The First-Time Manager’s Guide to Performance Appraisals

Author: Diane Arthur
Pub Date: 2007
Your Price: $24.95
ISBN: 0814474403
Format: Hardcover

 

• Overview
• Sample Chapter
• Table of Contents
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Chapter 1

Performance Appraisals: An Overview

 

The subject of performance appraisals, also referred to as "performance reviews" and "assessments," initially strikes many first-time managers as being complex and difficult. There are images of intricate forms, close scrutiny by Human Resources (HR), legal pitfalls, awkward face-to-face meetings, less-than-favorable reactions by marginal performers, and disputes over recommended salary increases.

In truth, the performance-appraisal process need not be overwhelming or problematic. In fact, it's quite straightforward. The process begins by identifying objectives, recognizing the benefits for all concerned, and identifying key criteria.

 

Objectives

Think back to the last time your work was formally reviewed. Did your manager make clear the overall purpose of the performance evaluation? Did you appreciate how the process benefited you, your manager, and the organization as a whole? Did you fully understand the key aspects of an effective performance appraisal system? Don't worry if you answered "no" to one or more of these questions. All three are rarely answered affirmatively due, in part, to the fact that many managers fail to have a clear understanding of what performance reviews are intended to accomplish.

 

Primary Objective of a Performance Appraisal

The primary objective of a performance appraisal is to ensure the maximum utilization of every employee's skills, knowledge, and interests. At first glance, this deceptively simple statement appears to be completely employee-directed. In truth, organizations that focus on the full use of each individual's abilities and areas of interest have a more motivated workforce; this, in turn, positively affects productivity, thereby increasing the company's competitive edge. In the end, everyone benefits. Let's examine this assertion more closely by way of two scenarios.

 

Scenario Number One: Lorie

Meet Lorie, hired two years ago to work as a computer analyst for a large bank. Employed right out of college, she was selected for the high grades she had achieved in computer science classes, as well as her experience working part-time performing data entry at the local branch of a bank near her school. During her employment interview, Lorie was asked about her knowledge of, and skills working with, computers. She elaborated on the fact that she had always being adept at working with computers. At no time did the interviewer ask Lorie whether she actually enjoyed computer work; nor did he ask her whether her short- and long-term goals involved computers.

Lorie was pleased to receive a job offer so close to graduation, and she gladly accepted. After several months, however, she began to reflect on the advertising classes she'd taken in college, and how much she'd enjoyed them. She wondered whether she'd made a mistake accepting a job working with computers simply because she was good at it.

During her first formal performance assessment, which resulted in a very high rating, she mentioned her interest in advertising. Her boss was chagrined, commenting that she should stick to what she knows and is good at, adding that she could look forward to a bright future with the bank.

Following that meeting, Lorie found herself focusing increasingly on her interest in advertising. Concurrently, her motivation to perform her job duties decreased, as did her performance level. She began to make mistakes—costly mistakes for the bank. Lorie was coached and counseled, but at no time was she asked what she thought was wrong. Finally, just before her next official performance review, Lorie tendered her resignation. During the exit interview with HR she explained that she had accepted an entry-level job at an advertising agency, where she would be able to work at what she really enjoyed.

 

Scenario Number Two: Vincent

When Vincent began searching for a job in HR, he was in the midst of a well-thought-out career change. He'd been teaching middle-school math for four years but always had an avid interest in the field of human resources. As a result, he returned to school, where he earned a degree in HR. He also interned in the HR department of a resort for two summers. He presented himself to prospective employers as having limited skills and knowledge, but a keen interest in HR.

During an interview for an HR assistant's position at a retail company, Vincent was asked many questions about his interest in HR, as well as the knowledge he'd acquired in school and the experience he'd obtained through his internship. It was evident that Vincent's interest in HR overshadowed his skills and knowledge, but the interviewer felt that the former would make Vincent an asset to the organization. The interviewer's assessment proved to be accurate: Vincent thrived in his position and was ultimately promoted to HR director. His colleagues and employees were motivated by his enthusiasm and energy and felt compelled to work harder. Three years after Vincent was hired, the company was showcased in a trade publication as having an "ideal HR department."

