What Are Performance Appraisals and Why Do They Matter?
At their core, performance appraisals represent a collaborative process between managers and employees to evaluate work quality, offer constructive feedback, align on goals, identify growth opportunities, and determine effectiveness of support programs on an ongoing basis.
They provide a vital framework for maximizing individual and organizational success through open dialogue. Appraisals allow managers to gauge team members‘ fit, motivation, productivity and development needs in order to assigning responsibilities, facilitate mentorship, and inform promotion decisions.
Meanwhile, employees gain insights around strengths to leverage as well as skills requiring refinement in order to chart the most fulfilling careers possible. Appraisals also offer a confidential forum to request additional tools, training, resources, or guidance to overcome obstacles.
Beyond individual stakes, organizations ultimately benefit from:
- Increased alignment across teams, departments and locations site through consistent goal-setting and performance data analysis
- Earlier identification of skills gaps enabling strategic investments into developmental programs
- Enhanced retention and recruitment efforts thanks to instrumentation around internal mobility and succession planning
- Reduced legal and compliance risks through documentation showing fair, unbiased evaluation measures
In fact, according to Josh Bersin principal and founder of BersinTM by Deloitte, "an staggering 70% of organizations cite retaining and developing talent as one of their top 3 priorities."
With so much at stake for managers, employees and leadership alike, optimizing appraisal processes merits significant attention.
When implemented effectively, regularly scheduled performance reviews serve as the cornerstone for productive career conversations that empower people. Let‘s explore best practices toward that end.
Best Practices for Managing Appraisals
As a manager, the strategies below set you up to facilitate engaged, forward-focused, and constructive discussions.
Offer Ongoing Feedback
The days of leaving all commentary for the annual review are long gone. Today‘s workforce desires much more regular check-ins on their performance and career growth opportunities. This prevents nasty surprises come evaluation time while building trust and rapport between meetings.
I recommend scheduling monthly or quarterly one-on-ones as standing forums for both praise and developmental nudges. Maintain open communication channels via email, Slack or text so that insights can be provided in real-time as well.
The Best-in-Class Performance Management study by Brandon Hall Group found that employees receiving the most frequent feedback rate it as 4x more accurate than those receiving predominantly annual reviews.
Set Expectations
At the start of each performance cycle, clearly outline both individual and team priorities, including:
- Key performance indicators being measured along with target metrics
- Weighting of top-level goals by importance
- Methods and measures used to capture productivity data
- Process for soliciting informal feedback
Refer back to these standards while gathering data and notes over the course of the year. They serve as the benchmark for holistically evaluating progress during subsequent formal reviews.
Emphasize Development
Appraisals should focus firmly on the future instead of harping on the past. Rather than calling out employees‘ shortcomings, use the opportunity to explore providing them with the tools they truly need to maximize strengths while improving in areas needing growth.
Create personalized development plans addressing skill and knowledge gaps the employee themselves recognizes via surveys and self-evaluations. Phrase commentary as "next steps" instead of criticism. Ask "what support would help you excel?" rather than imposing directives.
Research by LeanIn and SurveyMonkey found that high-potential women are 20% less likely than men to have discussed career trajectories with managers over the past year. So be proactive in nurturing advancement.
Foster Participation
The best managers solicit perspectives from multiple stakeholders, not just their own viewpoints. This allows for 3600 feedback from an employee‘s managers, peers, internal customers, and even direct reports.
Anonymous data offsets biases any individual reviewer may hold while spotlighting potential blindspots. Just be sure to use standardized metrics and carefully monitor input to prevent toxicity.
Sociometric solutions at companies like Microsoft suggests that 3600 assessments delivers 2x higher predictive ability on performance than manager ratings alone.
Address Unconscious Bias
Even the most seasoned professionals suffer from unconscious biases influencing their evaluations. Controlling for factors like over-weighting recent events, allowing personal rapport to skew ratings, judging based on demographics vs documented achievements demands diligence.
Make comparing across employees easier by creating standardized scoring criteria aligned to core values. Audit ratings after the fact to catch inconsistencies. Enroll yourself in bias training programs as well – education makes a difference.
Automate Administration
While methodical processes create the foundation, utilizing software removes considerable logistical headaches for managers and HR professionals. Solutions provide review templates, multi-rater assessments, seamless goal planning integration, automatic reminders and notifications to streamline oversight at scale.
Systems today also compile performance data, feedback, and development plans in easy to parse dashboards to uncover company-wide trends. Plus employees gain visibility into individual progress through user-friendly apps.
According to PeopleGoal‘s Analysis of Performance Evaluation Data, automating review administration alone saves managers 4-6 hours yearly.
Best Practices for Employees
While managers shape the scaffolding for effective appraisals, employees own much of the efficacy through their mindset, preparation, participation and accountability.
