- May 28, 2009
- Posted by: admin
- Categories: Blog, Human Resource Management
Performance Appraisal is one of the core HR activities. In this era, good companies that want to excel, initiate this process. It is the assessment of the employee’s job performance. It is completely based on employee’s job description and objectives to be achieved.
Performance Appraisal (PA) has 2 basic purposes. First, PA serves an administrative purpose. It provides information for making salary, promotion and layoff decisions as well as providing documentation for justifying these decisions. Second, rather more importantly, performance appraisal serves a developmental purpose. This information can be utilized for determining training needs, career planning and succession planning.
Employees have mixed views about performance appraisals. According to one segment, it is for the betterment of the employees and the organization. Those employees, who work efficiently and effectively, will get the agreed intrinsic as well as extrinsic benefits. It is being regarded as an excellent method of keeping everyone motivated. The better you perform, the more you get.
On the contrary, some employees suggest to their managers that companies should get rid of performance appraisals as it is a bitter process which has the ability to create emotional pressures and stress for the employees. A manager’s bias also plays its role. Furthermore, he might lack proper training for evaluating employees’ performances. Their perception is that “no matter how well we perform, our contributions will never be acknowledged.”
Is performance appraisal a punishment tool, or an organizational catalyst? Do you think that performance should be related with pay?
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Hi salima,
It is very wrong thing to connect performance appraisal with pay or person. Please refer to me book on quality management system. Performance appraisal is to take the stock of situation and improve further. It is not at all a fault finding session.
There are very famous improvement cycles PDCA and MMCI. Check process is where performance appraisal comes into picture.
For accomplishment as well as failure, one must be able to appraise the situation. As pointed out by Deming, it is never an individual in success or failure. It is always a team. One may have to learn from success as well as failure.
Performance appraisal is a HR arena as HR represents human resource management. Performance appraisal may be applied to all other resources like tools, techniques, methods, time etc. Everything must be appraised to understand what supported us as a team and what didnot work.
Performance management is a key process for all organizations. Performance management is a great tool that is not always utilized as it should be.
What do i mean?
Managers/Supervisors should always be communicating with their staff about how they are performing. (good and bad). This does not always have to be a formal conversation, but if you are waiting until a formal process to discuss your staff’s performance, you are doing everyone a disservice.
Many times I have had managers come to me and tell me that so and so isn’t working out, and they want to get rid of them.
The first question I always as them is: What did they say when you have spoken to them about their performance? Unfortunately, too often the response is: “I haven’t said anything, because I did not want to demotivate them.”
Employees can not improve performance, if they are not aware of the areas that they are not doing well. Osmosis works well in biology, not so well in management.
With high performing employees, sometime we neglect them, since we are focused on the poor performers. However, there is nothing wrong with telling someone they are doing a good job.
People who get regular feedback are typically more engaged. This leads to less turnover and higher performance.
When you get to the formal appraisal, if you have done your job correctly, the overall rating really should not come as a surprise to your employee.
I like the idea of providing training to managers on performance appraisals and employee relations.
I also like the idea of providing training to employees on the performance appraisal process. The better they understand the process, the smoother it is.
When employees have come to me to complain about their rating, or lack of communication with their managers – I have given them a little push back. If you are not getting the feedback that you need from your supervisor, there is nothing wrong with asking for it. There is nothing wrong with giving your manager regular updates on the types of projects you are working on.
As far as Relating Peformance with pay, I think it can be a strong motivator if you are able to do so.
The caveat to this is, it is only a strong motivator, if there is a reward going to those who perform at a higher level. If you are giving ex. 3% increases to star performers and 2.5% to average there isn’t much difference here, and it is not as motivating.
Hi Salima,
what’is it the alternative to a method it assures to you that you know, in advance and in a written way, parameters and criteria will be used to generally evaluate both, your results and your behaviours (relevant for company well being & well doing) ? That give you also some possibility to discuss about target setting and about your boss evaluations ?
I don’t know any alternative. If you know it, it will be a pleasure to learn more about.
The actual opposite to performance appraisal is any case an evaluation (always will be salary review, promotions, demotions and so on…).
Made by someone about you, without generally knowing exactly who he/her is, nor when it happen, nor being clear what is under exam and to what purpose.
I experienced both the approaches in my worklife, as a manager and as an employee…
I have no doubts about what is my preference.
Are you able to divine what is it my preference? (:-)
My 2 cents
Domenico
When Performance Appraisals are treated as a once a year event they are likely to be a form a punishment or a negative catalyst – they can inhibit the execution of the business strategy (inhibit personal development). But when they are designed to be part of strategy execution process, they can be a positive catalyst – speed up the execution of business strategy.
