Use Performance Appraisal
to Reward Top Performers

Empowering People to Drive Productivity

Performance appraisal is one of the stages in the employee performance management process. It is not the most important part of performance management. But it is a necessary part of performance management.

This must identify who among your people had shown outstanding performance.

Some view it as a measure of organizational effectiveness. But this depends to a large extent on the standard of performance by employees.

Appraising people is a challenging responsibility. It can cause problems if it is not done properly. When badly done, it has the propensity of de-motivating people.

Performance evaluation that fails to reward good performance is bound to fail.

What is Performance Appraisal?

Some people, including those at the higher level of management, mistake performance appraisal as performance management. They get stuck there and often do not realize it until it is almost too late.

Performance evaluation is that part of the process in performance management where each employee's performance on the job is evaluated whether they had carried out their duties and responsibilities to the expectation of management and informing employees on their performance.

This is done after a certain period of time usually after a year on the job. Some organizations conduct performance assessment twice a year at six months intervals.

Purposes of Conducting Performance Assessment

Your management needs to know how well employees had performed their job for the past twelve months.

The information is required by managers and supervisors to:

  1. execute strategy in recruitment and selection, training and development, career planning, and compensation;
  2. give feedback to their subordinates on what are important so that they can take steps to improve their performance;
  3. make managers and employees accountable for results and behaviors that bring positive results;
  4. prepare performance improvement plans. Performance planning is an integral part of performance management.

The results need to show the level of quality of your people. You then can use this information to change your plans.

Ensuring Effectiveness of Performance Review

Effective performance appraisal requires that you do certain things.

  1. Determine and communicate to employees the performance targets of your organization and each of the divisions, departments and sections.
  2. Agree with your subordinates on:
    • Performance targets for the next twelve months
    • What each of the employee must do and how he or she can do it
    • The performance standards and measures
    • Tools required in order to carry out the tasks
  3. Document all important decisions and performance events for each and every employee for whom you are responsible
  4. Agree with employees on the methods of resolving barriers to performance
  5. Inform employees how performance management will benefit them
  6. Assure the employees that you will help them every step of the way in the performance of their work

It is necessary to involve employees in performance planning. Ensure that this is done when you prepare your human resource plan.

Performance Planning Process

  1. At the beginning of the year (or twelve months period), review with your people the objectives of your organization, that is, what it wants to achieve for the year
  2. Review with them what your department or section must do to achieve the objectives of the department or section
  3. Align the departmental or section's objectives to the accomplishment of the organizational objectives
  4. Agree with your employees on what they are required to do to help their department or section accomplish its objectives
  5. Reinforce positive employees' behaviors during the performance evaluation meeting by telling them how they had contributed towards overall organizational performance.

Value of Employees' Knowledge and Ideas

Pay attention to what your people say. They are the best people in knowing about their jobs.

When you pay attention to what they say and accept their good ideas, you encourage them to make valuable suggestions for improvement. Test the feasibility of their ideas.

It is not easy to treat employees as if they are your equals. Even if you accept them as the persons that they are, you will not lose your authority.

In fact, your employees will become more enthusiastic and motivated. They will feel a sense of responsibility.

Ask them about their goals in their career and in life. Encourage self-evaluation.

Follow through on your commitment to your people. They will notice that you are sincere and serious about improving performance.

Performance Appraisal Requires Setting Clear Goals

To ensure the efficacy of your performance evaluation, clearly tell your employees:

  • what you expect them to do
  • the priorities of the jobs
  • the performance standards expected
  • the performance measures
  • the connection between what they do and the goals of their respective department, section, or division
  • how they are doing or performing every step of the way until it is time for the performance appraisal

Performance Standards and Measures

Once the goals are agreed upon, discuss the standards and performance measures for each of the goals set.

The standards are normally the industry standards.

Some refer to performance measures as "key performance indicators or KPI."

Key performance indicators are intended to make people focus on doing the right things. This is more than doing things right.

It is not necessary to measure everything. Use key performance indicators to measure only the critical factors that contribute to positive organizational outcomes.

In human resource management, ensure that performance measures for HR activities are linked to the achievement of organizational objectives. This is done under your HR strategic plan.

S.M.A.R.T. Principles

The goals or targets must satisfy certain conditions based on the S.M.A.R.T. principles, namely:

  1. Specific, not vague or capable of different interpretations;
  2. Measurable, that is, objective enough so that you can assess the level of their achievement;
  3. Achievable, that is, they are not too difficult or too easy to achieve;
  4. Realistic, that is, there is a reasonable possibility of attaining the targets, and
  5. Time-bound, that is, your people must achieve them within the specified time

Sometimes some people refer to "Time-bound" as "timeliness".

The standards must 'stretch' people in their effort to achieve the targets.

You can benefit from what Stacey Barr, a performance measure specialist says about performance measures. Click here for further information at

Performance Appraisal Interview

Are you using computer programs in performance appraisal?

There is nothing wrong with this provided the programs that you are using had been customized to the Human Resources needs of your organization.

Conducting a performance assessment interview is an effective interactive method.

Encourage dialogue. Keep inviting the employee to talk. Do not lecture.

It is unfortunate that there are not many executives who are ready to have a face to face performance evaluation interview. They would rather prefer to sit alone and make use of technology to do it.

But there are limitations to technology. Most often it does not improve the quality of your judgment or thinking.

With this method, interaction with your people is virtually nil.

A face to face meeting is an effective way of communication with your subordinates.

