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The HR magazine The HR Director reports that 65% of HR directors have stated that their performance management process has been put on the back burner over this last year, particularly as the way we worked was completely upended in March 2020. They go on to say that almost half (49%) of employees are not having regular performance conversations with their line managers, but that 67% of managers say they have performance conversations with their teams at least once a month.
Their explanation for the discrepancy in these statistics is that “it could be managers putting a positive spin on their management skills, or they could simply have a looser definition of what constitutes a good performance focused conversation. It is likely that managers are being honest when they say they are speaking to their team members multiple times a week, and in those interactions, they are asking questions such as ‘how is everything going?’ or ‘how are you managing?’. However, do these interactions constitute productive performance conversations and appraisal?”
Research by Breathe HR found that 75% of employees consider personal development to be valuable. Employers were equally positive about its benefits with 72% stating that the appraisal process was valuable, and a third (32%) considering it to be essential. However, only one in five (20%) employees consider their current appraisal process to be motivating and just 19% consider them valuable for their personal development, one in four (25%) say that they don’t seem worth the time, whilst 12% feel that their manager doesn’t seem well prepared for the meeting.
Leadership IQ surveyed 48,012 employees, managers and CEOs to find out what they thought of their annual performance appraisal process; some of the key findings from the study include:
- Only 13% of employees and managers think their organisation’s performance appraisal system is useful.
- Only 6% of CEOs think their performance appraisal process is useful.
- Only 17% of people think their performance appraisals are always open, honest and meaningful.
- Only 22% of people always think that their leader actually distinguishes between high and low performers.
- Only 28% of people believe that their leader always recognises their accomplishments.
Effective performance appraisals are the key to team and individual performance and organisational growth. When carried out effectively, performance appraisals offer positive benefits including improved motivation and better working relationships. When implemented badly, they can, as we can see from the statistics above, have a negative, demotivating effect on all those involved.
What is an appraisal?
Appraisals have long been recognised as an important process which helps both organisations and individuals achieve their goals. An appraisal is a meeting of generally two people, face to face, providing a periodic opportunity for constructive communication between the person who assigns the work and the person who performs it, to discuss what they expect from each other and how well those expectations are being met.
Often now called the performance review, appraisals are a summative evaluation of results achieved, an assessment of future potential and a reflection on effectiveness; in other words, what went well, what didn’t go so well and what can be done to make improvements for the future. The appraisal is at its best when it incorporates elements of assessment, performance management and personal development.
Appraisals should always be:
- Participative – appraisals should be an opportunity for both parties to talk about the appraisee’s career and achievements, to hear feedback from both parties, to reflect on achievements and disappointments and to put forward ideas and plans for the future.
- Fair, valid and evidence based – appraisals should be conducted fairly and consistently by competent and appropriately trained appraisers. They should be based on valid information and assessed against pre-defined standards.
- Supportive and developmental – appraisals should support performance, develop skills, encourage employees and improve the quality of their work, identifying areas of performance where development and change is needed.
- Streamlined and practicable – appraisal systems should seek to minimise the time taken to prepare, participate in the appraisal and complete any documentation. Appraisals should support, not disrupt working practices.
What is the purpose of an appraisal?
Appraisals should hold no surprises, for either the appraisee or the appraiser. Appraisees should never feel that their appraisal puts them under scrutiny or that they are being checked up on. This will only serve to make people dread their appraisal rather than to look at it as an opportunity to have dedicated time to discuss their contribution to the organisation.
It should be a culmination of all the performance discussions that should have taken place throughout the performance period under review. It provides a formal record of what both the appraiser and appraisee have discussed and agreed upon. There may also be a link with a reward review.
Specific objectives for the appraisal should be:
- For the appraiser and appraisee to agree on the level of performance attained during the period under review.
- To identify and discuss both strong and weak aspects of performance.
- To agree on methods of building on the strong and remedying the weak aspects.
- To agree on approaches and methods of training and development.
- To agree on job and personal performance objectives and/or KPIs for the following review period.
- To agree on a plan of action.
