What is Performance Appraisal?
Performance appraisal goes by many names – appraisal, review, 360 feedback – but it is essentially a process whereby managers and employees evaluate work performance and plan for future development. It is an opportunity to meet in a structured format to discuss what performance goals have been achieved during the review period, where improvements can be made (both from the employer and employee perspective) and how to achieve future goals.
Performance appraisal is not an opportunity to avoid timely performance management processes. Where there are performance issues, they should be dealt with as they arise, not stored up until such time as the performance review rolls around.
Performance appraisal should be seen as a positive practice where both the employer and employee have an opportunity to discuss past performance, then look forward to the future.
Why is Performance Appraisal Important for my Business?
Regardless of the size of your business, if you employ staff, performance appraisal is an important function. Organisation size may impact on the manner and type of performance appraisal, but it does not change its importance as a people management and development tool.
Employees need feedback on how they are performing. The consequences of failing to provide feedback can make managing your people difficult:
- High performing employees may become disengaged and potentially leave the organisation if they feel that their contribution and performance is not recognised;
- Poor performing employees may not realise that their performance is not at the required standard and not have an opportunity to improve; or
- Poor performing employees who do not desire to improve their behaviour can have a negative effect on morale for the rest of the workforce.
Based on this, appraisal within smaller organisations can be more important than within a larger business as one person underperforming and impacting on morale can have a larger impact in these circumstances.
Performance appraisal is also crucial to help develop your people. Without these discussions, it is difficult to plan for the employee’s future development in line with the needs of the individual and the organisation. Talking to the employee about their career goals helps and putting plans in place to help them achieve those goals not only builds loyalty, but also results in a more highly skilled workforce.
How often should I do a Performance Appraisal?
We live in a world where instant gratification is everywhere. Want a hot meal? Put it in the microwave for a minute. Want the latest music? Download it instantly.
We no longer wait around for gratification, and it’s no different when it comes to feedback about our work performance. Employees want to know whether they are performing well in a timely fashion. If they are underperforming, most will want an opportunity to improve now rather than waiting to hear about it in several months’ time when you do their appraisal.
This does not mean that you need to conduct full performance appraisals on a daily or weekly basis. Aside from sapping resources from your business, this would be exhausting for both employers and employees. Each business needs to find a balance for what works in their environment. The important element is the connection with the employee and communicating with them about their performance regardless of whether it is good, bad or indifferent.
You may choose to have a bi-monthly 15-minute catch up with each of your team members, then a structured performance appraisal once a year. You might already have a culture where feedback flows freely but want to implement six-monthly appraisals to help plan for growth.
How do I implement a Performance Appraisal system in my business?
The first step in implementing any system is to determine exactly what the purpose of the performance appraisal system is, and what resources can be devoted to the process. Using this as a framework, identify a process that best suits the needs of your business. Once you have developed your system and are ready to roll it out, education of employees will be the key to get them excited about the new process. Ensure that they know the end goal of the process is improvement and development, not for them to be judged.
Realise Performance can help your business build a tailored performance management system to suit your individual needs. Contact our team on (02) 8624 3300 to discuss your business’ performance appraisal goals and how we can help you achieve them.