What makes Performance Appraisal Systems successful?
Is the success of performance appraisal systems dependent on quality or is the secret to be found elsewhere?
Your choice of performance appraisal system will certainly have an impact on the success of your appraisal process but ultimately, the secret to success does lie elsewhere.
Over the 20 years I’ve spent assisting organisations with performance management, I’ve seen an unbelievable change in the range of performance appraisal systems on the market and there’s no doubt that a lot of them will stand up to scrutiny in performance appraisal terms.
There is though a big ‘but’ here. Having a top of the range appraisal system doesn’t automatically guarantee success. Good though it may be, even the ‘best’ system won’t work effectively if it doesn’t satisfy two key criteria; it must suit the culture of your organisation and it must be ‘welcomed’ by your workforce.
Put simply, as long as your appraisers and also, very importantly, your workforce as a whole, actually want to use the performance appraisal system, they fully understand its benefits and they know how to use it, the system should achieve its objectives (and potentially, even more).
On the flip side, if people don’t want the performance appraisal system, they won’t use it and they’ll tend to pay lip service to it. This is often the reason why the performance appraisal process becomes a tick box exercise rather than a constructive process linking performance review and personal development with organisational objectives.
Download this essential Performance Appraisal Guide. A handy list of the key actions to take when preparing for the appraisal, during the appraisal meeting and throughout the year.
So, just how do you get to the point where your appraisers and employees actually want to use your performance appraisal system?
In my experience, to really want to use it, they must like it. To like it, it’s essential that they find it user friendly and manageable in terms of time and effort. Critically, they must also understand why it’s worth their while making the effort to commit to it; in other words, they need be crystal clear of the benefits the appraisal system will bring to them as individuals and the organisation as a whole.
This is where the link to organisational culture comes in. People won’t warm to and embrace a performance appraisal system if it doesn’t suit their culture. The system needs to align with the way your people think, communicate and operate. For example, one organisation’s culture may embrace a discussional format for assessment purposes whereas another may prefer a straightforward rating system. There are of course many other examples I could give and criteria I could mention.
However, to choose the appropriate appraisal system isn’t enough to ensure success on its own. Once a system is in place, education comes to the fore. Some organisations make the mistake of assuming that appraisers and employees already know what they’re supposed to do and why they’re supposed to do it. Proactive organisations realise this isn’t necessarily the case. They make no assumptions; they take the initiative by organising training sessions for appraisers and briefing sessions for employees. The aim of these sessions is not so much aimed at teaching people how to use the appraisal system, but more to focus on why the system is worthwhile committing to and the benefits that will come from it.
Ideally, these sessions ensure that everyone fully understands the concept of performance appraisals, the part they will play in the appraisal process and the benefits they will derive. Objective setting should always be included in the training because this forms a solid base around which performance can be reviewed, managed and developed.
So the main thrust of my post is that the secret to the success of a performance appraisal process lies with matching your system with your organisational culture and then educating your workforce on its use, its benefits to individuals and the organisation, and its overall objectives.
Ultimately, appraisers and employees must want to use it!
Introducing a new performance appraisal system
Introducing a new performance appraisal system is a significant exercise for any organisation. Effective appraisal systems lead to a more motivated, focused and successful workforce. Bad ones can have the opposite effect.
Your performance appraisal system should suit your organisation. Put simply, it should be unique to you. The most effective appraisal systems form a cornerstone for generating personal development and improvement plans and reaching agreement with employees about performance expectations.
Consider these essentials if you are considering new performance appraisal systems or making improvements to your existing appraisal system;
The appraisal system should –
- Be simple and efficient to use.
- Be worth the effort to complete.
- Be beneficial to the employee and your organisation.
- Suit your organisational culture
- Enable objective performance review
- Serve as a platform for personal development
- Focus on the future (personal objectives)
- Act as a forum for two way discussion
Secrets to success of your performance appraisal system
Traditional performance appraisal systems usually review past behaviour and provide an opportunity to reflect on past performance. These are essential core components of any appraisal system.
