How to hold Effective Performance Reviews and Appraisals

Do you find that everybody dreads the Annual Performance Appraisals and puts them off? Do you find that staff tend to be demotivated rather than motivated by them? Then it may be time to reconsider your approach.

Most Performance Review systems evolve over time. There is an emphasis placed on fairness and keeping wage costs under control. Often, a set number of Grades are allocated, depending on fixed ratios or the size of the bonus pot. A Manager decides on an employee’s place within those grades and then finds enough faults to justify this grade. Not exactly a motivational approach.

So let’s go back to basics. This might strike you as odd, but in my view the primary objective of a Review is not to appraise but to improve motivation. I’m talking about creating the kind of environment where someone genuinely wants to engage more with the business. In order to do this, we need to cover three main questions:

  • Is the employee crystal clear exactly what is expected of them?
  • Does the company (and do you as their Manager) know exactly what they want from their work lives?
  • What can you both do to best enable both of these two questions to be fulfilled at the same time?

That’s it. Everything else is secondary. You may well want to add in a competency framework to make sure things are done with the right values. You will certainly want to add in specific SMART objectives for the year. See SMART Explained and When to Use it. But the less you can clutter the Review itself the better.

If possible, don’t give people a final grade such as “Above expectations” or a “2”. The Review will quickly descend in to an argument about what that grade should be and there will be little or no discussion as to how the individual can add more value and be more rewarded. Remember that although the Manager considers the Grade a measure of Performance that year, the individual will generally think of the Grade as a measure of how good they are. In other words their entire self worth rests on that grade!

This whole effect increases exponentially if you time the Grade given to a calculated Pay Rise! Pay rises can be separated from the review process. It just takes a little more thought and effort.

What about being fair? Some Companies will argue that Grades and quotas (only 3% of Staff should be graded as Outstanding etc.) are needed to make things fair. I would agree with this if where you have teams of hundreds doing an identical job, but this is rarely the case. Attempts to homogenise process so that it is fair and to normalize measurements, are honourable, but are fundamentally floored. The process of trying to standardize the review sucks all of the personalization out of the process. And management is all about understand each of your team as unique individuals. See Top Ten Management Tips.


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