Appraisals can benefit both employers and employees by improving job performance, by making it easier to identify strengths and weaknesses and by determining suitability for development. The appraisal is an opportunity to take an overall view of work content, workloads and volume, to look back on what has been achieved during the reporting period and to agree on objectives for the next. Appraisals should also help individuals to understand how their work contributes to the work of the team, and of the wider organisation.
Appraisals can also provide information for human resource planning to assist in, for example, succession planning and to determine the suitability of employees for promotion, for particular types of employment and training. Appraisals can also improve the quality of working relationships and employee engagement by increasing mutual understanding between managers and employees.
If there’s no formal appraisal system in place, managers may neglect to keep on top of how their line reports are doing. This can have implications should a manager need to apply the organisation’s capability or disciplinary procedures because there will be no formal record of managing performance.
Who are appraisals for?
An appraisal should be for everyone employed by the organisation, irrespective of level. An appraisal should provide a chance to stand back and take stock. First and foremost, it should provide the opportunity for praise and the acknowledgement of achievements. It should also help individuals at all levels to understand how their work contributes to the work of the team, and of the organisation. Performance issues can be clarified and addressed, and support and training needs discussed. Individuals’ voices can be heard, within the wider organisation.
Where should an appraisal take place?
There are a number of practicalities to consider when carrying out appraisals. Line managers should ensure that they have given their appraisees enough notice of the appraisal meeting so that they have time to prepare. They must also allocate sufficient time for the meeting and block out the time in their diary, as appraisal meetings should not be deferred or disturbed.
Appraisals should always take place in private; they are confidential meetings and managers should arrange an appropriate meeting place, preferably on business premises. However, there may be circumstances when space is not available in the workplace, so appropriate meeting space should be arranged at an outside venue. They should never take place in an open workspace or in a public place such as a coffee shop.
During the COVID lockdowns many appraisers carried out appraisals via online platforms such as MS Teams or Zoom; however, online meetings have their disadvantages, so wherever possible a private, face-to-face meeting should be arranged.
How often should appraisals happen?
There is no legal requirement for an employer to carry out appraisals, but most employers have a yearly or twice-yearly or quarterly review process, as part of an ongoing performance and talent management process.
If managers are conducting one-to-one performance discussions with their line reports on a frequent and regular basis, then reinforcing this with a more formal meeting carried out either once, twice or four times a year, whichever is appropriate, will ensure that the process has more value for everyone involved, rather than a once a year, tick-box HR exercise. The important thing is that you develop a culture where managers and their people talk to each other regularly about performance and development issues.
What should be included in an appraisal?
The three main things that must be included in a performance appraisal are:
As a manager, you are tasked with evaluating the performance of employees. A complete analysis should be included in the evaluation so that both of you understand how well the employee measures up to organisational standards.
The potential of every employee must be assessed. This will allow both you and the employee to understand their potential within the organisation. Employees that meet or exceed their objectives may be able to take on more responsibility if the need arises. Assessing employee potential is another means by which an employee will find confidence in their performance and work to even higher standards. By letting an employee know that they have potential for growth within the organisation, their motivation and engagement may be bolstered as a result.
A performance review must also include the weaknesses of an employee. These will be failings that the employee needs to correct to meet organisational standards. Capability issues are often accompanied by actions which can be taken to help the employee correct these problem areas. Training or assistance may be recommended, and giving precise examples of weaknesses will help your employee correct the issue faster. However, any issues about capability should not come as a surprise to the employee, as these should be addressed as soon as they become apparent through ongoing performance discussions.
How many people should be involved in an appraisal?
The immediate line manager should do the appraisal as they are closest to the job holder’s work, and the appraisal meeting should be a private one-to-one. However, there may be circumstances where others may need to contribute to an appraisal, for example where someone works under a matrix management structure and reports to more than one line manager. In these circumstances, each manager should hold a separate appraisal and feed the information into one appraisal report.
Line managers may elicit and obtain feedback on the line report’s performance from various sources, such as peers, other managers, customers or service users; this is often known as a 360° assessment. However, the appraisal itself should be facilitated only by the individual’s line manager as a private one-to-one meeting.
The appraisal itself should be a full 180° assessment with full participation by both the appraiser and appraisee. The role of the appraiser is to facilitate the appraisal meeting and the role of the appraisee is to fully participate. Both should be open, honest and fair, respecting each other’s views.