TIP #1

The primary objective of a performance appraisal is to ensure the maximum utilization of every employee's skills, knowledge, and interests.

 

Secondary Performance-Appraisal Objectives

Performance-appraisal objectives extend beyond the primary focus cited above. They also serve to enhance employer-employee relations. This is accomplished by strengthening the overall working relationship between managers and employees; developing a mutual understanding between managers and employees about performance expectations, goals, and measured criteria; encouraging employees to express themselves openly concerning performance-related issues; encouraging managers to examine their own strengths and areas requiring improvement; and helping managers to coach and counsel their employees as needed.

Performance appraisals also permit HR to perform key tasks more effectively by providing supportive data for decisions concerning salary increases, promotions, and disciplinary action; allowing for more productive uses of an organization's human resources; and yielding information about existing skill levels to support ways to expand beyond the existing talent pool.

In addition, by providing feedback on past performance, evaluating an employee's potential, and supporting developmental opportunities, managers can motivate employees to establish and achieve personal goals that are compatible with organizational goals.

TIP #2

Secondary performance-appraisal objectives include enhancing employer-employee relations; permitting HR to perform key tasks more effectively; and motivating employees to pursue goals that are compatible with organizational goals.

 

Benefits and Uses

It's not uncommon for both managers and employees to believe that performance assessments should be used to justify salary increases. Actually, many HR experts urge separating the timing of appraisals from when salary reviews are conducted by as much as three months. This way, employees won't think in terms of how their rating translates into dollars; they'll be able, instead, to focus on the specific observations of their appraiser.

So, if performance appraisals shouldn't be used in conjunction with raises, how should they be used?

 

Benefits and Uses for Managers

Let's start with how performance appraisals benefit you, the manager. First, you will be able to make the best use of your employees' abilities by becoming more aware of each person's strengths and areas requiring improvement. Second, you can isolate atypical employee behavior and performance; that is, you can identify outstanding performers and provide them with additional incentives and more challenging work assignments. You can also spot marginal performers and give them greater guidance and direction. Third, performance appraisals help you become introspective and determine whether you are doing your job as a manager: Ask yourself: Am I available for questions? Am I clear in my expectations? The answers to these and other questions will improve overall employer-employee relations. Finally, once employee skill levels are properly identified and you've determined whether you're functioning effectively as a manager, you can focus more fully on developing your own career goals.

 

Benefits and Uses for Employees

During the review process, managers typically clarify areas of responsibilities. This benefits employees by ensuring a mutual understanding of the scope and nature of their job, negating the likelihood of hearing them say, "I didn't know I was expected to do that!" Employees also learn how well they have been performing in relation to their areas of responsibility. This can lead to a discussion of helpful training opportunities, as well as a dialogue about future goals and career development. The performance-appraisal process additionally affords employees a chance to express openly their views and concerns about anything work-related.

 

Benefits and Uses for the Organization

Performance-appraisal systems can help protect organizations against discrimination allegations by providing an element of consistency; that is, ensuring that all similarly classified employees are evaluated based on the same criteria. In addition, performance appraisals reveal employee aspirations and career-development plans, thereby allowing organizations to determine whether there is sufficient alignment between their strategic goals and employee goals. Furthermore, data are furnished to help establish equitable and competitive salary-administration programs. Future training and development needs are also identified.

TIP #3

The most effective performance-appraisal programs are those that are beneficial to managers, employees, and the organization as a whole.

 

Responsibilities

HR practitioners have the greatest scope of responsibility when it comes to performance appraisals. They're expected to apply employment laws; identify the most productive method of appraisal; design evaluation forms that best facilitate the face-

to-face meetings between you and your employees; review the content of completed appraisals for consistency between ratings, supporting statements, and any recommendations you've made; and ensure that the performance-review process achieves its primary objective: that is, the maximum utilization of every employee's skills, knowledge, and interests.

As a manager, you're responsible for understanding how employment laws pertain to the performance-appraisal process, and for preparing for and conducting the face-to-face meeting. In addition, you're expected to provide ongoing assistance, support, praise, and constructive criticism (see Chapter 2, "Managers as Coaches") as well as to work with employees on specific work-related issues, as needed (see Chapter 3, "Managers as Counselors").

