Best Practices in Conducting Performance Appraisals.

Any professional in their management role needs to understand and be familiar with the best performance appraisal practices.

Appraisal and evaluation of performance are increasingly being used in organizations, especially in the service sector and the professions. While not difficult to understand, these practices have their complications, any professional in leadership and management position must understand the technicalities and the issues involved.

Role of Performance Appraisal System in An Organization

A performance appraisal system has benefits for the organization, the line manager and the individual employee:

Importance of Performance Appraisals to Organization, Management, and Employees

The organization benefits by having:

• Standard information about its employees
• Standard documentation to assist with recruitment, promotion, and training
• A facility to help staff development
• A means of planning accurately human resource needs
• A system that provides motivation by making clear to employees what is expected of them

The line manager benefits by having:

• Objective guidelines by which staff activity and effort can be assessed
• A better understanding of staff needs and aspirations
• A basis for improving relationships with staff
• An understanding with individual staff members, primarily through the appraisal interview

The individual benefits by having:

• An opportunity (albeit in practice on a semi-annual or annual basis) to discuss his work objectively with the manager
• Performance can be objectively evaluated.
• A basis upon which training and development needs can be discussed
• Relationships with the manager can be improved because of the communication mechanism built into the appraisal process
• Clarification of duties and responsibilities
• A clear understanding of his or her role or position in the organization

Performance Appraisal Methods and Techniques

Approaches to the measurement used in appraisal systems are based either on an analysis of the whole job or on the subdivision of a job.

Classification Appraisal Method

Involves evaluating the whole job. Firstly, decisions are made on what grades there will be (ABC). Then a decision is made on where each job fits into the organization. This method requires particular knowledge and is subjective.

Factor Comparison Appraisal Method

This method involves sub-dividing the job to be evaluated. Qualitative factors such as technical knowledge and responsibility are selected and given a financial value in dollars.

Each factor in each job is then evaluated as a percentage of the financial value. A simple, unscientific method. Does not suit office type jobs.

Points Rating Appraisal Method

Probably the most scientific method. Different schemes involve either evaluation of the whole job or subdivision of a job. Again, the qualities required (skill, responsibility, etc.) are listed. Each job is divided into between eight and twelve such qualities. Points are allocated to each factor and added to give a total score. This is a flexible, reasonably fair, and most used system.

A derivative of this method is associated with HAY MSL. This is a form of points rating based scheme but is based on three fundamental measurements  and understanding, problem-solving, and accountability. Each is sub-divided in turn for points allocation along the lines of the points rating system.

Widely regarded as a fair and reasonably scientific system, the HAY system has been widely used for appraisal systems involving higher management.

Best Practices in Conducting Performance Appraisals & Successful performance appraisal system

Have Frequent Appraisals

The firm should not appraise only at the end of the year but should look for ways of appraising the employee’s performance throughout the year. The end of the year should be a final review. This firm should adopt the Management By Objective (MBO) program in which managers and their subordinates set yearly targets and work towards them. In MBO, the performance of the subordinate is assessed at very regular intervals.

Performance Management is also a new technique currently being used as an appraisal tool. Like MBO, it involves regular assessment of workers and ensures that the end of year review is an authentic record of employee performance all year round.

Be Objective, Avoid Personal Bias

There is always a possibility that the evaluator’s personal prejudices assessment will interfere with his assessment of workers. In this firm, there is no objectivity. Even though avoiding bias may be difficult, evaluators must make every effort to ensure their feelings don’t affect the appraisal.

Encourage Frank Evaluation

Senior management expects honest and frank reports even if it discredits the individual. Most managers do not like giving negative reports, but they must be fully aware that the organization’s welfare must take precedence over the individual’s interest.

Communicate the Method and Purposes of The Appraisal

The firm needs to make employees aware of the methods used to appraise them. If employees are being appraised for other purposes, apart from promotion,  they should also be made fully aware of these other purposes.

Appraisals can also be done for compensation, termination, transfers, training, and other personnel purposes.

Use Appraisal Results to Improve Employees.

An appraisal of how well a manager has performed in the past should serve as a guide to helping him perform more effectively in the future. An employee should not continue to perform dismally, yet his weaknesses should have been identified and improved.

Keep the System Simple but Use the Best Available Method.

An evaluation system should be no more complicated than it is absolutely necessary to achieve the objectives stated for it. It should not be too complex but should be able to give the value expected from it.

Besides, the system designers should know all the methods available and choose a combination of the best since appraisal results are used for very important decisions by management. To make these decisions without the benefit of the best possible evaluation of a manager is a disservice to the organization and an injustice to the manager.

 Importance of Performance Appraisal in an Organization

Management relies on the outcome of performance appraisals to identify employees for rewards and promotion. Most of the companies have their appraisals carried out annually in preparation for the following years’ targets and objectives. The organization’s appraisal exercise has to be been done objectively, and not superiors have been awarding grades arbitrarily. Employees have been awarded the points and grades, they deserve whether poor or excellent.