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Performance Management Appraisal System: Examples and Key Elements

Optimize your organization and employees with a range of appraisals for improving performance, engagement and motivation 

Don’t lower your expectations to meet your performance. Raise your level of performance to meet your expectations. Expect the best of yourself, and then do what is necessary to make it a reality.

Ralph Martson, motivational speaker

There are a wide variety of types of performance management system currently available to businesses, each with unique features and benefits. One of the most popular features available from a performance management suite is an appraisal system. 

These allow HR leaders and managers to plan, schedule and conduct a range of appraisals to gain a better understanding of what motivates and engages their workforce.

So what are the core benefits of conducting appraisals?

Organizational benefits

  • Identifying and addressing behavioural issues relating to performance before they undermine team and departmental productivity.
  • Create a better understanding of working conditions, and how businesses can improve these to create a better environment for employees. Consequently, productivity and quality of work will improve.
  • Provide support for employees in the development of their skills and career path.
  • Offer unique insights for HR leaders and managers to improve their hiring and firing decisions. Succession planning, layoffs and internal reshuffles can all be geared towards having the maximum impact on positive outcomes.

Employee benefits

  • Appraisals give employees the opportunity to highlight achievements which may be overlooked by team leaders and managers. This attention to “unseen” contributions leads to greater recognition of good performance and the attendant rewards.
  • Spotting opportunities for lateral or upward promotions into more suitable roles within the organization.
  • Fostering a better understanding of the skills they need to work on and develop to further their professional ambitions.
  • Increased motivation through consistent engagement with performance, and how this fits into their long term goals.

Creating an appraisal system – core concepts and the performance management cycle

When crafting an appraisal system and the processes around it, businesses need to be mindful of the core features of the performance management cycle. Each component of this cycle impacts how the appraisal will be framed, and how it feeds back into these important stages.

Planning

This is the work undertaken in advance in which goals are set and the metrics used to define individual and team success are clearly defined. Often these plans are linked to the job description and are formulated as part of a collaboration with HR leaders, managers and the individuals.

A meta-analysis of this process from the Journal of Applied Psychology confirmed that this process of participation increases satisfaction with the performance cycle:

“[E]mployee participation was positively related to employee satisfaction with the appraisal session, the appraisal system, perceived utility of the appraisal, motivation of employees to improve performance, and perceived fairness of the system.”

These plans should also have a degree of flexibility built into them, allowing for adjustments along the way as objectives changes or new challenges to achieving goals arise.

Monitoring

Continuous monitoring of progress towards stated goals allows managers to fully understand what is impacting upon performance and how it can be addressed. Tracking objectives and key results (OKRs) and key performance indicators (KPIs) in a performance management suite offers this real-time analysis of key data.

Whether addressing sub-optimal performance or encouraging more great behaviour, this data can help provide clarity to employees receiving the feedback. Likewise, such data highlights trends over time, so employees whose performance is on a downward trajectory can see where things are going wrong and work to correct their course.

Developing

The next stage of the performance management cycle concerns learning and development. Appraisals should always bear this in mind, whether they are dealing with high achieving employees or under-performing ones. Some companies place too much emphasis on the latter, neglecting to develop the skills of their star performers.

When planning and conducting appraisals, HR leaders and managers should whenever possible bring development opportunities to the discussion. This can be through training programs and courses, or by offering more challenging work and other opportunities for personal and professional growth.

Rating

Rating performance allows employees to clearly understand their abilities and chart their progress in the role. It also gives business leaders a strong point of comparison to better understand how effectively performance is distributed throughout the organization.

Some tools and techniques organizations use to rate and compare employees include:

  • Ranking method. The rater ranks their subordinates on overall performance listing employees in relative positions. 
  • Forced distribution. A certain percentage of rates are applied to various categories then distributed across the employees. For instance, workers of outstanding merit will be placed in the top 10 percentile, with the others distributed in “good” and “fair” categories.
  • Checklists and weighted checklists. From a variety of statements about a specific role, the rater attaches each statement to a weight/scale for each employee. The rating sheet is then scored by averaging the weights of all the statements.
  • Critical incident techniques. Effective and ineffective behaviours of an employee are listed to represent outstanding and poor behaviour. These critical incidents are collated in a log which managers can then refer to during appraisals.

You got to be rigorous in your appraisal system. The biggest cowards are managers who don’t let people know where they stand.

Jack Welch, former Chairman and CEO of General Electric

Rewarding

Recognition for work well done should be embedded into the daily lives of managers and employees. Performance management software allows users to congratulate colleagues for a job well done at any given time through peer-to-peer awards. By placing positive feedback visibility within the system, leaders can encourage more of the same behaviours which lead to the best outcomes.

This shouldn’t come at the expense of a range of other reward systems, such as the traditional approach of offering financial compensation such as annual bonuses. But it should be understood that remuneration of this type is often less effective in effect as many employees consider these reward schemes as standard throughout the business world.

Instead, rewarding great performance should be an ongoing and organic process that is centred around human behaviour. Incentive schemes should be accompanied by sincere expressions of gratitude if they are to have a fully positive impact upon behaviours and performance.