Others that will be involved in the appraisal process, but not in the appraisal meeting itself, will generally be:
- The “grandparent” manager – this is the line manager’s line manager. They should be involved to monitor action, check consistency of comments and gain upward information, as well as acting as a line of appeal to ensure fairness and credibility.
- HR – who play an important role in implementing and maintaining performance management systems. HR can help line managers have constructive conversations with employees regarding their performance. Generally, they also collate the completed appraisal reports to use the information for such things as reward, workforce and succession planning, training and development planning etc.
What is the appraisal procedure?
An appraisal is an all-important meeting where a line manager and their line report(s) set aside dedicated time to look at employee performance, review how things have gone over the past year and plan for the year ahead. All managers who carry out appraisals should receive training to help them assess performance effectively and to put that skill into use in the appraisal process. This is particularly important if the organisation is using a rating system for evaluating employee performance. It is crucial that all managers understand the ratings and apply them consistently and fairly.
It is also useful to ensure that appraisees have been fully trained on the organisation’s appraisal process so that they can effectively participate in the process.
Prior to the appraisal meeting, both appraiser and appraisee should prepare by reviewing such things as:
- Job description.
- Current objectives.
- Team objectives.
- Any completed development activities.
- Performance feedback from other sources.
It is useful for appraisees to complete a self-assessment of their performance prior to the meeting so that they are able to participate fully with examples of where things went well, where there were problems, where they might have done things differently having had time to reflect, their aspirations for the future, and any ideas they may have to improve their performance and/or ways of working.
The appraisal meeting should generally follow a structure. The appraising manager should:
- Explain the purpose and scope of the meeting.
- Discuss the job in terms of its objectives and demands.
- Encourage the appraisee to discuss their strengths, successes and areas for development.
- Discuss how far agreed objectives have been met, providing constructive feedback.
- Agree future objectives.
- Discuss any development needs appropriate to the existing job or the individual’s future in the organisation, for example training, education, work experience.
Closing the appraisal meeting, the appraising manager should:
- Summarise what has been discussed and agreed. This should be done positively and enthusiastically.
- Give the employee a chance to react, question and add additional ideas and suggestions.
- Express appreciation for the employee’s participation and reinforce the commitment to future plans.
After the meeting, the appraising manager should:
- Follow up the discussion with a written record of the agreement and/or required action plans.
- Complete the appraisal report and forward it to the appraisee for agreement. If there are any disagreements explain how the employee can appeal against their appraisal outcome.
There are a number of things that should not be included in the performance appraisal. The appraisal procedure should not be:
- Exclusively about pay and reward.
- About specific promotion opportunities.
- A job interview.
- About grievance or disciplinary matters.
- An assertion of authority or judgement.
- A token procedure, “going through the motions” or a tick-box exercise.
- Perceived as unfair or unjust.
Are there any laws about performance appraisal?
Whilst performance appraisal is not a legal requirement for employers, there are some legal considerations that employers should take into account when carrying out performance appraisals.
The Data Protection Act 1998 covers the processing and use of personal information. The Information Commissioner (ICO), who is responsible for the enforcement of the Act, has produced four codes of practice to help employers comply with the Act.
- Code 1 covers recruitment and selection.
- Code 2 covers employment records.
- Code 3 covers monitoring at work.
- Code 4 covers information about a worker’s health.
Code of practice 2 on employment records covers computer records and some manual records kept in structured form and this will include records on performance appraisal.
Under the Equalities Act 2010, appraisers must ensure that they do not discriminate against or treat less favourably any of the nine protected characteristics when carrying out performance appraisals.
Appraisal procedures should not be used as a disciplinary mechanism to deal with unsatisfactory performance. The appraisal form is not the place to record details of verbal or written disciplinary warnings. These should be recorded separately as part of the organisation’s capability and/or disciplinary procedure. This is important should an employee decide to take a case to an employment tribunal.
It can be extremely valuable to set aside time for a formal appraisal review with each line report, as an appropriate and allocated forum for calm dialogue, reflection and planning. For organisations, having a performance appraisal process ensures that strategic decisions are implemented throughout the organisation, it enhances communication within the organisation and results in a directed, engaged and motivated workforce.