Annual review, performance review, evaluation, employee appraisal, etc. are all different names for Appraisals which is a cyclic phenomenon in every organisation. This regular evaluation of employees’ performance is necessary, for two main reasons; to keep the human resource updated of their shortcomings while expressing an organisation’s gratitude for their good work and to ensure that they are financially in sync with the constantly changing market demands.
Happy-productive worker hypothesis
Happiest workers are the most productive performers, and the most productive performers are the happiest workers. The question is how to produce happy and productive performers?
The structured and customized method of identifying both the work behaviour and the potential of an employee includes quantitative and qualitative aspects of their job performance. Appraisals boost employees’ confidence, self-esteem, and the process also improves their chances for better pay, promotions and other perks.
In fact, the main objectives of Performance Appraisals are;
3. Training and Development
4. Compensation reviews
5. Competency building
6. Improve communication
7. Evaluation of HR Programs
8. Feedback & Grievances
That said, we have compiled a list of 5 widely accepted and easy to implement appraisal methods.
For absolute transparency – 360-degree feedback for performance appraisals
Ongoing communication between employees and the team leaders/ managers motivate them to stay interested throughout the process and learn from the results of their performance appraisals. The 360-degree approach does exactly that, as the employee’s rating depends not on one but multiple raters, such as supervisors, peers, subordinates, customers, etc. The feedback is often collected via online questionnaires that allow absolute transparency. Every employee in an organization appraises their managers, peers, customers, suppliers, and takes part in regular self-evaluation, that ensures effective performance analysis.
For objective driven appraisal – management by objective (MBO)
The managers and employees work together to identify, plan, organize, and communicate goals for success. It is useful in determining rates of productivity and usually emphasizes career-oriented and tangible goals, leaving behind an employee’s intangible aspects such as interpersonal skills or job commitment. The manager sets the desired objectives to be achieved and gives responsibility to an employee in terms of the results that are expected from him or her. With every touchpoint meeting, the manager and employee discuss the progress made and use the outcome as a guide to measuring the contribution level of the employee.
For a more straight forward process – result-oriented approach
There are no layers to this approach, it follows a simple meeting of an employee and manager to discuss on a set goal which could also be used for determining promotion, salary increment, etc. This method is often linked to direct motivation as one knows what the prize is at the end of the race. Goal-setting can be applied to any matrix such as a sales number, amount of time spent on the field, the number of returned goods, etc.
To include every human trait in the process – behaviourally anchored rating scales (BARS)
BARS is used if the objective is to bring out both the qualitative and quantitative benefits of the performance appraisal process. Employer compares employee’s performance with specific behavioral examples that are anchored to numerical ratings. BARS has a higher rate of success in providing clear standards, improving feedback, and providing accurate performance analysis and consistent evaluation as it considers intangible aspects of an employee such as interpersonal skills. Performance management can be concluded using software that helps you maintain employee productivity and decrease the physical burden of such calculation.
For a more behaviour oriented approach – critical incident method
This is one of the most manually demanding processes but equally, useful for the individual growth of employees. The manager keeps a detailed log of the job behaviour for each employee, as to whether the traits displayed are sufficient or insufficient. This log is then translated into a checklist to evaluate the employee, suggest required training, praise the better deeds, etc in the evaluation meeting. It simplifies the process to identify an employee’s future career trajectory.
Possible drawbacks that can hamper the appraisal process
The performance appraisals are expected to be fair, accurate and objective, however, no system involving human and emotional parameters can be absolutely pure. Read on, to learn about common errors that can potentially tilt the balancing scales during the process.
Halo effect is another term for favouritism. This is caused when evaluators tend to be influenced by the previous judgments of performance or personality of an employee. For example; let’s say employee A has better interpersonal skills than employee B. It would be unethical if the judging parameter is a skill and yet employee A scores better than B despite, both equally good with their skill.
Strictness or leniencies
Authoritative figures can at times be extremely strict or extremely lenient with their evaluation. This results in overconfidence upon good undeserving evaluation or insecurities among good better deserving employees.
Unlike extreme measures of strictness or leniencies, here our authority is unwilling to demotivate their employees by giving low points and disagrees to giving an exceptional or good rating to a select one or two. Hence, the final result will be a group getting average ratings overall.
Recency of events
This occurs when a recent event overshadows the entire evaluation period which is usually 6 months to one year. It results in improper and unjust ratings as the entire work of an employee cannot be condensed down to one incident that is good or bad.
Despite these shortcomings, 69% of the employees say they’d work harder if their efforts are better recognised, making appraisals and innate process of the everyday business.