Performance Appraisals

When someone passes a good comment about your work, it serves as a morale booster and it is something you rarely forget. When someone criticises your work, although you may, at first, take it negatively, this should also serve as a morale booster because you know that if you take that comment seriously and work on it, your performance at work will improve. And if your performance improves, your boss at work will be satisfied, your colleagues will also be satisfied and, at the end of the day, even so will your own personal satisfaction.

Performance appraisals are certainly an essential element of the effective management and evaluation of staff. Appraisals help develop individuals, improve organisational performance that feed into business planning.

Formal performance appraisals are generally conducted annually for all staff in the organisation. Each staff member is appraised by his or her line manager in a head-to-head meeting.

What is the objective?

Performance appraisals enable effective management of the staff at work. They are also used to monitor standards and to agree, on an individual basis, personal expectations and goals based on the objectives the company has set in its business plan for the following period. It also facilitates the delegation of responsibilities and tasks to each staff member following an evaluation of his or her specific skills. During this one-to-one meeting, the manager also assesses, together with the member of staff, his or her performance during that year.

Performance appraisals generally review each individual's performance against objectives and standards for the trading year, agreed at the previous appraisal meeting. They are essential for career and succession planning and are important for staff motivation, attitude and behaviour development, communicating organisational aims, and fostering positive relationships between management and staff. Performance appraisals provide a formal, recorded, regular review of an individual's performance, and a plan for future development. In short, performance appraisals are vital for managing the performance of people and organisations.

Each company has a specific way of creating this tool, depending on the evaluation, the individual, the assessor and the environment in which it is being conducted, amongst others.

The objectives the manager and the individual set together have to be SMART: Specific, Measurable, Achievable, Relevant and Time based.

What does it mean for the employer?

Performance appraisals should be a positive experience. The appraisal process provides the platform for development and motivation, so organisations should foster a feeling that performance appraisals are a positive opportunity, in order to get the best out of the people and the process. Organisations should ensure that there is a climate conducive to a positive perception about performance appraisals. This will help to maximise the effect.

But why should employers invest in performance appraisals of their employees? First of all, staff performance appraisals establish individual training needs and enable organisational training needs analysis and planning. In some cases, performance appraisals data feeds into the salary and grading reviews and can be used - in most cases - for the business planning for the next trading year. More importantly, performance appraisals may be used to ensure that the employee is retained because it may be used to create and ensure job satisfaction.

With such a method, employers would be in a position to distinguish between the high and low performers in the organisation.

During the next period, the Human Resources Department, the manager and the individual can together look into the results of the last appraisal and draw up a plan to assist those who have been rated as low performers.

Methods of assisting the low performers include assigning a mentor to that person, providing more training and evaluating what could be de-motivating the individual. The performance appraisals may also be a tool to help identify and uncover a personal problem. Performance appraisals may be used to identify conflicts within a team at work or de-motivation as a result of an individual not seeing the possibility of ever getting a promotion, amongst others.

Moreover, performance appraisals could be used as a motivational tool since bonuses and promotions are usually linked to these appraisals. Even if no bonuses or promotions are handed down, the appraisals could be used as a tool to get the individual to exceed their own expectations and perform better than the previous period.

What does it mean for the employee?

As explained earlier, in an ideal scenario, performance appraisals are motivating because they urge the individual employee to make an effort to achieve better results in the next period.

It is also a tool for the employee to gauge where he or she stands and where she or he might need to improve. It will act as a guideline of what is expected from the individual and how this individual may achieve these results.

Regular meetings

Holding regular informal one-to-one review meetings greatly reduces the pressure and time required for the formal appraisal meeting usually held on a yearly basis. Holding informal reviews regularly is ideal. There are several benefits of reviewing frequently and informally:

- The direct manager will be better informed and more up-to-date with his or her people's activities and more in touch with what lies beyond, such as customers, suppliers, competitors and markets;

- Difficult issues can be identified, discussed and resolved quickly, before they become more serious;

- Help can be given more readily - people rarely ask unless they see a good opportunity to do so - the regular informal review provides just this;

- Training can be broken down into smaller, more digestible chunks, increasing success rates and motivational effect as a result.

- Relationships and mutual understanding develops more quickly with greater frequency of meetings between manager and staff member.

- Staff members can be better prepared for the formal appraisal, giving better results and saving management time.

The tip is not to make it a one-off thing. Having a regular one-on-one 'mini-review' would measurably reduce the anxiety created at the end of the year and eliminate the surprise that is sometimes experienced. The company would be in a better position to correct what is needed to be corrected earlier.

The downside of performance appraisals

Employees often find them subjective. Managers sometimes regard them as a nuisance and something extra in their already busy schedules. Both parties have been known to dread them and the endless form filling associated with them. This is the problem with performance appraisals: they may be subjective because of prejudices all human beings have.

Performance appraisals, while potentially a valuable tool for companies, have attracted much criticism, with some academics proclaiming that they nourish short-term performance, butcher long-term planning, build fear, demolish teamwork and encourage rivalry and politics.

Yet, if used effectively, the tool has the potential to boost the overall performance of a business and the individuals who work for it. Indeed, research has shown that companies that manage the performance of their people effectively are more likely to outperform than those that do not. To this effect, it must be highlighted that successful performance management can also help companies plan better, retain top performers and align individual goals with those of the organisation.

However, recent studies have revealed that although performance management is widely embraced in many companies in Malta and abroad, its use remains problematic and companies struggle to implement it successfully.

But why can it be so subjective? Strictly speaking, the manager is the do all and end all in this whole process: she or he has the final say. There may well be a personal grudge against an employee or a manager prefers one employee in his team to another. There may also be the 'you-scratch-my-back-and-I-scratch-yours' element or the element of personal favours. For example, an employee goes to the CEO of the company and says something good about the manager. The manager will feel obliged to give this employee a good performance rating because of this positive comment with his superior.

There may also be character incompatibility or an element of fear: the manager may be scared to give a negative rating fearing that the employee in question may not perform well in the following period or because it will de-motivate them.

Other problems encountered when compiling performance appraisal information is leniency or what is sometimes called the 'central tendency zone', whereby a manager tries to avoid extremes of the scale. This is considered as a safety net so that the employees do not get offended (giving them 5 instead of 2 out of 10).

How can subjectivity be reduced? One may introduce self-appraisals whereby the employees are asked to rate themselves. How did I perform this year? Could I have done anything better? What stopped me from performing better? These are the types of questions that need to be asked.

360 degree appraisals

360 degree appraisals are a powerful method and quite different to traditional manager-subordinate appraisals. As such, a 360-degree process does not replace the traditional one-to-one process - it augments it, and can be used as a stand-alone development method.

360 degree appraisals involve the appraiser receiving feedback from people - named or anonymous - whose views are considered helpful and relevant. The feedback is typically provided on a form showing job skills, abilities, attitudinal, behavioural and some sort of scoring or value judgement system. The appraisers should also assess themselves using the same feedback instrument or form.

360-degree respondents can be the appraiser's peers, up-line managers, subordinate staff, team members, other staff, customers and suppliers - anyone who comes into contact with the appraiser and has opinions/views/reactions of and to the appraiser.