What is a performance appraisal?

A performance appraisal, also known as a performance review, is a routine evaluation of an employee’s progress and achievements. Generally, people dread the annual performance appraisal. It’s often anxiety-inducing and can leave people feeling unmotivated to perform high-quality work. Recent trends, however, have spurred companies to implement more frequent performance appraisals (quarterly, for example) that provide constructive criticism and practical guidance to support employee success.

Why should HR leaders care about performance appraisals?

The new and improved performance appraisals function as performance benchmarks and allow team members to receive consistent, applicable feedback, and share their input with managers. Performance appraisals allow managers and employees to formally connect and communicate about setbacks, expectations, and methods for improvement. Based on the evaluation feedback, people can boost their productivity and feel more engaged with their work.

Additionally, performance appraisals enable managers to identify people’s leadership qualities and competencies–information necessary for succession planning and Organizational Network Analysis.

What can HR leaders do to run successful performance appraisals?

Though HR leaders don’t conduct performance appraisals, they manage the performance appraisal system. HR leaders can shape the style of the performance appraisals by implementing these five steps:

  • Set the tone. Identify the purpose of performance appraisals within the greater context of the company’s workforce planning and business objectives. Explain the purpose to managers so they can conduct meetings that promote company values and goals.  
  • Establish a protocol.  A protocol provides structure to the performance appraisals, allowing managers and their teams to know what to expect. HR leaders may decide to integrate self-evaluations, 360-degree feedback, a rating scale, or a combination of the methods mentioned above. Whichever system HR implements, ensure that managers document the meetings. Documenting the information discussed enables both parties to recall conversations from previous sessions and provide legal evidence of any issues, if necessary. 
  • Set goals. Let performance appraisals serve as a springboard to guide people towards greater productivity, innovation, and engagement. Give all employees, both those who’re meeting their job expectations and those who aren’t, realistic paths to goal achievement. Offering candid feedback and practical tips–without directly blaming people–can ignite employee motivation and morale.   
  • Involve people. Invite personnel to share their input. Participation enables people to feel more invested in their jobs and involved with their teams. 
  • Train managers. Instruct managers on how to steer the meetings in the right direction. To improve performance appraisal effectiveness, provide coaching or training in the following areas:
    • Handling criticism in a non-reactive way
    • Giving constructive feedback without sugarcoating the truth 
    • Offering tangible tips to achieve measurable outcomes  
    • Engaging in dialogue and two-way feedback 
    • Maintaining mutual respect

Why should performance appraisals be part of HR strategy?

Performance appraisals can function as growth opportunities for people at any stage of their career. An HR strategy that includes performance appraisals can facilitate communication and understanding between managers and their teams–an essential ingredient for higher productivity, engagement, and performance.