Event based performance Appraisals focus on
• filling out forms
• focusing on blaming employees rather than helping employees and working together
• focusing on the past, rather than anticipating problems and focusing on the present or future
• spending too much time appraising, and not enough time during the year planning and communicating
The above focus results in the following scenario – Leaders set up the organizational strategy for the year, along with the goals and objectives that align with it. Individuals are assigned the goals that they have to meet, and then they get on with their daily business. The end of the year rolls around, and everyone frantically retrieves their list of goals they were to have accomplished. Some of them may have gotten accomplished by default, but others have fallen by the wayside. The result? Your planning process was great, but the execution was non-existent. The problem? That huge gap between strategizing and executing – I call this the “strexecution” point. The point of transition between strategy and execution. This is the point at which many management teams falter by failing to recognize the importance of managing strategic execution. Instead, they allow it to be eclipsed by the urgency of day-to-day activities.
The key to successful navigation through the strexecution point is to use a strategy focused execution management process that:
Provides real-time access to information about what’s working and what’s not, whose performance agreements are being accomplished on time, where bottlenecks are, and which methods are producing desired results. To be effective, this real time information needs to be used to run meetings and manage individual and company performance. If the performance management process is used this way, it can change the course of your business by producing actionable information in real-time. This information helps leaders and employees understand how they can improve their performance (develop) while helping the organization achieve its strategic vision.
Other key tools, process or steps are:
• Integrating the vision and values with the daily activities required for success.
• Creating performance agreement (not objectives) between manager and employees.
• Employee and manager working together to create this agreement versus manager telling employee what to do.
• Managing performance through structured progress meetings throughout the year. These meetings need to require objectives to be scored and behavior evaluated by both employees and manager. Year end summary of these meetings provides a summary of the employee’s performance – no more guessing. If you are interested in seeing a demo of a Strategy Driven Execution Management process, we are running a webinar on June 9th. You are welcomed to join us. Just let me know and I will send you a web-link. Or if you cannot attend (time differences), feel free to contact me directly to learn more.
Regards, Chris Scott
PS …… In response to your last question “Connecting pay for performance” – This is difficult but it is necessary. If you do not make the connection, you run the risk of punishing those who perform and rewarding those who do not – which is a negative catalyst.
Hi Salima:
I believe for an organization to be as fair as possible and maximize its potential, it HAS to hae a performance appraisal in some form or manner. As you state, many see this as a right to be paid more (employee point of view) or a way to avoid pay increases or rationalize below average pay (employer point of view). Should it be tied in some manner, sure, but that is not the main reason for a review.
I believe the problem with many annual reviews/performance appraisals, it is just that, annual, meaning poor managers are not meeting/coaching/documenting throughout the year then they have to go through this exercise to meet “corporate” guidelines. I suggest these managers need coaching/training of their own in order to make the performance analysis valid, viable and usable.
It is a great opportunity to pin point areas for development, perhaps for promotional consideration in the future or perhaps to sure up a weakness in the employee who is otherwise great. There are many functions of a good appraisal process.
Does anyone see a problem with the “stars” being rewarded with a greater increase? Isn’t that what a good company should do, reward those who are bringing higher value to the organization? The flip side is good and poor employee receive same increase, therefore inevitably reducing morale of the star and thereby possibly reducing the drive and also having the good employee look elsewhere for employment where they will be respected and recognized for accomplishments.
Not a high brow answer, but one of logic and reality. Make sure the appraisal format is something that gives enough latitude for the manager/supervisor to demonstrate a good employee while there maybe a n area or two with at or below expectation levels. I would also suggest that examples of good and bad be documented and attached to the form and used during appraisal. A person cannot argue with facts from 8 months ago that are clearly documented. If you don’t it becomes a what have you done for me lately process. Good managers are tantamount to the success of a performance/annual review process as is the “buy-in” of the process from the executive level of the company, or it is just an exercise that ends up wasting everyones’ time.
In some companies, the process feels like punishment to the employee and the manager. While that is not the intent, some managers use the event as a time to compliment a little and criticize a lot. It is punishment to the manager who views it as a non-valued added activity required by HR.
Like other HR practices, performance appraisals are viewed as a must-have program. HR provides guidance and training for managers in how to do appraisals. Managers with a large number of people reporting to them do not have time to perform several appraisals a year and certainly do not have time to regularly observe, coach, and provide feedback on performance to employees. It would be great if managers could do that, but it does not happen in the companies with whom I consult.
I do not see appraisals as a catalyst, unless it is a catalyst that causes negative thinking among most employees.
