Choosing the Right Performance Appraisal for Your Culture

As an employer, you may be frustrated that performance reviews are not producing the expected results. They are time-consuming and it is difficult to recognize an employee's true contribution. In addition, the feedback seems to have little influence on the development of employees. If this is how appraisals in your company are viewed, it is likely that your performance appraisal system is doing your organization more harm than good.

Such assessment methods negatively impact workplace relationships and develop a culture of distrust, fear and unhealthy competition. This can lead to high turnover. In fact, one study shows that 85% of employees will consider quitting if they receive ineffective and unfair performance reviews. So how can you distinguish between a good and a bad assessment method?

Is your assessment method bad for your culture?

Not all performance appraisal procedures are the same. Companies use different appraisal systems, processes and methods to evaluate the performance of their employees. Unfortunately, some companies implement poor and ineffective systems that result in negative experiences for both managers and employees. Some key signs that the assessment method is bad for your culture include:

1.Inconsistent performance evaluation

As a rule, performance appraisals in companies take place once a year, which causes confusion among employees. They have a hard time understanding where they need to improve, and they can't even tell if they are improving at all. According to a study, around 92% of employees want feedback more frequently than just once a year.

2.Based on poorly set goals

Take a moment to consider whether you have set growth goals or just a list of tasks for the month or quarter. Of course a goal should be SMART. However, it should also push employees out of their comfort zone, encourage them to try things they haven't done before, and get them to make their work even more valuable to the company. Any culture that does not promote growth is doomed to foster a culture of dissatisfaction and disinterest.

3.An employee's accomplishments are not highlighted

If employees are not adequately recognized, there is a high likelihood that they will disengage. After appraisal season, they may also feel disconnected from work, which is one of the signs of the post-appraisal blues. Read here how you can get the appraisal blues under control and avoid them in the future.

What's also interesting is that the above study shows that companies that have adequate recognition programs experience 31% lower voluntary turnover! If you don't consider investing in employee reward programs, you're missing a huge opportunity to improve employee engagement and retention.

• Do you recognize and recognize under-performing employees who are making progress?
• Are you aware of the small successes of employees that you are not aware of?
• As a manager, how many times a month do you recognize your employees?
• Does your recognition program recognize both outcomes and behaviors?
• Do you promote recognition among equals?

4.Failure to achieve required performance results

This is a direct sign that your appraisal system needs to be completely changed or redefined. If the assessments do not produce the required performance results, consider:

• Whether you offer appropriate training and development opportunities
• Whether there is a follow-up after the assessment
• Whether the bias is under control
• Whether the appraisal system leads to division among employees

5.Not encouraging real-time feedback

Real-time feedback provides instant insights to improve performance. This promotes a culture focused on professional development. Be sure to provide performance appraisal comments in a timely manner to avoid confusion during the appraisal process.

Unfortunately, not many assessment methods encourage real-time feedback. Companies should not blindly adopt a traditional assessment method as it may not fit the workplace culture and may worsen it. Below you will find out what you can do about it.

Traditional Assessment Methods: Are They Still Relevant to Today’s Workforce?

Traditional assessment methods are unpopular. Employees don't like them, managers have a hard time implementing them, and it seems like these methods provide no real benefit. Nevertheless, most companies use these methods. According to a study, only 5% of managers are satisfied with the quality of traditional methods and only 10% consider them effective.

Over time, traditional assessment methods have become increasingly ineffective, so companies are now opting for a modern, holistic method.

These are some reasons why traditional methods are no longer relevant:

1.Poor design and implementation

Traditional assessment methods are harmful if they are not tailored to the needs of the company or its culture.

Take, for example, a company that has a collaborative and team-oriented culture. It has introduced a strict, individual, performance-based appraisal system, i.e. H. each employee was rated on the number of sales per day. Due to the mismatch between the company culture and the appraisal system implemented, employees only focused on their daily performance and found opportunities for teamwork and knowledge sharing unproductive. A culture that was once known for collaboration became one of competition and lack of innovation.

What system should the company have implemented instead? It should have developed a system that takes into account both individual contributions and teamwork. The company could have introduced peer evaluations, knowledge sharing metrics, and a reward system for those who actively contributed to each other's growth.

2.Performance issues are not resolved in a timely manner

Traditional assessments are designed in such a way that they occur less frequently. Because companies implement the system directly without tailoring it to their needs, they stick to the original concept of annual reviews. This means that employees are unsure whether they are on the right path all year round. You don't have the opportunity to work on problems in a timely manner. As mentioned earlier, employees can't get better if they only hear about it once a year.

3.Lack of regular feedback

Annual reviews also mean that the company doesn't take much time to provide feedback. If there is no feedback throughout the year, performance issues will not be addressed in a timely manner. A survey by Yoh found that 24% of employees were willing to quit due to insufficient feedback. Ultimately, employees are confused and overwhelmed during appraisals, leading to disappointment and disengagement. If the company fails to resolve this in a timely manner, it can also lead to unplanned fluctuation.

4.Plays a very small role in employee development

Another survey found that 32% of employees quit because of a lack of development opportunities. When feedback is irregular, employees have little to no insight into their performance and what they should improve on. However, this primarily depends on the company's interest in investing in employee development.
There are many other reasons - from bias to focusing on an important employee behavior. Ultimately, it depends on how a company designs and implements a rating system or traditional assessment method. Read here to find out more about it.

How to Choose a Performance Appraisal Method That Promotes Company Culture?

A good appraisal system is aligned with company goals, promotes company culture, addresses performance problems and recognizes employees in a timely manner. But even the best appraisal system can be harmful and ineffective if the company has an unhealthy culture. Some signs of this are:

• Employees are afraid to receive or give feedback.
• Employees are not motivated to improve their performance
• The company's goals are not shared.

