Chapter 1

Building Success with Performance Appraisals

IN THIS CHAPTER

Facilitating and strengthening the performance appraisal process from start to finish

Generating positive, measurable results with state-of-the-art performance appraisals

Enhancing employee development and productivity through the performance appraisal process

Many managers still see the performance appraisal process as an administrative rite that consumes a lot of time while producing little more than frustration, confrontation, and a loss of valuable time. This reaction is totally understandable if you’re relying on a performance appraisal system and related practices that are out of alignment with today’s approach to performance management.

As I explain in this book, the performance appraisal process can play a remarkably powerful role in developing your employees and enhancing their performance and productivity — when it’s done right.

In the past, a key source of the problems associated with the performance appraisal process has been the outmoded strategy in which managers treat appraisals as an isolated, annual set of steps that are separate and distinct from all other managerial responsibilities. Fast-forward to today and you’ll find that performance appraisals can be highly useful and productive when they are part of your ongoing managerial functions on a year-round basis.

As a manager, a key part of your role is to maintain regular and frequent contact with your employees, whether remote, onsite, or a combination of the two, and to provide them with regular coaching, guidance, and feedback. These steps are key components of what is called performance management. As part of the performance management process, there used to be a specific time — typically once a year — when managers would gather performance data on their employees, analyze it, document it, and then provide employees with specific feedback. This piece of the performance management process is the performance appraisal.

However, this process has undergone some major changes, which have led to far more positive and productive outcomes for employees, managers, and organizations. The first major change is that the notion of once-a-year annual appraisals has dramatically changed. Because of the dissatisfaction noted above regarding the annual process, some companies have eliminated formal annual appraisals altogether. However, it turns out that taking this step is often an overreaction, because employees still want performance-related feedback and guidance. The more widely accepted approach now is to provide more frequent performance appraisals, such as twice a year or on a quarterly basis. At the same time, even for companies that still use annual appraisals, one key fact is clear: For these sessions to generate positive outcomes, they cannot be held in a vacuum.

Hence, a related development that has significantly enhanced the performance appraisal process is a practice called continuous feedback. This component of performance management calls on managers to meet regularly with employees, typically on a scheduled basis as frequently as once a week. These collaborative sessions focus on employee performance, status of goal attainment, professional growth and career development, health and wellness, new initiatives, and any questions or issues that may need attention.

In the past, managers typically viewed performance appraisal not only as an isolated annual event, but also as a feedback session focused primarily on evaluation and documentation of past events. Although both of these have a place in the process, today’s performance appraisals can do much more, especially by focusing more on the employees’ future goals and achievements. When collaborative sessions are conducted more frequently and supported by continuous feedback, they are likely to generate a significantly broader range of positive outcomes, especially in terms of the following:

• Motivating employees
• Improving performance and productivity
• Increasing satisfaction and engagement
• Establishing, updating, and tracking goals and career paths
• Aiding overall administration

Laying the Foundation

In order to take full advantage of the wide range of measurable benefits associated with the newest approaches to performance appraisals, it’s best to start with a few foundational steps.

Rethinking annual performance appraisals

Annual performance appraisals have often been found to generate significant levels of dissatisfaction and distress for managers and employees alike. For managers, they tend to be seen as a yearly interruption of questionable value. They are typically regarded as angst-inducing rituals based on events and behaviors throughout a given year, often taxing the memory while consuming hours of valuable time. When the planned feedback is less than positive, there tends to be a related increase in managers’ anxiety and stress levels. The anticipation of forthcoming disagreements, arguments, or conflicts, which is not exactly uplifting for managers, often results in grade inflation, namely the practice of awarding high scores in order to avoid confrontation.

At the same time, employees who are about to receive their annual performance appraisals tend to experience a combination of fear, anxiety, and nervousness, especially if there was a problematic incident that occurred close to the date of the performance appraisal session. In many cases, employees believe that they’re not being fairly or accurately evaluated on the basis of their performance during the entire year, but rather are likely to receive feedback that is skewed as a result of more recent events. In addition, employees today are interested in receiving coaching, guidance, and advice to further their professional growth and career development, and this need is largely left unmet in annual appraisals.

Recognizing the advantages of more frequent performance appraisals

Increasing the number of formal performance appraisals from once to twice a year or even quarterly offers numerous advantages to managers, employees, and the organization at large. In the first place, more frequent appraisal sessions allow the organization to tailor the process to its key cycles. For organizations that conduct quarterly financial analysis and reporting, aligning employee appraisals in accordance with this timeframe provides a logical and timely basis for this employee feedback. At the same time, for organizations that are more project oriented, more frequent performance appraisals can be aligned with the timing of other key benchmarks that are central to company operations during a given year.

More frequent performance appraisals also provide an opportunity to place the employees’ goals in a more realistic timeframe. Although some goals can be a year-long pursuit, others can be pursued and met in a shorter period of time. More frequent performance appraisals provide employees with better opportunities to receive formal feedback and guidance on their goals while the achievement of those goals is still fresh in mind.

It's also important to recognize that many employees, especially Millennials (born 1981–1996) and Gen Z (born 1997–2012), are highly interested in sensing that their employer is truly committed to their growth, development, and career advancement. When employees are formally appraised quarterly or at least twice a year, they are more likely to sense this type of commitment from their managers and to thereby feel more valued, respected, satisfied, and energized.

These employees are not only highly interested in feedback, but they are also interested in feedforward: instruction and advice on the specific steps they can take to attain goals, improve performance, enhance growth, and guide their careers. More frequent formal performance appraisal sessions provide a meaningful and collaborative opportunity to address these interests.

Within this framework, an annual performance appraisal can still be provided at year-end, but it should not exist in isolation. Rather, if multiple appraisals are conducted during a given year, the year-end evaluation should encapsulate the formal feedback that was previously provided at the end of each evaluation period during that year. Handled in this way, the annual review is likely to be more accurate, useful, and forward-looking. However, to take the process to a higher and more productive level, a key element is the inclusion of continuous feedback.

Effectively incorporating continuous feedback

Continuous feedback is the managerial practice of providing regular feedback, feedforward, guidance, and coaching to individual employees on a regular basis, typically once a week or once every two weeks. These sessions can be held onsite or remotely, and they are not agenda-driven. Rather, these sessions provide an open forum to discuss topics of importance to each employee, the team, the department, and the organization at large. Premised on collaboration and two-way communication between managers and their employees on virtually any topic at work, the process of continuous feedback can include discussions that focus on an employee’s progress and performance, concerns and suggestions, metrics associated with goals, adjustments of existing goals, frameworks for new goals, health and wellness, career coaching, and defining and refining additional...