Assume a Growth Mindset
Adopting an open-minded, growth-oriented mentality goes far in cultivating receptivity to both positive and constructive feedback. Rather than rationalizing shortcomings or diminishing praise, embrace reviews as a precious opportunity to develop new skills.
Acknowledge that neither you nor your manager has every weakness uncovered or all the answers. But collective commitment to transparent dialogue and incremental improvement benefits all.
Self-Evaluate
Complete self-assessments distributed by managers to inventory your proudest accomplishments and improvements made over the review period. Submit them to your manager prior to your meeting.
Be specific by including metrics, linking to work product examples, and defining programs or tools that aided your success where relevant. Cite any obstacles hampering optimal productivity as well.
Self-appraisal builds accountability while ensuring your manager considers your own perspective when finalizing performance ratings.
Data shows people perceive review conversations as 29% more fair when they formally self-evaluate beforehand.
Actively Participate
The review meeting itself may feel uncomfortable initially, but remains critical for engaging openly around achievements, blockers, and goals.
Come prepared with questions that demonstrate deep reflection about your capabilities, trajectory and developmental needs. Have courage to challenge evaluations you believe are incomplete, but avoid outright defensiveness.
Remember you and your manager‘s priorities likely align more than it may appear on the surface. Use curiosity over confrontation during difficult talks.
Define Next Steps
Before concluding formal reviews, ensure you and your manager align unambiguously on tangible improvement areas as well as resources needed from the organization to get you there.
Take ownership over the subsequent months to diligently work on skill-building while checking in regularly with your manager on hurdles and wins. Update them on training progress so necessary adjustments can be made.
Research by Gloat indicates 72% of employees feel more loyalty to companies that demonstrate investment into their career growth. So take advantage of development opportunities when presented.
Performance Management Methods
Now that we‘ve covered fundamentals, let‘s explore popular appraisal formats, their applications and caveats:
3600 Feedback
360 reviews incorporate survey data from all spheres surrounding an employee – their managers, direct reports, peers, cross-functional partners, etc. This technique provides a holistic perspective on competencies and blindspots that no singular reviewer could surface.
When It Works Best: Capturing stakeholder feedback for senior leaders and specialists.surfacing potential discrepancies between self-perception and impact on others.
Downsides: Can expose divisions causing relationship rifts. Sources may remain undisclosed so information gets presented devoid of context.
Management by Objectives
Management by Objectives (MBO) focuses goal setting for individuals and departments around quantifiable, time-bound metrics tied directly to business strategy. Managers later evaluate achievement against targets.
When It Works Best: Promoting focus for employees and transparency into organization priorities. Customizable for particular roles.
Downsides: Operationally intensive to implement across teams. Difficult to recalibrate if goals emerge as unrealistic mid-flight.
Psychological Assessments
Psychological and personality assessments aim to gauge suitability for positions and developmental areas through a series of hypothetical scenarios, self-evaluations and values-alignment questionnaires.
When It Works Best: Surfacing talents or growth areas beyond current job performance data. Matching people to roles optimizing their strengths.
Downsides: Developing custom, legally compliant assessments represents heavy lift. Nuanced interpretive skills often needed to translate findings into action plans. Raises ethical concerns regarding reinforcing biases through testing limitations.
Performance Ratings
Scales allow managers to score achievement and competencies on standardized criteria. Options range from simple pass/fail to nuanced rubrics denoting characteristics of each level.
When It Works Best: Simplifies side-by-side comparisons between employees. Clarifies development needs when tied to common leadership principles.
Downsides: Ratings compression tends to emerge between middle tiers. Calibration across teams proving challenging. Links between scores and rewards can strain culture and teamwork.
Paired Comparisons
Paired comparison methodology evaluates employees in relation to one another rather than universal criteria. Managers systematically compare pairs to determine who meets expectations better.
When It Works Best: Useful for ranking employees, projects or ideas. Surfacing top performers.
Downsides: Extremely labor intensive without automation. Risks damaging morale and relationships. Struggles with larger sample sizes.
Regular Check-ins
Ongoing dialog subsumes formal annual reviews in favor of more frequent and targeted discussions on recent wins, current roadblocks and upcoming goals.
When It Works Best: Enabling “in the moment” feedback for real-time coaching. Keeping conversations focused on the near-term.
Downsides: Harder to track long-term trajectory. Disrupts continuity when manager changes. Capability gaps may calcify without eventual intervention.
Forced Distribution
Forced distribution appraisals, sometimes called stack ranking or rank and yank, demand managers bucket team members into tiers denoting highest to lowest performers. Fixed percentages dictate size of each tier.
When It Works Best: Data-justifying necessary layoffs. Identifying poor performers during financially difficult business periods.