To ensure appraisal systems are productive and effective, you must have a culture that supports them.

1.Understand where your culture stands in relation to performance management

If your culture doesn't support performance improvement, it can be difficult to establish and implement performance management practices. Understanding your culture is the first step to creating an enabling environment and putting appropriate systems in place.

This model was developed by Howard Dresner, John Wiley & Sons, 2010. It helps you understand where your culture stands in relation to performance management. It is divided into four stages, each of which determines where your company is and how far along or close it is to becoming a performance-driven culture. Most companies use it as a benchmarking tool to compare their culture, define improvements and evaluate progress towards a performance-oriented culture.

2.Understand the role of performance management in appraisals

While you can develop improvements to establish more efficient performance management, it is also important to understand the role it plays. Ultimately, the more effective a performance management process is, the more effective the appraisal season will be. Some signs that your performance management system is effective:

• Timely intervention by managers to improve employee performance
• Constant feedback, performance issues are addressed
• Individual development needs are determined
• Corporate goals are communicated
• Good goal setting
• High level of commitment and trust

The 6 Best Appraisal Methods That Foster a Strong Work Culture

Appraisal methods that help achieve desired performance management outcomes are more effective and better suited to performance-oriented cultures. You can be sure that your appraisal system promotes a strong work culture if you pay attention to the following signs:

• It focuses on specific goals and objectives
• It identifies training and development needs
• It helps in decision making regarding compensation and promotion
• It focuses on positive feedback
• It focuses on recognition

If your assessment method does not meet all the criteria, the following methods will help you. Most companies at Level 4 of the Performance Culture Maturity Model use a combination of assessment methods for a holistic and fair assessment. The following methods are most commonly used by such companies:

1.360 degree assessment

A 2019 survey by the HR Society of North America found that around 63% of companies use a 360-degree assessment method. 360-degree reviews are becoming increasingly popular because they evaluate and look at an employee's performance holistically. In addition, development needs can be identified and collaboration and communication can be improved.

When employees give and receive feedback from each other, it improves collaboration. However, this can be devastating in a culture where employees are afraid to speak their minds or where the emphasis is on giving negative feedback. For this reason, companies should create an environment that is at least between levels 2 and 3 of the above model. To achieve this, companies should train their managers, promote a feedback culture and address underlying workplace issues.

2.Performance review

Performance reviews can be an appraisal method in which employees are evaluated by comparing their actual performance with expected performance. This helps in making decisions and identifying development needs.

Apple, for example, uses a form of performance review called a performance review. This is a system that includes 360-degree feedback, assessments and continuous feedback. Employees are assessed by more than two managers, direct reports and colleagues. You will be evaluated in 3 categories: Teamwork, Results and Innovation. The employer receives a clear overview of employees' contributions and can support them in improving.

3.Leadership through target agreements (MBO)

Management by Objectives (MBO) is a widely used assessment method based primarily on objectives and goals. According to a study by the American Productivity and Quality Center, MBO leads to a 10% increase in productivity. Another study by Bain & Company found that customer satisfaction can be increased by 20%.

The main focus of this method is to align employee goals with company goals. When employees feel more connected to their company's goals, they are more engaged and motivated. This promotes a culture of accountability and communication. By focusing on goals, it becomes easier to identify areas where employees are falling short. This also helps identify areas where the organization can improve, leading to a culture of continuous improvement.

4.Behaviorally Based Rating Scales (BARS)

This is a well-known method that compares people based on performance dimensions. By anchoring performance evaluation in specific skills, characteristics and behaviors, there is less room for bias and subjectivity. A fair and objective process leads to a positive work environment and ultimately promotes your work culture. To achieve this:

• Supervisors and employees should jointly agree on the performance dimensions (behaviors, skills and characteristics) for each role.
• The behaviors should also be anchored in the culture of the company.
• Provide regular feedback

5.Self-assessment method

Self-assessment is a process in which an employee evaluates his or her own performance over a specific period of time. This helps them prepare for the appraisal process where they can communicate their development to their managers. This method allows you to foster a culture in which individuals take responsibility for their own results. Employers should give their employees the opportunity to complete their self-assessment and encourage them to be honest and objective. If you would like to learn more about how to write a self-evaluation, read here.

6.Assessment Center Method

Assessment centers are used to assess an employee's competencies and skills in various areas through exercises such as role plays, baskets, etc. This assessment method is often used to assess an employee's suitability for a management position, but can also help make decisions about training and development or promotions. Because they are rated by multiple people, this method is unbiased and fair. Some exercises require employees to collaborate and communicate, which ultimately promotes collaboration and teamwork. As a result, this method promotes a stronger work culture.

Is there a way to improve the current appraisal system?

You may choose not to implement a new appraisal system because you lack the resources, employees resist it, or the new system doesn't fit your culture. In such cases, you can improve your existing system. First, realize that annual reviews have many negative consequences. You can overcome this by making some changes to your current system. Introduce frequent, timely, regular feedback in addition to your current system. Many companies use real-time feedback to address performance issues in a timely manner. Collect feedback from colleagues and conduct regular reviews. When possible, use technology to collect performance data, set simple goals, hold private meetings, and collect feedback. You can do all this and much more with IceHrm's PMS.

How IceHrm can help you improve your culture

IceHrm's Performance Management System is the perfect solution for companies looking for appraisal software that can accommodate their growth, enable continuous feedback and provide real-time assessments. With IceHrm you can also analyze and track the performance of your employees and ensure that the results are achieved. It offers other features like 360 degree software, OKR software, and one-on-one conversations.

IceHrm's Performance Management System offers solutions for fostering a positive work culture through continuous feedback and real-time assessments.