Please don’t be put off by the word appraisal. It doesn’t have to be feared or avoided. It is fair to admit that many organisations have brought the term into disrepute by inappropriate treatment of the process.
If your organisation does have an appraisal system, now may be a good time to appraise the process itself - there is always room for improvement. If, on the other hand your organisation does not have an appraisal procedure then it may be missing out on some valuable benefits.
If there is thought of introducing something along the lines of an appraisal system but a fear of a less than positive reaction in advance due to any negative overtones associated with the term then there are other titles that can be applied, such as development review, development and performance review and so on. For ease and clarity we will stick to using the term appraisal to cover all possibilities.
WHAT DO WE MEAN BY THE TERM APPRAISAL?
There are many variations on the theme. The most common and the recommended route when introducing appraisals for the first time, is a simple one-to-one conversation where the manager appraises the subordinate. It is then common for the outcome to be written up and passed on to the manager’s manager. This chain is often referred to as the son / father / grandfather scenario - although to be politically correct this description is perhaps is no longer appropriate.
Of the many alternatives to this, there is: -
• “two-way” appraisal, where the subordinate also appraises their manager
• peer appraisal, where colleagues are involved in the process
• 180 degree appraisal, involving a range of managers and customers (internal and external)
• 360 degree appraisal involving all of the above plus subordinates of the appraisee.
There are also specialist schemes such as competency-based appraisal and the balanced scorecard process, but these certainly need specialist knowledge to implement.
Although there is usually an annual review, that formalises the process, it must be remembered that appraisals should not just be an annual event. There should be regular informal or interim reviews, especially to consider progress against specific targets, identifying problems and adapting targets and objectives in the light of organisational change.
WHO SHOULD BE RESPONSIBLE FOR APPRAISAL?
The responsibility generally lies with the direct line manager but it is important that the appraisee fully “buys in” to the process. For the normal line appraisal, the manager’s manager will normally check, approve and comment. Completed appraisals should then be co-ordinated, normally within personnel (or HR) to identify relevant information. This should then inform training plans, succession planning and other corporate initiatives.
WHAT ARE THE OUTCOMES AND BENEFITS?
• Cascading business objectives (which, having read last month’s MorePeople page, you now know all about!)
• Performance management - providing information to improve productivity, praising strengths and good performance, passing important information to colleagues etc
• Can help to drive change through a business
• Building a training plan - focused on actual training needs rather than assumptions
• Succession planning - appraisals may help to discover hidden talents.
• Identifying aspirations - for example, enabling added responsibility to be given, in turn making an employee happier and less likely to leave
• Linking to reward (see below)
• Assists in the process of employee involvement
• Ensures a higher level of openness.
MANAGING PERFORMANCE
Traditionally, it was thought that only two factors influenced performance at work, ability and motivation.
While this is still largely the case, it is now recognised that there is an important third factor, that of enabling performance. It is not enough to have a highly motivated and able employee if the planning, systems, structures, individuals and processes frustrate his or her desire to perform, or if the individual doesn’t have a clear picture of their objectives.
An efficient appraisal and review process will help in the setting of agreed targets and objectives, cascading the main business objectives throughout the organisation, thereby bringing about a shared view of expected performance.
The manager can support performance by organising resources, providing coaching, feedback and training, help to tackle obstructions to performance and generally by being available to the employee.
SETTING OBJECTIVES
Last month’s article covered this topic. As a reminder, objectives should be “SMART.”
• Specific
• Measurable
• Agreed
• Realistic
• Timely
WHAT ARE THE POTENTIAL PITFALLS?
Too often, enthusiastic designers of an appraisal system try to achieve too much in one go. This can lead to an over-elaborate process that is too time consuming and too complicated. This can mean no one enters the process with genuine commitment.
A lack of time to complete the process is a common criticism. This can be overcome if the systems that are set up are kept as straightforward as possible - fit their specific purpose and are not ‘over engineered’ to suit all permutations.
Many line managers will criticise the appraisal process as being bureaucratic and something that is not accompanied by commitment beyond personnel/HR. It is essential that such objections are overcome by involving management in the process of design and in the actions that arise from the outcomes.
There is a real danger that there can be a conflict between different objectives of the process.
The manager as a helper, conducting an honest review of the recent performance of an individual along with identification of training needs and/or development potential may not fit well with the role of the manager as an “assessor”, conducting a review for a merit assessment for the purposes of a salary increase or determining promotion to another role. This is because, by instinct, the latter role (where the manager acts as an assessor) will lead to a more defensive or cautious approach from the employee.
After all, who is going to admit to weaknesses and training needs if the pay rise is likely to suffer? (This particular point is discussed in more detail below.)
Another risk is that managers are afraid or unwilling to criticise their staff, either because of the fear of damaging working relationships or sometimes because of fear that some of the criticism may reflect back onto them as individuals or their management style. Specific training can help to overcome this.
Finally, unless managers are provided with adequate training in appraisal techniques and are fully aware as to the aims of the whole process, there is a danger of inconsistencies occurring across businesses. Also there may be an inability to cover some key areas - especially the softer areas of management. Training will also help to overcome any unconscious bias that may exist.
SHOULD APPRAISAL BE LINKED TO FINANCIAL REWARD?
This is the big debate. There is an argument that only by linking appraisals to reward will managers feel that the process deserves their full attention. Alternatively, it can be argued that the development aspects of appraisal should not be linked directly to money / reward, but realistically, for most managerial posts such a link is inevitable.
Our preferred solution is that it is acknowledged that part but not the entire appraisal informs part but not all of the decision making process relating to reward. The logic here is that performance against most objectives must relate to overall performance. However, some objectives may be more stretching, aimed at personal development, so may not be directly relevant to immediate reward assessment. At the same time, there are various factors outside of the appraisal process that should also be taken into account in determining pay e.g. inflation, local conditions etc. Ideally, the actual appraisal review should be carried out at least six months before the merit / pay decision.
HOW TO LINK APPRAISAL TO REWARD?
Taking the above into account, the simplest way to link the two is to summarise performance in a single merit rating. There are many more complex ways of handling this, especially where bonuses are paid against various performance targets. There is a school of thought that suggests that merit should be rated against a four-point scale, therefore avoiding the temptation to use the middle point of three, five or any odd numbered choice.
Once a rating has been given, financial reward can be allocated against this - in most cases, determined by the company’s overall budget. This use of a rating method is recommended rather than just asking a manager to allocate money per se as the latter can be emotive and is therefore more likely to cause managers, specially junior or inexperienced ones, more difficulty.
HOW TO INTRODUCE A SUCCESSFUL SCHEME?
The key to success is, as ever, in the planning.
• Ensure that senior management are genuinely committed to the process
• Design a system that meets the needs of the business
• Decide what it is you want to achieve and whether or not reward is to be formally linked to it
• Design a system that fits with the existing organisational style and culture
• Sell the benefits and allocate time to listen to issues and objections
• Train appraisers in how to plan for, and conduct an appraisal interview
• Train appraisees so that they also plan for the interview and seek to benefit from the process
• Don’t ignore the outcomes. Ensure that training/development and other actions are taken where identified by the process, (subject, as ever, to cost effectiveness)
• Ensure that there is reasonable consistency of application, but allow individual input appropriate to the role
• Ensure that the process is not an isolated annual event but that effective follow up takes place on an ongoing basis
• Measure the benefits and, if appropriate, be willing to amend the scheme to improve its effectiveness.
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