Performance appraisals have had bad press over the last few years. Countless articles have been written about how employees dread them and find no value in them. Research studies have backed up this view, just one example is a study that found only 17% of people think their performance appraisals are open, honest, and meaningful.
However, dig a little deeper and you find that employees want lots of things that appraisals are supposed to deliver – relevant feedback on their performance, being recognised for things they’ve done well, and direction on how they can improve and develop their skills. So, what is going wrong?
What are performance appraisals?
Performance appraisals are a way of documenting and evaluating how well an employee is doing in their role, examining how closely they are matching up to the requirements of the job. They can be known by many different names – employee evaluations, performance reviews, development discussions, or employee appraisals to name a few variations.
Traditionally, employers have used appraisals to rate employees to determine promotions, pay raises, bonuses, and terminations. They have been seen as a means to an end, a management tool of control rather than a process to help employees develop their skills and build their careers.
In the past, appraisals were held once a year, but in the last few decades, more organisations have been holding them more frequently, either bi-annually or quarterly. Our own research with UK employees found that 36% of them have an annual performance appraisal, 20% have one twice a year and 20% have them quarterly.
Why were performance appraisals developed?
Managers have had a desire to measure how well employees are doing for centuries. Some historians believe that it goes as far back as the third century when Wei Dynasty emperors in China rated the performance of their family members. There has long been a desire to have a tool that could help leaders identify those who were doing well and should be rewarded and those who were underperforming and could be let go.
Performance appraisals as we recognise them today first began to take shape in the late nineteenth century, with Frederick W Taylor’s time and motion studies. He was interested in finding the most efficient ways of working from a scientific angle. What he missed was any kind of human element, viewing workers like machines, not individuals with their own unique ideas and feelings.
This focus on mass production and operational efficiency persisted until after the Second World War, with all the attention placed on output with very little or no consideration for employee development or engagement. In the 1950s, personality-based appraisals began to gain popularity with employers. It soon became apparent that these traits had little to do with productivity in the workplace and from the 1960s, an annual appraisal began to focus more on employee goals and objectives. While elements like 360 feedback have been introduced since then, until very recently performance appraisals remained a very top-down process, with managers in charge, directing the conversations and topics discussed, telling employees what to do and how to improve.
In the modern workplace, where employees are required to work autonomously, think creatively, and find solutions to problems, this kind of appraisal isn’t fit for purpose anymore. It doesn’t provide employees with the ability to think for themselves or take control of their own development. For performance appraisals to remain an effective tool, employers need to consider how they can adapt them to support the current needs of their business and employees.
Are performance appraisals still relevant?
The success of any business is driven by its people. These employees need to feel that they are making a worthwhile contribution, their efforts are being valued, and they have the support to develop and progress. If conducted in an effective way, performance appraisals should give employees all these things, so remain of huge importance.
Keeping employees focused and aligned, so they are making a positive contribution to the goals of the business is key. In today's workplace where more employees are spending a greater amount of time working remotely, having effective performance appraisals is even more important. They need to have a clear understanding of the objectives they are working towards, and managers need to be empowered to help drive employee performance.
As well as having a clear sight of relevant objectives, employees also want regular and timely feedback to help with their development, so they know what they are doing well and what could be improved. 83% of employees appreciate feedback, be that positive or negative. They see this as a sign that their efforts are valued, and that their employer is supporting their progress. Performance appraisals should play a crucial role in delivering this feedback.
What are the benefits of performance appraisals?
When you are busy, and engrossed with getting the job done, it can be easy to get lost in your work and forget the bigger picture. It can feel like there is so much to do that there is no time to take a step back, review and reflect. However, to direct effective performance, remain aligned, and drive progression, it is vital that this happens. Managers and employees need time together, outside of their usual work regime, to remain focused on objectives, celebrate successes, and agree on areas for development.
Performance appraisals have many additional benefits for employers and employees, here are just some of the main ones.
Five benefits for employers:
- Making the most of internal talent – with the skills shortage gap and the threat of the Great Resignation, it is vital for employers to nurture their employees, develop their skills and understand how they would like to progress.
- Better succession planning – understanding the skill sets within the business and who is performing consistently above and beyond their expected level when measured objectively highlights who is ready to step up to the next level.
- Identifying areas for further training – through objective performance appraisals, employers can establish what skills may be lacking in their employees that will be vital for their continued success and put effective plans in place to address this before it becomes a significant issue.
- Increase job satisfaction and motivation – employees want to be treated with respect and feel they are valued. They want to know that their efforts are appreciated. Employee recognition is vital to maintaining a high level of job performance. People want to feel like what they do matters and make a difference.
- Improve morale and teamwork – with growing numbers of employees working remotely, there is an increased danger of them feeling isolated and out of the loop. The performance appraisal process helps retain a connection to the business, their department and the rest of the team.
