Conducting performance appraisals
Performance reviews or appraisals encourage you to formally set objectives for your employees and to monitor how well your employees are doing. These meetings are a two-way opportunity to give and receive feedback about their job, find out what's working, what isn't, and look for solutions to any problems.
It is also an opportunity to take a strategic look at the role of each employee and discuss ways to expand your business or run it more effectively.
On this page:
- The role appraisals play in your business
- Use performance goals and objectives
- The importance of regular feedback
- Setting up appraisals
- Evaluating performance
The role appraisals play in your business
Most employees dread performance reviews, but there should be no need for worry if they understand appraisals are not a witch hunt, but an opportunity to talk openly about their role, recent highs and lows, and ways everyone can work together more productively.
Appraisals should not be problem-focused; they should be solution-centric.
When you schedule time for an appraisal or review, explain that appraisals provide a focused forum to communicate openly about the business, the employee's role in the business, how you can help them work better and how they think they can help the business work well.
Encourage your employees to prepare for the appraisal so that you can both give constructive input and get the most out the appraisal process.
Use performance goals and objectives
You can't fairly assess someone's performance unless they know what is expected of them. You will probably have performance criteria outlined in the job descriptions for your various employees. Refer to these as part of the performance review and discuss whether they are still relevant or need to be updated.
Use your first appraisal to set goals for the next period. This could be a particular sales target for sales staff, performance targets for production staff, or submitting reports and administration on time. It's important that employees have control over their own goals and that the goals are achievable.
Ongoing employee performance can be discussed at the next appraisal and the goals and targets can be reviewed and updated. Having goals to work towards can give direction and purpose to employees, and knowing that they are monitored can motivate employees to work better.
The importance of regular feedback
Although appraisals usually take place at set yearly or twice-yearly intervals (possibly more regularly for the first year of employment for new employees), you should not wait for these meetings to give your employees feedback.
Allocate time to have an informal monthly or bi-monthly chat with each employee to give you the opportunity to discuss what is going well, what needs improving, how they feel about their job, and how you feel about how they do their job. This sort of ongoing feedback plays an important part in maintaining good morale and helps you address any issues as they arise, rather than waiting months to broach the subject.
If an employee is getting regular constructive feedback, they will have no reason to fear a performance appraisal. But if they're wondering whether the work they're doing meets your approval, they might approach the meeting with a defensive attitude rather than one of looking for ways they and the business can work better.
Setting up appraisals
For established employees, appraisals usually take place on a biannual or annual basis, with more regular reviews for the first six months to a year as they settle into and learn their new role. Here are some tips to ensure you get the best out of these meetings.
- Schedule the review a few weeks in advance: To allow both you and your employee time to prepare, try to schedule each performance review at least a week or two in advance. You won't get quality feedback if you spring the review on your employees at short notice.
- Select a private meeting place where you won’t be interrupted: You'll have a more productive appraisal if both parties are comfortable talking about problems without worrying about being interrupted or overheard. Pick a quiet meeting venue so that you can both focus on the meeting without distractions.
- Ask each employee to prepare responses to questions: You'll get more valuable feedback if you ask employees to prepare for the appraisal. What you ask them could vary from employee to employee, but could include: How well do you think you're doing in your job?; Identify the aspects of your job you think you're doing well and the areas where you don't think you're doing that well; Do you need any equipment or training to help you do better?; How do you feel about your job and the company?; What top three things would you change if you could?
- Do your own preparation: You'll need to spend time preparing too. Read your employee's job description and read your notes from previous reviews so that you can see whether previous issues have been resolved and whether the goals that were set have been met. Look at performance indicators (sales or production figures, letters from satisfied customers, or other metrics) so that you can discuss both their strengths and weaknesses.
- Prepare your employee for tough questions: If there are weak spots that need to be discussed, prepare your employee in advance by warning them that you'll need to discuss why certain goals or targets weren't met this year and invite them to come to the meeting with possible solutions.
Evaluating performance
Open the meeting with something positive, and focus on performance over the entire period, not just recent good or bad events, or events that stand out. Try to encourage a two-way conversation and formulate questions to encourage ideas and input from your employees.
Avoid being confrontational and remember that the purpose of the appraisal is to evaluate the job performance and not the person - so don't get personal and focus on personality issues. Listen attentively, affirm good performance, and tell weaker employees that their performance needs to improve.
Keep an open agenda and give your employee a chance to give input. At the end of each agenda item, summarize what has been said and check that you both agree with your summary before recording it on an appraisal sheet.
Apart from focusing on the job and productivity, you should also talk about areas that will concern your employee. Discuss your employee's work-life balance and solutions to improve this if necessary. Look at job satisfaction and other areas that are important to your employee like training and career development. Try to identify if there are things that could be affecting your employee's attitude to their job, which could negatively impact on their performance either now or over the longer term.
Summarize the appraisal and agreed goals and objectives in writing. Give your employee a copy and file another copy in their personal file. Employees should also be given the right to appeal if they do not agree with the appraisal and this should be noted in their file.
Many appraisal systems are linked to rewards, which can include periodic performance bonuses, the size of annual bonuses, and pay increases.