Other Types of Performance Assessment Methods

Apart from using automation, the use of assessment forms is very common.

Sometimes the same rating forms are used organization-wide. The rating items become general and do not explain how employees had performed. Thus, they will not know how to improve their performance.

Some organizations conduct group assessment.

Performance Ratings

Always discuss with the employee how he or she had performed.

Only then, come to an agreement on the rating for each item of assessment. Based on the fact that ratings have limitations and the possible reasons for the standard of performance, negotiate the ratings with the employee.

Some experts argue that we cannot add up the ratings since this leads to unfairness and inaccuracy.

Feedback on Performance

Give feedback to employees during the performance appraisal interview on their performance for the past twelve months.

But do not forget to give continuous feedback throughout the year. This motivates them and give them the opportunity to make timely improvement before the performance appraisal interview.

Documentation of Performance

Do not get obsessive with forms. Click here for an explanation on Performance Assessment Form.

Keep records of important performance-related discussions and performance events during the year.

This can form the basis for decision making and as an aid to memory. It also provides protection against allegations of discrimination.

Sign all formal documentation and obtain the employee's signature. Allow the employee to make fair comments before signing.

Make summaries of the discussions, recording only the essentials. If there is a possibility of taking disciplinary action, make more detailed documentation.

Use of Performance Appraisal Results

The results are usually used for the following purposes:

  1. Awarding salary increase based on merits
  2. Training and development of employees
  3. Performance improvement
  4. Improvement of the performance system and process
  5. To provide feedback to employees
  6. Employee deployment
  7. To initiate action to terminate non-performers

Who can Evaluate Who?

  • In most organizations, the immediate supervisor evaluates the performance of subordinates. The evaluation has a higher reliability. It also enhances the authority of the supervisor.
  • Peer evaluation is usually used by organizations that had implemented Total Quality Management (TQM) concepts. This is usually concerned with team evaluation.
  • Self-evaluation is used to supplement the supervisor's assessment. This is a way of empowering employees and can make employees less defensive and more committed to achieving the organizational goals.
  • Subordinate evaluation is used by organizations based on TQM concepts. It is believed that employees know how their manager or supervisor had performed.
  • 360-degree evaluation made by the employee, the superior, peers, subordinates, and outside parties having constant dealings with the employee concerned. This type of evaluation is fairly common among Fortune 500 companies. The complete information is fed back to the employee. It has been found that this is a powerful tool.

Weaknesses in Performance Appraisal

These include:

  1. Lack of support from senior management;
  2. Errors made by raters or assessors due to lack of skills and knowledge;
  3. "Halo effect" where the superior sees only one major event as being the common thread in subordinates' performance for the past year;
  4. Leniency or bias where the supervisor consistently rates his or her people either high or low;
  5. Central tendency of the evaluation by supervisors, making everyone "satisfactory" performers which does not convey any meaningful indication of performance;
  6. Positive or negative prejudice of the rater towards an individual or group;
  7. The manager or supervisor uses the most recent event, whether positive or negative, to influence the evaluation;
  8. The relationship between the superior and subordinate and not actual performance influences the ratings made;

Performance Appraisal Systems

Select the system that fits well into your organization.

Systems include:

  1. Ranking System where employees are ranked from "best" to "worst". You can only use this method if there are common features of the jobs.
    • It has been argued that ranking employees is not desirable. It only works in situations where an employee has to demonstrate performance in terms of numbers.
    • One of the worst shortcomings of ranking is that it can encourage people to pull down others so that their "competitors" do not perform well.
    • Grading whereby superiors rate subordinates against specified performance levels, usually five levels, such as excellent, good, satisfactory, marginal and unsatisfactory. This results in a "bell-shaped curve" that has attracted criticisms. It is unfair and reduces employees' trust in the system.
    • Critical Incidents method where the manager keeps a record of his or her subordinate's job behaviors that demonstrate good or bad performance. This method is at risk of taking recent events into consideration and requires much time in records-keeping.
    • Management by Objectives (MBO) where the superior and subordinate agree on common goals including the subordinate's responsibility for achieving results.
    • Graphic Scales involving selection of criteria for evaluation such as creativity and initiative. This is an unreliable method for assessing different jobs.
    • Behavior-based method to demonstrate behaviors that result in good or bad performance. This requires a lot of effort and is time-consuming.

Other methods such as using assessment centers is more suitable for identifying employees for promotion and workplace surveillance is controversial in nature.

Click here for information on "Performance Evaluation Methods"

Performance Appraisal Cycle

The cycle commences from identifying the goals and proceeds to performance appraisal that is tied to rewards system.

The results of the performance review discussion are used to review the goals.

Performance evaluation is a dynamic process. But remember that managing performance is more important than performance appraisal.

Your managers and supervisors need to communicate the performance appraisal results once they had evaluated the performance of their subordinates based on the agreed goals and performance measures.

The matter does not end there. They need to discuss with their subordinates and agree on a plan for further performance improvement.

And the cycle starts anew after a review of the goals and performance measures.

Acceptance of Performance Appraisal

In some countries, and especially in the public sector and institutions of higher learning, performance evaluation is not accepted as bringing much benefit.

Many academics believe that performance assessment curtail their freedom.

In some unionized organizations, performance appraisal is seen as manipulative, compelling employees to increase productivity.

Even if this is so, your organization needs some kind of method in assessing employees' performance. And that is performing performance appraisal.

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