Performance appraisals
The last few years has been challenging for employers and organisations. Add the Great Resignation, talent shortages, and economic challenges and it has been a tough time for both employers and employees. Companies in Australia and New Zealand must review their processes and look to reinventing their old standard processes which have not given effective results.
One of the ways you can revamp your approach to performance management and employee well-being is rethink your appraisals. Work appraisals can be a key ingredient in effective performance management and help boost productivity and retain vital talent.
In this guide for employers, we explain performance appraisals, the process of performance appraisals, benefits of appraisals, and ways Peninsula can help you.
Appraisals
Appraisals refer to the regular review of an employee’s job performance and overall contribution to the company. Also known as an annual review, employee appraisal, performance review, or evaluation, you don’t have to legally do it in the workplace.
An appraisal also evaluates an employee’s skills, achievements, growth, and tasks. In an appraisal, you periodically review and assess past performance to determine compensation and promotions. You can use appraisals to justify raises, bonuses, or even termination.
Appraisals do not need to be formal and do not need to be on a set timeframe. However, they should be documented and the more often they occur, the less risk there is of problems developing. Unless it is outlined in the employment agreement, contract, or any workplace policies there is no requirement for a formal time period or structure for an appraisal, but there are a few tips you should consider for every employee and their appraisal.
Performance appraisals vs performance reviews
Performance appraisals and performance reviews are terms used interchangeably but there are few differences. Performance appraisal is the formal, structured, and specific process while a performance review can be informal, unofficial, and even a friendly chat between a manager and an employee.
Performance appraisals process
Setting clear goals and objectives as to what is expected is an easy way to ensure employees are clear on what they need to accomplish. In this process, not only should you outline what you expect but employees should be encouraged to state what they would like to accomplish.
In an appraisal you have the steps as follows:
Let your employee know you will be holding an appraisal on so and so date. This should be done weeks or months in advance so employees can prepare.
Schedule the meeting weeks in advance and confirm it with the employee.
Inform the employee about the nature of the meeting, the agenda, and any questions that may arise in the meeting.
Some questions that you may ask:
How well they think they’re doing in their job?
Which areas can use improvement?
Whether they need any additional support or help for their role?
How they feel about their job and company?
What would they change if they could?
Have your own thoughts and notes prepared for the meeting. This should include your employee’s job description, their tenure, notes from previous reviews if any, performance indicators, metrics, any other relevant figures that are related to their role. Get feedback from other stakeholders, seniors, and even colleagues. Discuss the tough questions with your employees- if they are not performing well, you will need to ask why certain targets weren’t met. Give them time to prepare answers. Take notes in the meeting and share the copy with the employee. Share final thoughts, next steps, and a written summary. Carry out follow-up meetings to ensure the development program is achieving the desired outcomes.
You have the freedom to make the appraisal interview as formal or casual as you wish. Although, as a general rule of thumb, it is a good idea to conduct the meeting in a safe, secure environment (e.g. private meeting room or quiet local café), where you can both speak openly – free of distractions and interruptions.
Types of appraisals
There are the standard appraisals which are usually the manager or supervisor taking the lead on it and evaluating the employee with no external input.
A range of new performance employee methods have been developed and put into practice in the modern workforce. As a result, employers have the freedom to pick-and-choose from a number of approaches, which can be tailored to match their style and the needs of the business. Ideally, a combination of methods would be adopted to get the best all-round picture of the employee’s performance.
Peer assessment: Your employee’s colleagues or workgroup rate their performance
Self-assessment: Employees rate their performance and behaviour
360-degree feedback assessment: A holistic approach as it includes input from an individual, supervisor, and peers
Management by objectives (MBO): This approach works when you have short-term projects and are more about specific and measurable goals. It is ideal for teams that have quarterly or annual targets that need to be met.
Behaviourally anchored rating scale (BARS): While this is a newer method of performance appraisals, it admits that behaviours play a big role in employee performance. This method involves rating employees on defined behaviours relevant to their role. For example, if an employee is in a customer service role, how they perform their role is equally important as what they achieve.
Objectives and key results (OKRs): This can be used in combination with MBO or self-assessments. This method is suitable for growth-focused businesses and encourages employees to set individual measurable goals that align with company objectives.
Graphic rating scale: Graphic rating scales are visual scales used to evalute employees on a continuum. The scale has numerical or descriptive options such as (1-5, 5-10) or (below expectations, meets expectations, exceeds expectations).
Performance appraisal form
Regardless of your approach to the performance appraisal, it is important to have all your bases covered. Below is a checklist of the key details to include in your appraisal form:
The employee’s details.
Summary of the employee’s performance results within the reporting period.
Summary of the employee’s performance and whether they’re reaching development goals.
Agreement on new development goals for the next performance period.
Section for both the supervisor and employee to sign-off on the details.
Benefits of performance appraisals
Performance appraisals have multiple benefits for both employees and employers. When executed effectively, they have a strong impact on the workplace.
Regular appraisals ensure that your employees have a clear target they are working towards. They feel motivated and have established expectations about potential rewards. Appraisals boost employee morale and productivity and incentivize hard work and dedication.
Criticism of appraisals
While performance appraisals have several benefits, they also have some drawbacks for the organisation and employees.
Appraisals are standardised and do not take into account individual temperament and style of working.
Several companies tend to use standardised or general appraisals without considering their company culture.
Appraisals can have unrealistic goals and demoralise workers or push them to feel resentful.
Due to the close relationship between a manager and their employee, appraisals can become about likability and not performance strictly.
Not all roles may have clear metrics or figures that can signify good performance or progress.
Key things for employers to remember
Appraisals should be an ongoing process. Through the year, ensure that managers and supervisors feel comfortable to engage with employees. They should establish goals, note progress, and provide feedback consistently and regularly.
You also don’t necessarily need to wait till appraisal to give your employees feedback or get feedback from them. You can set up informal chats with them once or twice a month to keep track of progress and any other support they may need.
Managing poor performance
Poor performance can occur for many reasons. An employee may be suffering from low morale, lack certain skills or abilities, or the issue could relate to problems outside of the workplace (i.e. problems at home). Regardless, it is crucial to identify the cause of the underperformance first before you jump to conclusions.
First, carry out a general observation of the employee in question. Do they appear to be stressed, upset, or over-worked? How do they interact with other staff and customers? Even a few basic observations may clue you in to what is really going on.
Secondly, reach out to other team members and find out if they have noticed any strange behaviour lately. Don’t pry though! You do not want the team to feel as if they are being investigated. Otherwise, this may reduce morale and productivity.
From there, have a meeting with the employee. Give clear examples as to where the employee has underperformed, let them share their side of the story, and listen carefully. Depending on the reason for the underperformance, the next step is most likely to provide the necessary guidance, training, and education to improve the situation.
When managing underperformance, always set clear, reasonable goals for the employee to focus on and reach. And carry out follow-up meetings to ensure the program is achieving the desired outcomes.
Peninsula can advise you on how to manage your employee’s performance effectively and implement feedback processes.
Establish effective policies with Peninsula
Communication between employers and employees is key to productive workplaces. Poorly handled appraisals can be detrimental to your company and also cause attrition. You need a bespoke approach and tailored advice that allows you to create effective policies and procedures for your business. Peninsula understands the specific needs of your business and ensures that we provide the customised resources and help you need.