Five benefits for employees
- Gives employees a voice – talented employees have great ideas. Effective performance appraisal processes should become a forum for employees to have their say. These don’t just motivate the employee; they energise the whole business.
- Empowers self-development – employees who feel empowered to take control of their own development will be more effective, loyal, and motivated. They will be comfortable sharing their ambitions and pushing themselves to achieve them within their current environment.
- Provides an opportunity to share problems – if an employee is struggling with work or their life outside of work, it can be difficult for them to find the right time to ask for help. A performance appraisal provides that private time between a line manager and an employee to discuss even the most private or challenging problems.
- Allows line managers to receive feedback – just as employees need feedback to improve their performance, the same applies to managers. Each person is different and requires a subtly different approach from their manager to produce their best. Performance appraisals provide an opportunity for employees to let managers know what support they need to thrive.
- Builds career opportunities – progression shouldn’t just be limited to promotion. Many employees want to expand their experience beyond their own specialism and build their skillset to cover many different areas. Their performance appraisal provides an opportunity to share what they would like to learn and how they want to develop.
“I find Appraisd to be really easy to use, both as a user and as an admin. I like that I am able to customise everything I need, from appraisal forms to feedback forms and even the colour scheme. In our last year, we have seen an 80% increase in the number of appraisal conversations happening which has been huge.” <div class="author">G2 review, administrator in mid-market marketing and advertising organisation</div>
Making performance appraisals fit for the modern workforce
There is still very much a place for performance appraisals, but they need to evolve and become relevant to the post-Covid workplace. Just as they have changed from their early beginnings, they need to fit the needs of today’s employers and employees.
Each organisation is different, with its own culture and objectives. Their performance appraisals need to reflect this and be adapted to fit the particular needs of their employees, so they are able to contribute as effectively as possible to the overall objectives of the business.
Elements to consider are:
- Frequency – an annual performance appraisal in today’s fast-moving environment is simply not fit for purpose. Far too much is likely to happen in a year for objectives to remain relevant, effective feedback to be given or the employee to stay aligned with business goals. It’s crucial that performance appraisals happen more often for them to be valuable. There is no magic number, each business needs to find the cycle that suits them. This could be two, three, four, or more times a year, whatever provides the best balance for managers and employees.
- Regular check-ins – to keep managers and employees connected and the dialogue going between performance appraisals, many organisations have adopted regular check-ins. These shorter meetings may just consider key points or look at one particular aspect like career development. These ensure any problems are addressed quickly, objectives are reviewed and adjusted if needed, and provide an opportunity for timely feedback or recognition.
- Types of objectives set – over the last few years, organisations have been looking at building on SMART objectives, exploring ways in which they can use goals to align their employees with each other and the business as a whole more closely. Types of objectives include OKRs and V2MOMs, but more and more variations are appearing as businesses find solutions that work for their unique circumstances. It’s important that organisations take the time to understand what they want to achieve from their performance appraisals and adopt the type of objectives that will best ensure they are successful.
- Approach to feedback – feedback is an important part of performance appraisals but who gives this feedback, how often it is given and who sees it is something that each organisation needs to consider carefully. It needs to fit in with the culture of the organisation and be supported by senior leaders so everyone across the business is comfortable and confident to embrace the chosen approach.
Tips on how to engage employees with their performance appraisals
Our customer success team has worked with hundreds of organisations to help them develop and establish effective performance appraisals. Here are their top tips for helping employees to engage with the process:
- Think about language - there may be an issue with the word “appraisal” itself. If some employees have had poor experiences in the past, think about how you can rebrand them to change their perceptions. Using alternative names like “development reviews” or “employee evaluations” can encourage employees to feel more positive and overcome previous grievances.
- Ask for their opinion – employees should be made to feel totally included and an active participants in their performance appraisals. Canvass their views before making any changes so that you know what people want and what would be useful. For example, when you are creating the appraisal forms, make sure the questions are clear and relevant.
- Keep to the point – while it’s important that performance appraisals are comprehensive, they shouldn’t be so long that they take hours to complete. Make sure you are as concise as possible and that everything included is completely relevant.
- Make sure they lead to action – while employees want to be heard, they also want their performance appraisals to matter. There is nothing worse than asking for additional support or training and nothing happening. Employees need to be confident that actions captured within their performance appraisal will happen and the process will positively enhance their development.
Helping employees understand their performance, provide ongoing support and enable regular feedback and recognition is vital for any modern organisation. Whether you choose to keep the name performance appraisal or use another term, the practice of employees meeting at set intervals with their line manager to discuss their progress, what has gone well and what could be improved is essential to drive success in the organisation and keep employees focused and motivated.