Pay for performance may work well in some industries and with some positions, but a number of people doing the same job on different shifts have little opportunity to differentiate performance. Set a pay rate that fairly compensates the employees for doing the job requirements. and then a manager could have more time to appraise performance regularly.
Salima,
Yes, I think that compensation should be linked to performance and contribution to the company.
I agree with Jeff. Additionally, here are some of my other thoughts and experiences as a consultant.
Where I have encountered employees who were bitter and de-motivated about Performance Appraisal systems, I found some or all of the following to be the case:
> The PA criteria were completely at odds with the organisation’s vision and espoused values. A common example is an organisation that says it values teamwork and collaboration, but actually rewards individualistic, competitive behaviours. In the worst case scenario, an organisation with these espoused values force-ranked employees at the same level across functions — despite extremely diverse expertise requirements, job structure and role elements — grouping them into 3 categories and performance managing out the bottom third.
> Employees and work groups are not part of the dialogue establishing objectives and other performance expectations, and (one of Jeffrey’s main points) do not receive coaching and feedback throughout the year — often leading to ‘shock-horror’ reactions at year’s end.
> Feedback and/or PA review sessions focus exclusively on ‘Find the Flaw’ and areas needing improvement. I have actually had managers tell me that they intentionally never give employees positive feedback because ‘they will get lazy and rest on their laurels’.
> Performance Appraisal criteria include ‘stretch’ objectives that, in fact, are unachievable.
> Employees perceive favouritism (i.e., someone gets an excellent PA who did not appear to meet objectives and/or other established criteria).
> Direct managers’ appraisals can be over-ruled by more senior managers — even though the senior mangers have little direct contact with employees’ work. I have seen many instances in which the over-ruling was based on a ‘snapshot’ (e.g., one poor presentation; the Sr. Mgr walked into the work area once and caught the employee with his/her feet on the desk).
On the other hand, some of the Best Practices I have seen include:
> PA objectives, process, criteria and rewards reflect the Vision, values, brand identity and unique core competencies of the company. (Functional and departmental goals are aligned and deployed from the Vision, values, etc and from corporate strategic goals).
> Department meetings are conducted to discuss corporate goals and priorities and to discuss and agree the department’s own goals and metrics.
> Work teams meet to discuss deployed departmental goals and to establish proposed work group and individual objectives and metrics to support achievement of departmental goals, to submit to their Sr. Manager for approval.
In addition to receiving (and asking for) feedback from colleagues, customers and the manager, work groups and departments meet periodically to see how they stand against achievement of objectives.
> PA objectives include elements such as providing assistance to others and asking for assistance.
> PA objectives include a segment in which an employee and or work group can demonstrate how they seized an opportunity (not in the initial objectives/criteria) to make a major contribution to the company. (Areas have included: Cost avoidance or reduction; Enhancing profitability; Inventing a new technology;product or service; Overcoming an unanticipated crisis; Taking initiative to improve a process).
> Feedback, progress meetings and the final appraisal all contain balanced positive and critical feedback.
> There is a strong career and professional development program in place to support individual developmental/performance enhancement needs.
> The PA process solicits feedback from the manager, any matrix manager, any Project Managers, work group colleagues, employees,and internal or external customers — versus relying solely or primarily on the perception/opinion of a single manager.
Hi Salima,
my experience in HR begins just with a performance appraisal system in crisis (over 1.200 employees, on a total of 4.000, activated procedures of appealing against the performance evaluation campaign of the year 2001) and we learned a lot of do’s and donts’ about this tool and the whole process, but the most important things we learned (from a panel of focus groups, and listening to each and every one of the 1.200 …) was WHY.
So, WHY adopt this process? We found three reasons:
1) GUIDANCE -managers perspective-, this is a tool available to the managers to address the performance of the team (by spreading a culture of results) and create opportunities for discussion with individual employees;
2) EMPOWERMENT -employees perspective-, this is a tool available to the person to grow in self awareness and be an actor of their own professional development;
3) VALORISATION -company perspective-, this is a tool for the company to manage the resources and guidance rewarding systems for and professional development systems.
We also understood that an extensive training and communication was needed, so we REALLY implemented it.
The rest are technicalities…
The following years we had an average of 30 appealing procedures for each campaign…
About the pay-for-performance framework i think that you can apply it AFTER performance appraisals are “well-performed” according to the three reasons above.
We did it, we established a clear linkage between evaluation system and various rewarding systems, but as HR you have to be committed to support managers using these tools, otherwise many mistakes will come…
Regards, Alessandro
Hi salima,
It is very wrong thing to connect performance appraisal with pay or person. Please refer to me book on quality management system. Performance appraisal is to take the stock of situation and improve further. It is not at all a fault finding session.
