What is a performance appraisal, which areas benefit from it and how can managers make these evaluations more effective?
It's known that an annual or semi-annual performance appraisal isn't the most effective way of improving employee performance. However, these types of employee evaluations are still being used by many organizations as a system to assess, manage and reward the job performance of their employees.
Performance appraisal is a formal procedure where one or more people in an organization (often the supervisors) analyze and gather data on how well each employee is performing on their job functions. This evaluation can be done at an individual or group level.
The word "formal" in the definition is crucial because, in reality, supervisors should be continuously evaluating a person's performance.
An evaluation system was already in place during World War I to identify those who were doing poorly in the U.S military, to make decisions about discharges or transfers. This process became very popular and by the 1940s, over 90% of American companies were using appraisals. A strong rating in the reviews boosted aspirations for career advancement. Today, it is speculated that this form of performance evaluation reduced employee collaboration.
In 1957, Douglas McGregor, a famous social psychologist, proposed that employees should receive feedback from their boss and set goals together; in the 1960s, companies started discussions about adding accountability and growth as goals for improvement.
During the 1980s, Jack Welch championed the idea of creating a forced ranking that rewarded top employees and fired poor performers.
This was successful and two decades later, up to a third of the US corporations had adopted a forced-ranking system. However, what appeared to be a fantastic performance-oriented system ended up overwhelming both appraisers and the appraised. One reason was the time and workload each manager spent doing evaluations. There were cases where a single manager had to evaluate over 25 people. Therefore, several companies such as Adobe and Kelly Services quit their traditional evaluations and started giving recurring and informal feedback.
The main goal of a performance appraisal is to improve organizational and individual performance and to guide main human resource management decisions such as training and salary increases. These are some HR areas that are aided by a well-designed appraisal system:
Even when it’s reasonable to assess performance, it’s unclear whether the data has real value for organizations and employees. For example, a frequent reasoning for formal performance appraisal systems is the fact that they provide feedback that’s useful, yet, some research on feedback effectiveness questions this assumption.
Having high expectations from a single evaluation plan may be problematic and lead to a great deal of frustration. For instance, a method that is effective for employee development may not be the best for determining pay raises.
It seems that performance evaluation and performance management systems are virtually always assessed as failures by both employees and management, regardless of how they are created.
Have you ever had annual/semi-annual performance appraisals and found it hard to remember feedback you’ve given throughout the year? There's much information that needs to be retained daily. Sometimes it can be challenging to remember a colleague's performance over the year.
Additionally, the process itself is expensive and time-consuming. Big companies such as Deloitte found themselves dedicating a lot of money and time to performance management until they chose a different approach that was faster and more focused on the company’s goals.
As mentioned, performance management systems (PMS) are occasionally created using conventional performance appraisal techniques (e.g., annual evaluations), but these systems are increasingly created using more informal, streamlined evaluations that place more emphasis on real-time feedback than annual summaries.
Thus, businesses are switching from using annual performance appraisals to PMS that incorporate more frequent, unstructured performance reviews and feedback. These systems frequently appeal to both employers and employees because they appear to be more straightforward and user-friendly. Incorporating technology and software such as Tap My Back to support these learning and performance functions makes the process simpler and more affordable.
But this doesn’t exclude the use of objective metrics on performance appraisals, which is an overcorrection of the issue. These metrics still offer valuable clarity for employees and managers. The suggestion here is to adopt a continuous feedback culture in your company.
Performance appraisals built on the tenet of continuous feedback are more likely to be future-oriented and aimed at fostering growth and development. Continuous performance management views each person as an individual whose potential can be fully realized rather than evaluating them in accordance with criteria that apply to all employees based solely on their prior performance.
Tap My Back is an employee engagement software that allows you to give feedback in an effective way to any of your colleagues, as well as review it. Suppose it's time for a performance appraisal, and you’re not sure about the key factors identified in the previous ones. You can enter our platform, and search for the feedback that you gave during the year to that same employee. It gives you a structured realistic idea of what the employee's performance was, saving you time responding to those appraisals. This easy access to previous feedback can work as an explanation for your evaluation given to that employee.
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