Appraisal types – choosing the right appraisal for the right circumstances

Choosing the right kind of appraisal for the right circumstance makes sure managers and their employees are on the same page. If the discussion needs to be focused on short-term expectations then both parties need to be clear on this so that they can prepare accordingly. 

Performance management tools allow users to create templates for a wide range of appraisals, which can then be automated and scheduled. Making sure everyone is aware of the purpose of an upcoming appraisal ensures these meetings remain on point.

Here’s an overview of some of the most common types of appraisals which can be planned and coordinated via a performance management system:

Weekly catch-ups and one2ones

Contemporary performance management is strongly oriented towards continual processes, and weekly catch-ups and one2ones should be embedded into everyone’s work schedule. With many employees working remotely even as the hybrid model of splitting time between work and home becomes commonplace, managers can often overlook forces influencing behaviour and performance.

These regular appraisals make sure problems are identified early on, with insights into factors that might otherwise be missed due to the lack of face-to-face office encounters. They also built trust between managers and employees, strengthening relationships so that individuals feel capable of speaking freely about pressures and challenges they are facing.

Monthly and quarterly appraisals

Annual performance reviews are becoming increasingly redundant, particularly in light of the unprecedented events of 2020. Once a year is simply too infrequent for these reviews to be meaningful, so successful companies are switching to quarterly or even monthly reviews to keep their finger on the pulse of the organization.

Monthly and quarterly reviews are more comprehensive than regular one2ones, and should be used to both look back on the previous period of time to assess performance on a variety of measures, as well as plan ahead for the next period. Pitfalls to high performance and other shortcomings are considered alongside what went right for a fair representation of overall performance. 

Such appraisals are perfect opportunities to revisit an employee’s Personal Development Plans (PDPs) to check their progress is aligned to the desired expectations. 

  • Are they fulfilling the training and development set out when these plans were first established? 
  • Do they need to update the plan to reflect the changing roles and responsibilities they have within the company?
  • If their work has been suffering is it appropriate to set up a Performance Improvement Program (PIP) to set them back on the right track?

Probation appraisals

Probation appraisals are usually conducted within 90 days of an employee taking on their role, although in some cases these appraisals are ongoing, for instance occurring every three months. Their primary purpose is to ensure the employee is fulfilling the objectives of their role and is suitable for a permanent position within the organization.

Expectations should be explicitly understood as part of the onboarding process so that managers and team leaders can measure how effectively an employee has accomplished these over the probationary period. Similarly, a development plan gives a clear view of any training and mentoring required for their role, or how well the employee has “shadowed” a colleague to come up to speed on their duties.

Aspects of performance which managers should consider during probation appraisals include:

  • Accuracy and quality of work completed
  • How efficiently this work is handled
  • Absence and sickness patterns and general attendance
  • How effectively the employee has managed their time
  • General competency within the role – including any instances where work has either excelled or fallen short of requirements
  • How well they have worked with other colleagues and team members

Appraisals for under-performers

As a general rule of thumb, appraisals should if possible be focused on positive feedback. However, sometimes employee performance continually lags behind the rest of the company, and in these instances, appraisals that seek to deliver constructive feedback need to be scheduled.

HR leaders and managers conducting such appraisals should consider the following:

  • Sandwich the negative feedback between positive remarks. While some performance management professionals are critical of the sandwiching technique, in the right circumstances it can be helpful to give the employee a positive frame to help boost confidence to overcome their shortcomings. It can also help with modeling the behaviours and outcomes you want them to focus their efforts on moving forward.
  • Deliver the feedback in an honest and candid tone. Corrective feedback needs to be delivered in a way which is stripped of personal emotion so that the individual doesn’t feel they are being attacked. Being forthright but professional helps them to digest the information clearly.
  • Bring solutions to the table. Criticism without a constructive element is almost worthless, so make sure you prepare a plan of action before the meeting so the employee can see light at the end of the tunnel. This could be in the form of an improvement plan, which team leaders and managers can compile in conjunction with the under-performing employee themselves.
  • Give the employee the opportunity to share their perspective on performance issues. There may well be extenuating circumstances which the HR leader or manager conducting the appraisal aren’t aware of. Make sure the employee has plenty of time beforehand to bring together any relevant information which may be useful for making a decision about how to resolve their under-performance.

Self-assessment and 360 degree appraisals

There is only so much HR leaders and managers can know about the strengths and weaknesses of a given employee. Performance management software can provide detailed analysis on a wide variety of metrics, but there are often hidden influences that affect performance.

Self-assessment and 360-degree appraisals offer employees to shed light on personal issues which may have affected their outcomes, as well as the challenges their colleagues may have endured which aren’t immediately obvious to team leaders. Managers can regularly schedule and automate these appraisals so that they have a complete view of the pros and cons surrounding a given employee’s performance when conducting appraisals.

Since 360-degree appraisals are anonymous, those participating are in a better position to give well-rounded and constructive feedback.