conversations, and managers who encourage such dialogue will help employees feel confident they can speak frankly about their concerns.

3. Carry out regular employee feedback surveys

One of the key elements of the employee performance and performance appraisal process is understanding employee sentiment. Performance issues are often related to “hidden” challenges employees are facing, and often employees can be reluctant to speak openly about the challenges they are struggling to overcome. 

Employee Net Promoter Scores

This sentiment can be monitored via an Employee Net Promoter Score (eNPS) which allows individuals to express how they feel about their role and the work environment. Business and HR leaders can use these scores to gain a better insight into how motivated employees are, which teams and departments are suffering from a lack of enthusiasm, and the overall degree of satisfaction in the workforce.

eNPS surveys are conducted anonymously to ensure a higher rate of responses, and while this data isn’t appropriate when discussing performance with specific individuals it nevertheless highlights significant trends. Managers are able to extrapolate key issues from the results which can be used to address individual performance-related issues. 

Culture feedback mechanisms

One of the most famous quotes from business world icon Peter Drucker states that “culture eats strategy for breakfast”. Broadly speaking this means that if the people within your organization don’t nurture the core ambitions of the company, any strategy, no matter how well thought through, will likely fail. 

Culture feedback mechanisms can be put into place to help strengthen culture and give employees a role in how it is defined. A culture that embraces feedback is one that is geared towards evolving in a manner that reflects the skills and competencies of the collective workforce. Placing core values front and centre and inviting employees to contribute to their definition gives everyone a sense of investment in the company’s future prospects.

Performance management tools can be used to drive a culture of feedback. Manager-to-employee and peer-to-peer recognition can be used to help empower employees, driving behaviours most desired. When coupled with rewards, these systems drive performance through an enhanced bond between employee and employer.

4. Build employee resilience and well-being into the development process

With many employees facing uncertainty in the aftermath of the events of 2020, companies are increasingly concerned with building up resilience, both institutionally and at the individual level. Deloitte’s report, Resilience Reimagined: A Practical Guide for Organizations, outlines the role resilience has come to play for businesses worldwide:

“Organisational resilience isn’t purely defensive in orientation. It is also progressive, building the capacity for agility, adaptation, learning, and regeneration to ensure that organisations are able to deal with more complex and severe events and be fit for the future. The challenge of adaptation is exacerbated by today’s uncertain, complex, highly demanding and rapidly changing context in which organisations operate. Recent crises have raised serious questions about how rapidly organisations can adapt to changing threats, disturbances, and perturbations (such as a pandemic, climate change, or cyber-attacks).”

The challenges are best approached at the macro and micro level, and as such managers should approach performance as a question of resilience and well-being. In order to build resilience and well-being into the daily habits of employees, managers should consider:

  • Bolstering a sense of purpose. When employees feel as if they are working towards a goal which really makes a difference, their sense of investment and well-being is increased. Celebrating individual and collective wins brings teams together and makes them stronger.
  • Creating networks of social support. Dealing with stress can be difficult, particularly for employees who are working remotely. Juggling a work/life balance can be much easier when staff have someone they can talk to about the challenges they are facing. Managers can help facilitate dialogue between colleagues so they can receive good advice and overcome these obstacles.
  • Offer virtual tools and arrange activities. Team and company-wide activities are a great way to boost resilience by bringing employees together. By fostering relationships which aren’t exclusively focused on work, managers can give their staff breathing room from the day to day grind.

5. Track performance with the appropriate performance management tools

Mistakes should be examined, learned from, and discarded; not dwelled upon and stored.

Tim Fargo, entrepreneur

In order for managers and employees to make the best decisions about performance, it needs to be consistently tracked in real-time. Performance management tools offer users a raft of measures to better understand how well an employee is performing and what adjustments need to be made.

Performance management software allows managers and employees to:

  • Track progress towards goals through objectives and key results (OKRs). Gain a clear insight into progress towards goals via a personalized dashboard. When it’s time for an appraisal, everyone can be completely clear on where things worked out and what caused issues.
  • Monitor work efforts via key performance indicators (KPIs). Tie KPIs across the organization at the individual, team and department level so that the company remains on track to spot problems and maximize opportunities. KPIs are a great way to enhance alignment throughout the organization.
  • Analyse data through dashboards and reports. By using a performance dashboard, employees know exactly what is expected from them. Managers can set up customized reports to pull the relevant data out of the mix and present it during appraisals.
  • Assess team, departmental and organizational competence with performance leaderboards. Understanding the performance of individuals and teams helps HR leaders and managers provide guidance for those who are lagging behind. High performers can receive rewards and recognition to reinforce positive behaviours.

By analysing this data, when it comes to conducting performance appraisals managers can be confident they have the right information to guide future performance in the right direction.

6. Conduct regular appraisals

When it comes to the appraisals themselves, there are a variety of approaches to consider adopting. These give managers and HR leaders a holistic overview of how the employee is performing across a range of measures and allows them to conduct the appraisal with the maximum benefit. 

Managers and HR leaders should ask themselves the following questions when approaching an appraisal:

What are the different types of appraisal? 

There are a range of appraisal formats that can be adopted depending on the circumstances. These include:

  • General Performance Appraisal
  • Technological/Administrative Performance Appraisal
  • Manager Performance Appraisal
  • Project Evaluation Appraisal
  • Sales Performance Appraisal

What are the four key elements of a good performance appraisal?

An effective appraisal should try to incorporate the following four key elements:

  • Purpose
  • Outcomes
  • Accountability
  • Teamwork

What are the three main reasons for conducting performance appraisals?

  • to provide adequate feedback to each person on his or her performance
  • to serve as a basis for modifying or changing behavior toward more effective working habits
  • to provide data to managers with which they may judge future job assignments

The managers assessing employee performance and performance appraisal process should consider these types and key elements when preparing their review. The framework for appraisals will vary depending upon the employee and circumstances, and efforts should be made to make sure the session focuses on the relevant issues at hand. 

By following the first 5 steps outlined in this process, appraisals can be conducted efficiently and on-point. Automation and template creation through performance management software helps to smooth out this process even further.