In our experience, to be truly effective, performance appraisal systems should also include;
- Relevant competencies or skills sets that relate to the employees’ roles.
- An appraisal and/or assessment framework against which employee performance can be appraised and if preferred, assessed.
- An effective framework for reviewing the employee’s objectives which were set for achievement during the period under review.
- An effective framework for the agreement and setting of the employee’s objectives for the future.
- An opportunity to discuss and agree the employee’s personal development requirements, training needs and any support necessary.
- The performance appraisal system should also be supported by a clear and up to date job description for reference/assessment purposes.
11 tips for choosing and introducing new performance appraisal systems
1. Be focused and clear at the outset – Make sure you know what you want to achieve from the new appraisal system. Is it just to do with assessing performance or do you want the new system to link to other HR processes like compensation, recruitment or succession planning? There’s some excellent appraisal software available but making decisions like these at the outset ensures you get value for money and make the most of the appraisal system you choose.
2. Get your senior management team on board – If your senior managers don’t buy-in to the concept of a new appraisal system and get involved in its development, then it will most likely fall flat. They should also be seen to be part of the process as appraisers, and where appropriate, employees.
3. Consider strategy and objectives – Prior to introducing the new appraisal system, it’s essential that company strategic objectives are clear. These should provide the cornerstone from which departmental, team and in turn, specific employee objectives are set.
4. Determine how personal objectives will be set – An effective appraisal system ensures that employees understand clearly what they are expected to achieve in the coming year. Both the appraiser and the staff member should be involved in this process. Employees are much more likely to be committed to achieving their objectives if they have played a part in the development process. Objectives should be Specific, Measurable, Achievable, Relevant and Time-based (SMART).
5. Clarify competencies – Without competencies (skills sets) it’s difficult to achieve objectivity when the performance appraisal takes place. With a clearly defined set of competencies, appraisees can be assessed against criteria which actually relates to their job. Another consideration here is the rating scale; do you want to score employees on a scale or simply invite appraisers to comment on staff performance?
6. Decide who will take the reins – Be clear on who will lead the introduction of the new appraisal system. Don’t just lump it on HR. Involve people from other departments, both appraisers and employees if possible.
7. Run an Appraisal Pilot – It may make sense to introduce the new Appraisal System by targeting a ‘pilot’ group. Ideally this group should include senior members of your organisation. This helps to send out a positive message about the system to employees. This pilot group would be the first to use the new system. Feedback from this initial implementation can then be used to fine-tune the system prior to its introduction company-wide.
8. Ensure objectivity – The appraisal system should encourage objectivity and fairness. The appraisal form should provide appraisers with a platform to use fact so that their comments are backed up with real observable examples of good or poor performance.
9. Train your appraisers – Appraisers require a multitude of skills in order to do their job effectively and professionally during the performance appraisal. It’s essential that all appraisers receive comprehensive appraisal training. It’s just not fair to expect managers/appraisers to use the appraisal system effectively and behave professionally if they haven’t received guidance. Even if you have a first class Appraisal System, it is likely to fail if your appraisers don’t know how to manage and run it effectively. Employees should also be briefed thoroughly on the Appraisal System.
10. Brief your staff – Some companies fail to see the importance of briefing employees on the new appraisal system. Staff members need to know the part they have to play, how the system works (particularly if it’s an online appraisal system), the benefits they can gain from it and the timeframe. Don’t expect employees to be enthusiastic about their new appraisal system if they don’t know how to use it or why they are doing it.
11. Ensure credibility – Employees and appraisers must believe in the performance appraisal process. An appraisal system may fail if people don’t feel it is worth carrying out or if they don’t understand the benefits that can be gained from it. To achieve credibility, it is helpful to involve both appraisers and employees in the development of the system, or at least to invite feedback from them during the development stage.