There are very famous improvement cycles PDCA and MMCI. Check process is where performance appraisal comes into picture.
For accomplishment as well as failure, one must be able to appraise the situation. As pointed out by Deming, it is never an individual in success or failure. It is always a team. One may have to learn from success as well as failure.
Performance appraisal is a HR arena as HR represents human resource management. Performance appraisal may be applied to all other resources like tools, techniques, methods, time etc. Everything must be appraised to understand what supported us as a team and what didnot work.
Performance management is a key process for all organizations. Performance management is a great tool that is not always utilized as it should be.
What do i mean?
Managers/Supervisors should always be communicating with their staff about how they are performing. (good and bad). This does not always have to be a formal conversation, but if you are waiting until a formal process to discuss your staff’s performance, you are doing everyone a disservice.
Many times I have had managers come to me and tell me that so and so isn’t working out, and they want to get rid of them.
The first question I always as them is: What did they say when you have spoken to them about their performance? Unfortunately, too often the response is: “I haven’t said anything, because I did not want to demotivate them.”
Employees can not improve performance, if they are not aware of the areas that they are not doing well. Osmosis works well in biology, not so well in management.
With high performing employees, sometime we neglect them, since we are focused on the poor performers. However, there is nothing wrong with telling someone they are doing a good job.
People who get regular feedback are typically more engaged. This leads to less turnover and higher performance.
When you get to the formal appraisal, if you have done your job correctly, the overall rating really should not come as a surprise to your employee.
I like the idea of providing training to managers on performance appraisals and employee relations.
I also like the idea of providing training to employees on the performance appraisal process. The better they understand the process, the smoother it is.
When employees have come to me to complain about their rating, or lack of communication with their managers – I have given them a little push back. If you are not getting the feedback that you need from your supervisor, there is nothing wrong with asking for it. There is nothing wrong with giving your manager regular updates on the types of projects you are working on.
As far as Relating Peformance with pay, I think it can be a strong motivator if you are able to do so.
The caveat to this is, it is only a strong motivator, if there is a reward going to those who perform at a higher level. If you are giving ex. 3% increases to star performers and 2.5% to average there isn’t much difference here, and it is not as motivating.
Performance management is a key process for all organizations. Performance management is a great tool that is not always utilized as it should be.
What do i mean?
Managers/Supervisors should always be communicating with their staff about how they are performing. (good and bad). This does not always have to be a formal conversation, but if you are waiting until a formal process to discuss your staff’s performance, you are doing everyone a disservice.
Many times I have had managers come to me and tell me that so and so isn’t working out, and they want to get rid of them.
The first question I always as them is: What did they say when you have spoken to them about their performance? Unfortunately, too often the response is: “I haven’t said anything, because I did not want to demotivate them.”
Employees can not improve performance, if they are not aware of the areas that they are not doing well. Osmosis works well in biology, not so well in management.
With high performing employees, sometime we neglect them, since we are focused on the poor performers. However, there is nothing wrong with telling someone they are doing a good job.
People who get regular feedback are typically more engaged. This leads to less turnover and higher performance.
When you get to the formal appraisal, if you have done your job correctly, the overall rating really should not come as a surprise to your employee.
I like the idea of providing training to managers on performance appraisals and employee relations.
I also like the idea of providing training to employees on the performance appraisal process. The better they understand the process, the smoother it is.
When employees have come to me to complain about their rating, or lack of communication with their managers – I have given them a little push back. If you are not getting the feedback that you need from your supervisor, there is nothing wrong with asking for it. There is nothing wrong with giving your manager regular updates on the types of projects you are working on.
As far as Relating Peformance with pay, I think it can be a strong motivator if you are able to do so.
The caveat to this is, it is only a strong motivator, if there is a reward going to those who perform at a higher level. If you are giving ex. 3% increases to star performers and 2.5% to average there isn’t much difference here, and it is not as motivating.
Neither nor – in most cases.
re punishment tool: in some worst practise cases it might be implemented to work as such, but that’s not the rule. Of course, it not always pleasant. And it shouldn’t. In fact, it is pleasant more often than it should be, because many managers shy away from addressing issues. BUT: it should always be constructive.
re Organisational Catalyst:
in theory, it should be one. In practise, the process is often to admin-focused, not aligned with business requirements, done quick, because it was the objective of the HRD to have one be 1st Jan, ignores cultural barriers,…
In my experience, really good processes are VERY rare, the majority is mediocre and has no or a slight positive effect (avoiding negative effects by lime managers finding ways to work around HR’s process), quite a big chunk has negative effects, because objectives, appraisals and conversations serve a rigid process and HR database rather than business requirements.
