6 Ways to Better the Annual Performance Appraisal

The end of the year is often the time when companies conduct performance reviews. While many leaders and managers understand the importance and long-term value of these reviews, they are often not high on the list of priorities during the rest of the year. Employees dread them, vacillating between cynical eye-rolls and desperate last-minute bids to suck up to the boss before review time. Managers see them as an obligation to finish before they can mark one more task off their endless to-do lists.

But performance reviews themselves aren’t the problem – it’s the way companies handle the review process that is flawed. Below are our top five tips for conducting year-end reviews that are not only pragmatic but are based on mutual and honest communication.

Travel through time

Most annual performance reviews look only at tactical performance and evaluation, rather than also measuring the growth curve and the larger impact made by the employee. Managers should design the appraisal conversation to be high-quality and dynamic instead of a one-sided talk that counts achievements or the lack of them. They should also consider the key accomplishments versus goals over a longer time frame, and share how the manager and the team member can work together on achieving future goals. According to a Gallup study, employees who received feedback on their strengths show 8.9% higher profitability.

Keep it short

A long-winded and lengthy performance appraisal can be exhausting and meandering without really achieving anything more than a short appraisal meeting. Managers should have their talk points ready and encourage their team members to do the same. This will keep the conversation to the point instead of turning it into an unproductive open-ended discussion. Ideally, the feedback from the manager should be an ongoing activity that continues around the year, leaving the annual appraisal to sum up key points and set goals for the future and list out what’s required to make those goals happen. If there is no formal review structure, create a transparent process – divide the review into specific goals and competencies, clearly defining how much weight each category should receive. This way, employees know exactly how they are evaluated and what’s most important. By making annual reviews short and to the point, employees will engage more with the process.

It has to be a two-way street

Typically, the annual performance appraisal ends up being a one-sided talking session with the manager listing out the employee’s shortcomings, poor KPIs, and explaining how they can do better. But what if instead of focusing on what the employee did and didn’t do, managers also gave the employee a chance to review the manager and the organization. By giving employees the chance to speak and share their thoughts during the appraisal, you will make them feel more valued.

Get more voices added to the mix

Performance appraisals tend to be tipped one-way because of a possible bias of the manager reviewing the employee. For a more rounded view of the employee, managers must always solicit feedback informally from others who work with the employee. For instance, an employee may not be participative in the office but could be excellent with external customers. This not only ensures that more than one point of view is considered, but will also help foster an environment of teamwork and trust. Taking feedback from multiple sources – peers both within the same department and outside, team members reporting directly to that employee, and other colleagues who work closely – will help avoid biases and misinformation, and will give a better picture of an employee’s performance.

Don’t hold it in for the whole year

Feedback is a valuable and necessary part of managing a team, and stockpiling it all until annual performance appraisal time is not a good idea for the manager or the employee. Feedback should be given to the employee throughout the year so that the appraisal becomes a culmination of what has been achieved by the manager and the employee together. Studies show that implementing regular employee feedback can result in turnover rates that are 14.9% lower than for employees who receive no feedback. Employees should also be encouraged to provide feedback to the manager, both formal and informal, regularly. That way problems can be easily identified as they arise and issues dealt with before they escalate.

Personalize that appraisal
While it is OK to have a set appraisal template to use as a guide, it makes all the difference to the employee to see that his manager understands his aspirations and requirements. A good manager truly knows his team and can deliver tailored feedback that is most constructive and impactful for the individual. Personalized feedback also helps motivate employees. For example, one employee could be more motivated by concrete, quantitative data on their performance and how it directly affects potential raises and bonuses, while another is looking to move laterally and pick up new skills by working on a variety of projects. Even the setting of the appraisal can be changed. A more formal, conference room setting may work for one team member, but a meeting at a café might be more productive for another.

To prevent annual appraisals from becoming pointless meetings, the HR team needs to revamp the existing process and try implementing organization-wide changes to traditional performance appraisal methods.The benefits are obvious. Do you have any more ideas to make the performance appraisal process more effective? Tell us in the comments below.

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