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Maximize Performance Review Effectiveness

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In most companies, large or small, there is an age-old process known as performance appraisal or performance evaluation (this article will primarily use the term performance appraisal). The importance of providing feedback to employees cannot be overstated. However, the key to a successful performance appraisal is that it occurs in the right environment, in the right context and in the right way.

A performance appraisal system is important for a number of reasons, including:

  • Improves coaching and mentoring opportunities for managers and supervisors.
  • Clarifies the performance criteria that are important for employees in carrying out their respective jobs.
  • Defines a clear basis for wage increases, promotions, disciplinary actions and other important work-related issues.
  • Clarifies that performance and pay are rationally linked.
  • Serves as motivation to continue focusing on improving performance.
  • Brings consistency to the organization in evaluating employee job performance.
  • Creates a means for clear and complete documentation of work performance.
  • Assists in identifying training and development needs.
  • Helps link company goals and objectives to employee goals.
  • Provides employees with important information about how they are perceived in relation to their daily work.

All organizations should have some type of performance management system. Many of the existing "systems" are not well defined and/or do not address critical performance variables (competencies) commonly associated with the job.

Employers should be aware that personal bias plays into employees' overall perceptions. What many managers believe to be facts about an employee is often nothing more than their own biased perception of the employee's performance.

Appraisal of an employee is sometimes an unfair process. In most companies, there are often misconceptions about different employees. And unfortunately, there are many managers and supervisors who simply aren't good mentors and coaches, so the employee doesn't have the opportunity to correct performance issues before the annual performance review.

Adding to the problems of personal bias, misperceptions, and poor coaching, many performance review meetings (the actual performance review sessions) are poorly conducted by managers.

It is important that performance reviews are taken seriously because they are an important feedback mechanism for employees and an opportunity for managers and employees to share valuable information. But remember that formal performance reviews aren't the only time you should give feedback to your employees. Adequate and timely feedback to employees is important to reinforce positive behaviors or address negative behaviors. In short, well-managed companies do not use performance reviews as the only feedback mechanism. Before the formal appraisal interviews, there should be regular communication between managers and employees.

Some companies choose to conduct formal reviews more often than once a year, and this is acceptable and may even be preferable depending on the company culture. However, too frequent formal assessments can dilute the effectiveness of the process, so it is important to consider the impact of formal assessments conducted more frequently than once per year.

It is usually more effective to create a culture where regular feedback is provided outside of the formal performance review process. In this scenario, managers engage in more informal discussions about training needs, goal achievement, particularly good work, performance issues, etc., as needed.

Regular conversations about achieving goals are central to a culture of high performance and high accountability. This is all important to help employees achieve their own goals and dreams and to ensure the overall success of the company.

An effective performance review/appraisal system includes at least:

  • A clearly defined process for documenting performance during each appraisal period. This is an important reference tool when it comes time to complete the actual assessment form.
  • Well-informed/trained managers/supervisors who know how to complete appraisal forms and how to conduct performance appraisal interviews with employees.
  • A properly prepared appraisal form that includes appropriate and valid competencies for evaluating employee performance.
  • A valid and appropriate evaluation mechanism (scale).
  • Clearly defined goals for each employee that relate to company goals.
  • A clearly defined appraisal period and appraisal process that all employees understand.
  • Justice and fairness in the assessment process.

Effective performance appraisals foster growth and alignment. Clear processes, regular feedback, and fair evaluations are essential. Utilize tools like IceHrm for streamlined performance management.

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