HOWEVER: it’s got the potential to increase business performance significantly, when done well.
Performance Appraisals as concepts / systems are in themselves not intrinsically bad. But put them in the hands of untrained people or a badly led org and you have trouble. And of course I really don’t know many people who enjoy giving or receiving them or indeed any measures that shows their overall effect. Usually the participation number is the measure.
Anyway, my rules below.
Rule (1) Any organizational system has to be VALID for EVERYONE in the company or for no-one. Not adhering to this negates everything else.
Rule (2) PAs should be supported by an electronic system that allows BOTH SIDES to make daily notes that can be printed and brought to the discussion.(Ever managed 20 ppl and tried to remember the important stuff one year later) Try as a manager showing up without a printout of your employees performance and see what happens.
Rule (3) People want different things from work, reward systems need more imagination.
Rule (4) Train people to give feedback all year long, and make notes, so that the PA is itself the CULMINATION of a long, ongoing discussion not a major surprise / disruption.
Like Domenico I don’t know a great alternative
Best wishes
Alph
If these examples are accurate they indicate the enhanced role that “HR approaches” must take in their interventions with the management ethos of the organisation. Not all organisations want the same values as those espoused here, that is their choice. Where they do, they need to recognise that much work is required to equip managers to support the motivation of the workforce.
Badly handled, a two hour or 1/2 day appraisal can destroy ambition and decimate performance for months and even years. This can happen if only one of a team recieves a badly conducted appraisal.
Perfomance must always be linked to recognition and remuneration (unless you are in the banking or financial sector; where it appears anything goes?) and financial return is one aspect of that.
Milind touches on one area where quality systems can lead managers to only see the shortfalls or gaps. Performance appraisals must recognise contribution regardless of outcome or they become unbalanced. The moment this happens, employees switch off and be “done unto”.
There should be nothing bitter in a performance appraisal. Anything of that nature should have been dealt with immediately at the time using other procedures.
When Performance Appraisals are treated as a once a year event they are likely to be a form a punishment or a negative catalyst – they can inhibit the execution of the business strategy (inhibit personal development). But when they are designed to be part of strategy execution process, they can be a positive catalyst – speed up the execution of business strategy.
Event based performance Appraisals focus on
• filling out forms
• focusing on blaming employees rather than helping employees and working together
• focusing on the past, rather than anticipating problems and focusing on the present or future
• spending too much time appraising, and not enough time during the year planning and communicating
The above focus results in the following scenario – Leaders set up the organizational strategy for the year, along with the goals and objectives that align with it. Individuals are assigned the goals that they have to meet, and then they get on with their daily business. The end of the year rolls around, and everyone frantically retrieves their list of goals they were to have accomplished. Some of them may have gotten accomplished by default, but others have fallen by the wayside. The result? Your planning process was great, but the execution was non-existent. The problem? That huge gap between strategizing and executing – I call this the “strexecution” point. The point of transition between strategy and execution. This is the point at which many management teams falter by failing to recognize the importance of managing strategic execution. Instead, they allow it to be eclipsed by the urgency of day-to-day activities.
The key to successful navigation through the strexecution point is to use a strategy focused execution management process that:
Provides real-time access to information about what’s working and what’s not, whose performance agreements are being accomplished on time, where bottlenecks are, and which methods are producing desired results. To be effective, this real time information needs to be used to run meetings and manage individual and company performance. If the performance management process is used this way, it can change the course of your business by producing actionable information in real-time. This information helps leaders and employees understand how they can improve their performance (develop) while helping the organization achieve its strategic vision.
Other key tools, process or steps are:
• Integrating the vision and values with the daily activities required for success.
• Creating performance agreement (not objectives) between manager and employees.
• Employee and manager working together to create this agreement versus manager telling employee what to do.
• Managing performance through structured progress meetings throughout the year. These meetings need to require objectives to be scored and behavior evaluated by both employees and manager. Year end summary of these meetings provides a summary of the employee’s performance – no more guessing. If you are interested in seeing a demo of a Strategy Driven Execution Management process, we are running a webinar on June 9th. You are welcomed to join us. Just let me know and I will send you a web-link. Or if you cannot attend (time differences), feel free to contact me directly to learn more.
Regards,
PS …… In response to your last question “Connecting pay for performance” – This is difficult but it is necessary. If you do not make the connection, you run the risk of punishing those who perform and rewarding those who do not – which is a negative catalyst.