Do you know the saying 'The more things change, the more they stay the same'? Well, it's 2021 and performance appraisals are still the most universally used method to evaluate employees' effectiveness and productivity.
But while overwhelmingly popular, performance appraisals are not without their critics.
Employees still complain that the feedback they get feels biased or disconnected from their work. And managers still see performance appraisals as yet another bureaucratic, box-checking exercise.
Let's get critical!
Global Management consultancy McKinsey did some research into performance management back in 2018. In criticism of the long-used approach to measuring performance, they found that half of the executives surveyed said that their organisations' evaluation and feedback systems had no impact on performance. Or worse – had a negative effect. While McKinsey didn't conclude that performance appraisals should be scrapped, they did identify several critical factors that can help make the process more effective.
Of these factors (which include fairness, flexibility, coaching and adaptability), fairness is the most critical. Employees need to believe that the frameworks and methodologies of performance appraisals aren't stacked against them. In fact, they found that 60% of respondents who perceive the performance management system they were evaluated under as fair, also stated that it was effective.
Here we share 7 great tips to make your performance appraisals as effective as possible:
1. Link your employees' goals to your business priorities
Employees want to make a difference. In particular, they want to understand how their work fits into the larger picture of what your company is trying to accomplish. When you link your 'employees' goals and objectives to your business vision, you build a solid foundation of trust, and give their work meaning and purpose. It helps your people feel more connected to both the company and the rest of the workforce.
Your quick takeaway: As part of the performance appraisal process, communicate the higher-level strategy and explain how the individual's efforts help the company succeed.
2. Keep things simple!
Performance goals and KPIs work more effectively when both management and employees understand what they mean. Many organisations try to evaluate their employees across far too many dimensions. And some measures are way too fuzzy and subjective to gauge effectively. Focus on easy-to-understand objectives that translate directly into successful business outcomes. By all means, take into account important soft skills like emotional intelligence and culture - but ensure there’s a way to rate these objectively, instead of relying on gut feel.
Your quick takeaway: Employee goals need to be the critical things that really matter for the business. Keep appraisals simple and motivate teams by concentrating on a few core measures of success that are easy to understand and interpret.
3. Give your employees a say - let them create and shape their own goals and KPIs
Like it or not, a top-down approach to performance is rarely going to get people on-side, engaged or excited. A great way to build engagement is to give your people a say in the framework and measures that they'll be evaluated against. When your people feel as though they are part of the decision-making process, they'll feel ownership and responsibility for your most important key performance indicators.
Of course, some tasks go beyond simple KPI measurements and involve a complex web of multiple people or departments. In this case, even more regular feedback is recommended so that everyone knows how they're performing against the plan.
Your quick takeaway: Buy-in is critical! Bring your people together to shape their goals as a team.
4.Train your managers to become positivity coaches
Be careful - performance review sessions and appraisals can quickly turn into negative (and dreaded) experiences. Your employees can feel as though their manager is taking the opportunity to offer up criticism under the guise of being ''helpful'. Performance reviews should be a positive event - reflecting on the person's capabilities, potential for improvement and personal development.
The focus should be on developing the person, so they become better at their job. Go ahead and discuss what's going well and what's not, but don't let it become a 'dressing 'down'. Instead, discuss the importance of achieving goals, and where necessary, agree on joint plans to help your employees succeed.
Your quick takeaway: Celebrate achievements and identify opportunities. If your managers adopt a positive coaching mentality and offer praise and help in equal measures, employee communication lines will dramatically improve.
5. Goals and objectives need to be realistic and evolve as business conditions change
Employees cite unrealistic employer goals as one of the most demotivating factors in the workplace. Of course, businesses are ambitious, and shareholders expect constant growth. But while smart goals stretch people to new heights, unrealistic and unachievable ones can make employees give up all too quickly! You also need to be careful about promising rewards when it’s unlikely anyone can earn them. Carrots are great, but when they’re always out of reach, your people can feel frustrated, unvalued and demotivated. At the same time, goals and KPI targets need to change to reflect the current business climate.
At the top level, your business strategy and objectives change with the ebb and flow of the economy and the state of your industry. Revisit performance goals at least twice per year to ensure they make sense given the business climate. Be honest - are these goals real, relevant and even remotely achievable? Or are they just a pipe dream?
Your quick takeaway: Revisiting goals and KPIs regularly means your people remain focused on the most important jobs-to-do in the organisation and avoid time and effort wasted on initiatives that are no longer a priority.
6. Make sure your teams have the resources and technology they need to achieve their goals
During performance reviews, your employees are bound to question the resources they had available to them during the relevant period. Granted, some people can be idealistic about having unlimited access to resources, whether people or technology. And equally, some managers are guilty of overpromising what an employee will have at hand to help them succeed.
So, reviews need to consider whether an employee's performance was impacted by something out of their control. This could be a factor relating to the economy, the marketplace, or lack of access to an internal resource (like an assistant or a realistic marketing budget) that has held them back from achieving their full potential.
Your quick takeaway: Be fair. If you want your people to act as 'intrapreneurs' and find opportunity from challenging situations, then make sure they have the help they were promised.
7. Engage with your people little and often - rather than just focusing on the single annual review
By discussing performance regularly, your managers can get the best out of their (positive) coaching role. (After all, a football coach 'doesn't just meet with his or her players once a year. They attend every game, carefully watching, strategising and providing tailored feedback).
If you're only providing feedback and discussing performance once a year, you’re missing the chance to make a real difference month-to-month. If there’s too much time between reviews, your employees can feel as though they are adrift and disconnected from the things that are crucial for the business to succeed. After a prolonged period without regular feedback and discussion, an employee may build up problems and find it more difficult to raise them.
Your quick takeaway: By reviewing performance little and often, you create regular opportunities to fine-tune performance, motivate, communicate and build relationships.
BONUS - Allow your employees to reflect on what went well and what didn't
We all make mistakes. During a performance review, focus on the strengths and weaknesses (or positives and negatives) of each skill or competency that's being measured. Invite your employees to reflect on what went well and what didn't. What they’ve learned since their last review, and what would they do differently next time? And is there something that made them successful that they could share with the broader team?
Your quick takeaway: Business success in any industry comes from a test and learn approach.
The big takeaway
We all like to do better. And we know full well that motivating with praise will always reap bigger rewards and better outcomes than ruling with fear.
With some honest reflection on your current performance review process and utilising innovative technology to keep you on track, you can turn your appraisals into a powerful motivational and insight generating tool. By setting goals with your employees (not in isolation from them), you can win their hearts, improve performance and efficiency levels, and reduce attrition rates. And that’s got to be good news for everyone.