Employees should also play an active role in the performance-appraisal process. Specifically, they may complete self-appraisals to compare with your evaluation of their work performance; ask questions and express views about their evaluations; and seek job-enhancement and career-growth opportunities.

TIP #4

While HR has the greatest scope of responsibility when it comes to performance appraisals, managers and employees should also actively participate in the process.

 

Criteria

While, as a first-time manager, you're unlikely to have much say in how your organization's performance-appraisal system is designed, it's helpful for you to understand the following criteria for an effective system. It should be:

 

Job-Related

A performance program should be founded on criteria that are directly related to the primary duties and responsibilities of a particular job. The criteria should be specific, observable, and measurable; for example, the criteria for a sales representative might include ". . . generating an additional $x,xxx in revenue each month."

The nature and level of responsibility for each position should determine the amount of weight assigned to each factor measured.

 

Reliable and Valid

To be reliable, a performance-appraisal system should yield consistent data regardless of who does the appraising or when they do it. For the system to be valid, there must be a direct correlation between the factors being measured and the critical elements of a particular job. Elements critical to one job might not be at all relevant in another job; for example, requiring experience with conflict-resolution would be valid for a customer service representative; it's unlikely to be valid for an administrative assistant.

 

Standardized

An appraisal program should be standardized in its design and consistent in its administration. This does not mean that you cannot have more than one set of standards: indeed, many organizations have one set of evaluative categories for exempt employees and another for nonexempt employees (the Fair Labor Standards Act defines the term exempt as literally meaning "exempt from overtime compensation"; the term nonexempt conversely means "not exempt from overtime compensation." The Department of Labor provides a series of requirements that must be met before classifying someone as exempt.)

All managers and HR practitioners using the appraisal system should be given written guidelines accompanied by training in its implementation. Organizations should also develop effective techniques for monitoring the degree of consistency in implementation.

 

Practical and Workable

To be effective, a performance-appraisal system should be practical, workable, and viewed by managers as a helpful tool. In particular, it should not be so complex or time-consuming to administer that you view it as a burden. This can easily occur when instructions for completion are difficult to interpret, forms are excessive in length, multiple approval steps are required, or the system requires a forced distribution of results.

 

Acceptable

A performance program should be deemed acceptable by appraisers, the appraised, senior management, and HR; in other words, everyone in the organization. Ideally, representatives from each of these groups should have some role in developing the system; for example, HR may prepare the framework of the system; managers could contribute categories they feel are important; employees might help develop criteria for measuring their own performance; and senior management would show its support of the program via a written message to everyone in the organization.

 

Managerial Style

Managerial style should be conducive to employee growth. In order to create the right climate for a successful performance-assessment system, you should strive to be encouraging and supportive of your employees' efforts. You should also display confidence in your employees' ability to progress.

Periodically ask yourself questions to determine how well your style relates to performance management; for example, (1) Do I know how my employees view me? (2) Do I have sufficient confidence in my own skills to encourage the growth and development of others? (3) Do I show interest in my employees and exhibit encouragement for greater accomplishment?

If you can answer these questions affirmatively, then be confident that your managerial style is likely to encourage employee growth.

Suggestions for Improved Performance

Managers often shy away from offering suggestions for improved performance. After all, it can be uncomfortable to tell employees that their work is anything less than outstanding, even when their performance is really subpar. Yet, an important element of performance appraisals is offering suggestions for improved performance so employees can strive to use their skills, knowledge, and interests as much as possible.

The key to success is for employees to be receptive to their manager's suggestions. This requires a solid rapport between you and your employees, coupled with mutual respect. If these elements are lacking, employees are unlikely to be responsive to even the most well-intentioned suggestions for performance improvement.

TIP #5

In order for a performance-appraisal system to function effectively, it must be: job-related; reliable and valid; standardized; practical and workable; acceptable to everyone in the organization; reflective of a managerial style that is conducive to employee growth; and predicated on a managerial willingness to offer suggestions for improved performance.

 

© 2008 Arthur Associates Management Consultants, Ltd.
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