Downsides: Considered punitive rather than developmental by many. Significant variance year-over-year. Perceived as encouraging competition over collaboration.
Selecting Performance Management Software
While methodical processes set the stage, purpose-built technology removes considerable administrative headaches for HR and managers at scale. Let‘s explore what to prioritize when evaluating solutions:
Key Feature #1: Configurable Workflows
- Built-in templates covering various performance methods
- Surveys, self-assessments, multi-rater distribution
- Automated notifications and reminders
- Integration with compensation management
Key Feature #2: Centralized Data
- Single version of truth personnel records
- Current and historical performance indicators
- Feedback, reviews and development plans
- Consistent, non-duplicative information
Key Feature #3: Analytics and Reporting
- Real-time dashboards tracking evaluation rates
- Trend analysis by segments like function, manager, location
- Ad hoc reporting to uncover spikes and dips
- Export data to external BI tools
Key Feature #4: Development Focus
- Personalized training recommendations
- Assign courses and track completion
- Development planner with guided templates
- Analytics identifying most critical skills gaps
Beyond robust functionality, also ensure any prospective solutions meet stringent security, access control and compliance standards for your industry.
Now let‘s examine five highly-rated platforms capable of transforming performance management:
1. Leapsome
[Leapsome screenshot]Best For: Global or matrixed organizations needing consistency across regions and divisions.
Leapsome centralizes performance data, engagement surveys, 360 reviews, goals setting and project tracking into one sleek platform. The software shines through its flexible review workflows and multi-lingual support.
Implementation begins by choosing pre-built templates or configuring fully custom cycles. Admins then outline organization-wide competencies, values and OKRs while employees manage action plans and measure progress transparently.
2. Zoho People
[Zoho People screenshot]Best For: Growing SMBs seeking an integrated HRMS system with payroll, recruiting and benefits administration.
In addition to performance, Zoho People offers time tracking, leave and shift management, onboarding, learning and more within a unified interface.
The platform simplifies cascading goals from executive leadership down through frontline staff. Automated notifications combined with an intuitive UI bolster end user adoption across hierarchical levels.
3. Paycor Perform
[Paycor Perform screenshot]Best For: Mid-market businesses seeking robust analytics around retention drivers, diversity insights, compensation equity and other workforce indicators.
While supporting common performance needs, Paycor’s analytics capabilities stand out from competitors. HR obtains visibility into trends by department, tenure, manager quality and more to pinpoint risks. Custom surveys then help leaders probe emerging issues.
4. Reflektive
[Reflektive screenshot]Best For: Fast-scaling startups valued under $1 billion needing support until going public
Reflektive meets the demand for real-time feedback from Millenial and Gen Z workforces through flexible review cycles and anonymous engagement polling.
The platform particularly shines with its integrated peer contribution mapping and benchmarking to mitigate office politics during calibration.
5. Culture Amp
[Culture Amp screenshot]Best For: Large enterprises with deep investments into Linkedin Learning, Salesforce and Microsoft Dynamics integrations
Culture Amp summarizes itself as “a people and culture platform helping organizations take action based on feedback.” Alongside comprehensive performance management, Culture Amp‘s regular pulse surveys deliver trended insights into belonging, equity and inclusion.
While these solutions demonstrate tremendous potential, simply implementing software fails to wholly dissolve discomfort with candid conversations. Managers must hone delivery finesse through empathy, active listening and coaching skills training. Employees need guidance to receive commentary openly without self-judgment.
But combined with the architecture established above, technology goes a long way in realizing performance appraisals‘ full value.
Preparing for Review Meetings
With strong infrastructure as our foundation, let‘s conclude by covering tips to make discussion productive for both managers and team members:
For Managers
- Schedule strategically – allow adequate time and prevent rush
- Set expectations regarding discussion flow and outcomes
- Listen fully before reacting to perspectives shared
- Help employees feel heard by paraphrasing input
- Remain flexible to exploring unforeseen insights together
- Close with clear next steps for continuing the dialogue
For Employees
- Reflect on achievements since last review
- Consider your needs to reach next performance levels
- Listen openly to feedback before judging
- Clarify anything you perceive as untrue or incomplete
- Focus solutions around getting supportive tools requested
- Express gratitude for efforts your manager invested
Getting More from Performance Management
In today‘s turbulent talent landscape, organizations must doubled-down on performance systems to match rising expectations around fulfilling work and purposeful organizations.
Rather than allowing inertia to propagate half-hearted or anxiety-invoking reviews, leverage the steps here to ignite productive career conversations that unlock potential at all levels.
Soon you‘ll reap tangible returns through better aligned, developed and inspired team members. So now is the time to raise the bar on appraisals, collectively and compassionately.
