INVESTOPEDIA defines performance appraisal as a regular review of an employee’s job performance and overall contribution to a company.
“What is human resource.com” defines it as an ongoing process of obtaining, researching, analysing and recording information about the worth of an employee as a method of evaluating the job performance of an employee.
A performance appraisal seeks to assess an employee’s competences, achievements and growth, or lack thereof toward the furtherance of an organisation’s strategic goals.
The very act of doing this, if properly instituted reinforces a culture of openness that allows dissent and the flow of ideas, which in turn enables the achievement of the organisation’s objectives and mission.
To set the context, all organisations envision success. However, success decrees that an organisation must have the right set of people who will drive and develop the organisation’s strategies to compete effectively.
What is however important to understand is that at any one time, employees will be performing at different levels. There may be those operating at an optimal level, those at sub-optimal capacity and perhaps those whose strengths are yet to be discovered.
An organisation seeks to strengthen the strong points and minimise the effect of weaknesses and develop solutions for identified development areas.
In other words, a successful organisation with a good implemented performance management system learns to find ways and means to motivate the good performers to reach greater heights, engage the sub-optimal performers to bring them to optimal capacity and perhaps in the process discover new talent and/or perform a skills re-alignment so that new good performers can be discovered.
A performance appraisal done well helps employees and their managers to create a plan for employee development, perhaps through additional training to resolve identified shortcomings and perhaps to enable an employee meet increased added responsibilities.
In short, performance appraisals must be an imperative in a world where productivity is the underlying goal. It is however important that there must be a performance-based culture which is open and respectful but most of all, that is designed to develop its people.
This means that difficult conversation must be had with employees, but in a way designed to elicit positive development and action from those appraised. It is often a good thing to put oneself in a position of those being appraised to understand how to appraise effectively.
Human Resource Zone, a UK leading business-to-business publisher specialising in online, interactive professional communities identified four different variations of performance appraisal systems as detailed here:
1. Behavioural checklist: This is a list of criteria that an employee should work towards done on the basis of individual employee performance without comparisons depending on the type of job being assessed.
2. 360 degree appraisal: This an upward, downward sideway appraisal feedback collection and assessment method providing an in-depth feedback of the employee from the supervisor, supervised and peers.
3. Management by objective: An objective type of performance appraisal, where the manager and the employee agree upon specific and obtainable goals with a set deadline. With this method, the appraiser can define success and failure easily. This is the common approach in modern professional services firms.
4. Psychological appraisals: An evaluation of the employee’s intellect, emotional stability, analytical skills and other psychological traits, which aids employee placement in appropriate teams.
An important point of note from this is that a performance appraisals system must be necessarily an objective process and therefore the associated feedback must be kept open, constructive and linked back to the individual’s professional role, agreed set of performance goals and the strategic goals of the company.
Where an employee has shortcomings, activities must then be planned that help the employee develop the agreed performance element going forward.
Having noted the value of performance appraisals to an organisation, there are certain common shortcomings that must be avoided as these can impede its value to the organisation.
First, it must not be a process of retribution. It needs to be admitted that sometimes, the implemented performance appraisal system end up being a retributive tool to hunt down employees on perceived slights. This should be discouraged.
Natalia Nistor (2014) in her article Pitfalls in performance appraisals published online on Performance Magazine, put it more succinctly when she identified the main pitfalls in performance appraisal as follows:
The lack of objectivity – This could be a tendency or preference for or against an individual or group for whatever reason, in the setting of performance evaluation, and which has an impact on their overall performance review.
The halo effect – This is a sort of extrapolation of a positive or negative impression to several individual performance categories in the performance review.
The recency effect – This describes the tendency to focus on the recent employee’s activities whether good or bad to measure overall performance instead of the entire appraisal period.
The distributional tendency – This arise from evaluators trying to be too strict by rating everyone below average, or the central tendency to avoid bad ratings or really good ratings. The other could be the leniency tendency, when all employees are assessed to be above average performers.
The stereotype – The identification of an employee with a certain group (whether bad or good) and the assumption that the characteristics of that group apply to the employee as well.
The contrast tendency – In trying to contrast employee performance as part of a performance review, evaluators resort to comparisons between employee performance and they fail to provide an objection evaluation of the employee based on actual facts and results.
These shortcomings have a tendency to pop up even in very mature performance organisations and it is up to the top leadership to tinker those tendencies toward a culture that focuses on the pure objectives of why the performance appraisal is done in the first place.
It must be communicated and regularly that performance appraisals are not intended as a score setting process and must not be used to respond to incidents of perceived slights, otherwise the end result of such performance cycles is of disillusionment and a morale decay which ultimately reduces employee engagement.
The performance culture in any organisation is necessary as a source of competitive advantage and increased productivity, but there must be a friendly corporate culture, capable and assertive human resource leadership to inculcate that imperative.
*Kelvin Chungu is a Partner at Nolands Zambia. He can be reached on firstname.lastname@example.org or on +260976-377484.