Managing Appraisals and Performance ReviewsWhat Sort of Leader are You?
Appraisals, also known as performance reviews, performance appraisals and employee appraisals, are a way of measuring and assessing employee performance.
Once an annual event, often with a huge bureaucracy attached, the performance appraisal process has recently become more informal and flexible in many organisations.
Whether your organisation favours an annual process or a more informal arrangement, performance reviews are a vital tool for managers and their teams to discuss performance on an individual and team basis. They also serve as a way to identify and address development needs.
Learning to carry out performance reviews effectively is an important skill for managers and leaders.
What is an Appraisal?
An appraisal or performance review is simply a way of evaluating and documenting employee performance. The process generally involves:
Setting individual or team goals and targets for a period;
Assessing and documenting progress against these goals and targets at intervals; and
Identifying linked development needs for individuals or teams.
Many organisations operate an annual appraisal system. However, increasingly, employees and managers are finding that it is helpful to have more frequent performance discussions, perhaps quarterly, with regular one-to-ones that touch on performance and provide task feedback in between.
This page distinguishes between two types of discussion: formal performance reviews, and more informal performance discussions.
Formal Performance Reviews
Many, if not most, organisations require formal performance reviews at intervals. The intervals may be flexible—for example, to fit with project deadlines, rather than time-bound periods—but the process itself remains fairly similar:
The first step in any appraisal process is to set clear goals for the individual. To be meaningful, these should be closely linked to the organisation’s goals and strategy, and also to those of the team.
The goals should also be ‘owned’ by the individual, not the manager. Managing the balance between this and the link to the organisation’s goals can be challenging for managers, but it is important to ensure that individuals are genuinely interested in their goals.
Goals should be SMART (Specific, Measurable, Attainable, Relevant, and Timed). Our page on Setting Personal Goals explains more about how to do this. The goals should also set out clearly how progress against them will be measured, so that the employee knows what is expected.
2. Assessment of performance against the goals
Formal performance reviews need to make an assessment of performance against the individual or team goals. However, it is important to remember that there should be no surprises in these discussions. These conversations are also not the place for detailed discussions about recent or individual events.
Issues of poor or outstanding performance should have been raised when they occurred, with detailed feedback provided. For more about this, see our page on Giving and Receiving Feedback.
Instead, these formal discussions should focus on the whole period under review, and the overall level of performance against the goals. Discussion might include how the goals changed over time, whether they were achieved, and what challenges were met in the process.
The focus should be on learning, and not on punishment, success or failure.
3. Identifying development needs
A key part of formal appraisal is to identify development needs, and consider how these might be addressed. It is no use agreeing that someone needs to work on their stakeholder management skills, for example, without working out how this will be achieved. A clear action plan is an important outcome of appraisal discussions, and should be documented (see section 4 below).
Our pages on personal development may provide some ideas for this part of the process.
Like goals, it is important that a personal development plan is owned by the individual and not the manager (although it is, of course, also important that the manager supports the plan, and is prepared to provide the time and other resources required to achieve it).
4. Documenting the appraisal
The final part of the process is to document it.
This means the goal-setting, progress and performance during the period, and the discussion itself. In other words, you should record the formal parts of the process, but you should both (manager and employee) also keep track of good and bad performance during the period, with evidence. For example, it is helpful to keep a record of:
Any praise or complaints from customers, and internal managers or staff;
The outcomes and outputs from projects and tasks, including meeting deadlines; and
Any problems that were encountered that affected the project.
It is helpful for both manager and employee to keep these records, as they can be helpful tools during formal and informal performance discussions.
The goals, appraisal outcomes and personal development plan should be written up and formally agreed by both manager and member of staff, to ensure that they have a shared understanding of these.
Why document discussions?
You may feel that documenting performance discussions is a waste of time that could be better spent on actual work.
However, it is worth bearing in mind that employment tribunals often rely on performance appraisal discussions as evidence of either good or poor performance.
No document = no evidence = potentially unfair dismissal.
If you get into the habit of routinely recording all performance discussions, and agreeing the record with the other person, this will never be a problem.
Informal Performance Discussions
Important though formal performance reviews are, they are no substitute for regular feedback on performance.
As a manager, you should aim to discuss performance with your team members regularly, providing feedback routinely on how they are doing their job—and also seeking feedback from them on your performance as a manager.
Effective feedback is timely: you should provide it at the time you notice the event, or as soon as possible after that. It should also be specific, and focus on behaviour. If it is positive, a quick word in passing can be very effective:
“By the way, I was impressed with the way you handled that question from the client. It could have been difficult, but your response got straight to the heart of the matter, and I could see he was happy with that.”
Praising people in front of others can be good, but negative feedback is probably best handled in private, on a one-to-one basis. For a single event, it is best not to make a big deal of it, but just ask quietly how it might have been better approached.
Our page on Giving and Receiving Feedback may be helpful in deciding how to approach issues.
A focus on moving forward
Appraisals and performance reviews should always be approached with a focus on moving forwards.
They are not, and should not be, about punishment. Instead, they should be about praising and encouraging effective behaviour, and developing weaker areas to improve those for the future. Keep this in mind, and your appraisals will be more effective, and more welcome to your team.