Guidelines for Effective Performance Appraisals

ManagementJanuary 19, 2023 10:00


Have you ever stopped to think about how your company is approaching performance appraisals? Are they conducted effectively so as to empower your employees? Performance appraisals are, without a doubt, an essential aspect of your company’s HR strategy. They serve to provide employees with feedback on their job performance, identify areas for improvement—and above all, align individual goals with your company’s overarching mission.

However, performance appraisals are so often disparaged as an inaccurate and time-consuming corporate ritual. A study conducted by McKinsey indicates that most CEOs do not view performance appraisals as a useful tool in identifying top performers. This negative perception is similarly echoed by employees who report that the performance appraisals given by their managers are often biased and unfair.

It is unfortunate that performance appraisals have gained such an undeserved reputation. Here are 3 guidelines on how you can conduct performance appraisals effectively in your company:

1. Establish a Clear and Consistent Format

Consistency throughout the entire process of performance appraisals is vital. Thus, you should implement a consistent format for all appraisals with a set of clearly defined criteria. The exact performance criteria for evaluating employees may differ from company to company, yet the following are applicable to all industries: quality of work, job knowledge, communication, teamwork and initiative.

This will help to ensure that the appraisal process is as fair as possible, since all employees are assessed using the same benchmarks. Not only should you define the performance criteria well ahead of performance appraisal time, but you should also communicate them to employees in advance. You want your employees to understand and be fully aware of what is expected of them, so that they will not be caught off guard during the performance appraisals.

2. Implement 360 Degree Feedback

After establishing a clear and consistent format for performance appraisals, it is time for you to gather feedback from a variety of sources. This framework, in which feedback is collected from an employee’s manager, peers and subordinates, is generally known as the 360 degree feedback. Beyond providing employees with a well-rounded view of their performance, 360 degree feedback can help to build a culture of collaboration in your company.

First, you should develop a questionnaire with a mix of open-ended and close-ended questions, based on the previously established criteria. For the open-ended questions, explicitly state that the participant cannot simply scribble down hasty one-liners. Sufficient elaboration—substantiated with specific examples—is required.

Then, distribute this questionnaire to the different individuals involved in evaluating a particular employee. That particular employee should also be asked to perform a self-assessment. They should be given a specific period of time, for instance a week, to complete the questionnaire.

3. Guide Managers on How to Deliver the Performance Appraisals

Last but not least, you have to guide the managers who will be delivering the performance appraisals in one-on-one meetings. Encourage each manager to use his or her subordinate’s self-assessment as a springboard to discuss the collated 360 degree feedback. The manager should set the tone for an honest and open discussion with his or her subordinate—no monologuing!

Furthermore, impress upon each manager the need to offer recognition and praise for areas which his or her subordinate has excelled in. Once positive feedback has been given, the manager can proceed to identify areas which still need development and growth. The manager should finally end the performance appraisal on a positive note, celebrating the past year’s wins and injecting inspiration for the future.

We hope these three guidelines will help you wield this strategic tool in your company’s HR toolkit for enhanced employee performance!


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