Performance appraisals

Scope

Performance appraisals, among other things, are communication tools used by company leadership to identify employee strengths and weaknesses.

Regulatory citations

• None

Key definitions

• None

Summary of requirements

Some companies have formal performance appraisal programs, and others have little more than a policy of open communication used to cover any performance issues. Since appraisals are not required, some companies choose not to conduct them at all. There is no set process for what is right for all companies. Company policy and culture need to be considered in determining which strategy works best.

If you are going to have such a program, it is essential that it be done well. If not, you may well be better off with no program at all. Too often, supervisors are not candid in their appraisals and gloss over issues and cause employees to believe they are performing better than is the case. That approach deprives employees of knowledge that they need to improve and may cause confusion and litigation if the employer disciplines them for their performance. Poor appraisals have been a problem for supervisors and their employers in discrimination and other litigation.

Performance appraisals, among other things, are communication tools used to identify employee strengths and weaknesses. They are also tools to communicate goals and achievements. The information can help the organization be more productive. Effective appraisals avoid being adversarial in nature, but are honest. They let employees know how they’re doing, what they can do to improve or move up, and provide an opportunity for recognizing good performance.

Other benefits of performance appraisals include the following:

• They provide opportunities to identify new ideas and improved methods.
• Well done appraisals help avoid potential legal issues.
• They allow employees to see how their work fits into the company goals, and why their work is important.
• They provide opportunities for employees to convey personal conflicts that adversely affect their work performance.

Poorly run performance appraisals may have a negative impact. They may:

• Not advise employees of the problems they are having and provide a false sense of comfort.
• Lead employees to feel that they are adversarial and are used to place blame for overall company performance.
• Inhibit open communication between the managers and the employees.
• Be also used to as an opportunity for managers to promote their biased opinions of certain employees.

Performance appraisals should be designed to gather facts, identify potential problems before they arise, and provide for open communication. The appraiser needs to be objective, and needs to be familiar with the appraisal process along with how the information gathered is or can be used.

Establish goals. One of the first things to establish is what the goals of the company are and how employee tasks and performance fit into those goals. From there, the goals of the employees’ positions can be formulated and geared to mesh with the company goals.

These need to be communicated to the employees. Knowing where they fit into the big picture provides them with a feeling of value, that the work they do has a place of importance in the company’s overall goals.

To help establish goals, the appraiser may want to review each employee’s training, experience, skills, and qualifications, along with the employee’s job performance since the last appraisal. This should be done prior to the appraisal. The appraiser may want to consider this information in regard to the employee’s career opportunities in the company, or any obstacles that may exist.

Communicate goals, expectations. Goals should be communicated as something the employee can reasonably expect to achieve. Organizations may find it helpful to identify such things as a time frame to achieve the goal, the resources that may be required, and the conditions in which the goal is to be achieved. The more specific the information, the less ambiguity employees will have in regard to what they need to do, and the better the chance they have at achieving the goals.

In addition to communicating the company goals and the employees’ position, the appraiser also needs to communicate the expectations of each employee. This information will help make evaluating employee performance easier. The expectations, as opposed to the goals, may focus on tasks that are not consistently required, but are needed only on occasion, or perhaps only once for a specific project.

Some of the information regarding expectations may be found in job descriptions. However, some expectations may be more detailed than the job descriptions provide.

This is an area where the employee may be able to provide some input. Instead of dictating what work should be done, appraisers may want to allow the employee to provide insight into the functions of their position to better understand some possible expectations.

Some companies allow for employee input prior to meeting with a supervisor or other appraiser.

Ensure consistency. Some organizations perform the same type of appraisal for all employees, while others have different types for different levels of employees. Appraisals for management level employees, for example, may have more qualitative information than line employees. This may be because management level employees do not engage in activities that are easily quantifiable; i.e., they do not complete 500 widgets a day, but they may put in place a process that increases the department’s output of widgets.

Appraisers have different tactics and different personalities, but the process should be designed to be as consistent as possible. This can be aided with the use of forms. The forms can be tailored to gather both quantitative and more qualitative information — that is they can force the appraiser to rank the employee on only a given scale, or they can allow for notes from both the appraiser and the employee. Allowing the employee to explain or supplement the comments is very valuable.

The design of an appraisal form cannot guarantee rater consistency. Appraisers may, however, learn to be more consistent with appropriate training.

Training. Those who need to perform employee performance appraisals may benefit from learning some of the pitfalls to avoid and how to handle certain situations. It may help them to know about rater biases and what to do if an employee refuses to accept responsibility for his or her performance.

At the very least, those who are to perform appraisals will need to know the process for doing them — who they are to appraise, what forms to use, what information to gather, when to perform the appraisal, and why they are doing them in the first place.

From there they can be taught how to rate employees, what to evaluate, and how to score. Additional training can include the following:

• Maintaining open communication;
• Documentation — not only of the appraisal, but of the employee’s ongoing performance;
• Appropriate places to hold the appraisal;
• Listening skills, and
• Coaching.

As indicated earlier, employee performance appraisals can run the gamut from basic open communication between management and employees, to formal processes. Whichever one is used should focus on truthful and based on facts. Information should be documented, but such documentation should refrain from information that involves age, race, gender, or any other protected class.