Performance Evaluations & Appraisals

Performance Evaluations & Appraisals – Summary

The performance evaluation is an opportunity to meet and discuss the employee’s job performance, priorities, and goals. The evaluation should focus on key behaviors that are important to the organization and on the employee’s progress in reaching performance goals. An appraisal may be done on a formal or informal basis, but ideally it will be an ongoing process. Discussion of wage increases, when available, has also traditionally been part of the periodic performance appraisal. However, it is best for any discussion of pay to be conducted separately from the performance review.

Why are Performance Appraisals Important?

An effective performance evaluation measures an employee’s progress and demonstrates the supervisor’s interest in the employee’s personal development. It can also highlight training needs and provide the employee with an opportunity to discuss workplace interests, problems, and goals.

A solid plan starts with the manager identifying the goals that, if met, will increase the organization’s value. These goals may not only include concrete, fact-driven goals such as increased productivity and revenue. But also abstract, intangible goals such as improved employee morale and engagement. Once the key goals for the organization’s success have been identified, the manager should use the appraisal as an opportunity to assess and align his or her employees’ performance so that those goals can be met or exceeded.

Common objectives of effective performance evaluations include:
  • Identifying a limited number of critical behaviors that are vital to the organization’s ability to meet its goals
  • Clarifying the performance measures expected of employees and those results considered essential to the success of the business
  • Seeking honest feedback, as employees perform better when they can speak openly.
  • Applying uniform performance standards that assure fairness and eliminate confusion
  • Giving employees a stake in the process by encouraging them to set their own performance goals and assess their progress
  • Making performance management an ongoing process that reflects changes in the business
  • Gathering information for succession planning by identifying employees who have the interest and potential for advancement
  • Improving coaching by encouraging supervisors to observe an employee’s job performance and compare it with performance standards
  • Providing a tool to determine wage adjustments based on a worker’s contribution to the organization

Clear expectations and performance standards, along with achievable goals, will increase retention and improve morale. Employees are more able to engage in their jobs, and therefore perform better, when they understand:

  • what the company is expects from them
  • how to meet those expectations
  • how their performance affects the success of the business

Identify and Focus on Key Behaviors

As noted above, the first step of an effective performance evaluation is identifying the goals of the organization, then determining how employees can be best deployed to help attain those goals. The link between a job’s key responsibilities and the employee’s performance goals should be clear so that employees understand what is expected from them. In turn, the link between the employee’s performance and the organization’s success should also be clear, as an employee understanding how he or she fits into the big picture can provide a greater sense of purpose to the daily tasks being performed on the job. A performance appraisal that focuses solely on an employee’s friendly demeanor and punctuality is shallow and ineffective for both the employee and employer if the appraisal can’t tie those traits directly to success in and for the organization as a whole.

Communicate these expectations to each employee. 

Now that the key behaviors have been identified, the next step is to ensure that employees actually know and understand what those behaviors and expectations are. One reason employees fail in their tasks is because the performance model has not been made clear. What behaviors does the organization want its employees to focus on and maintain? How does an individual measure success? Does each individual understand which behaviors are critical to success?

As with the goals of the company, a general idea of these expectations may come directly from the organization’s executives or from the company’s mission statement, with each manager then tailoring the larger goals to the specific roles within the department.

It is preferable that the performance evaluation not be the first time that employees learn of these expectations; however, if the goals and needs of the company and the department are shifting regularly, the performance evaluation can certainly provide an opportunity to reevaluate how the employee can best adapt to any changing needs going forward.

Link any abstract expectations directly to concrete examples in the job.

If key expectations have been identified and communicated on an abstract level (e.g., “maximize revenue, improve brand loyalty, provide best-in-class customer service”), it’s important to ensure that there is a clear and logical link between those expectations and the key tasks and responsibilities in each employee’s job.

Employers should start by creating a job description that accurately reflects the job’s responsibilities. The critical job responsibilities, as documented in the job description, should be linked to the organization’s objectives in a clear and understandable way. For example, employees who work in a sales context may understand that increasing revenue means completing more sales, but employees in an information technology context may be unsure how they can “increase revenue” until they understand that they can help reach this same goal by eliminating employee or customer downtime due to network outages.

Set reasonable performance standards and achievable goals. Finally, once the organization’s larger goals have been identified and linked to the specific tasks of each employee, it is time to determine the extent to and means by which each employee should meet these goals in order to be successful—or exemplary.

For some roles, these goals may be numbers driven for other roles, these standards may be task, project, or initiative driven. Note: During the actual performance appraisal, employers should also encourage employee involvement in tracking success, setting their own goals, and identifying any steps that they can take (including seeking and completing additional training) to further improve performance.

Objectively apply those standards to each employee. 

Let’s take a look at what we’ve done so far. We’ve identified what the company needs to succeed; we’ve linked those company needs to the specific roles of each department, job, and employee; and we’ve considered some reasonable and meaningful standards by which we can measure success. Now we are ready to apply those standards to existing staff.

A Few More Points to Consider

  • Decide how often you will conduct reviews.
  • Consider self-reviews.
  • Provide management with the tools and motivation they need, too.
  • Be consistent.

Common Mistakes to Avoid

The following are some of the common errors often made at the beginning of the performance appraisal process that can distort the analysis.

Limited focus. Focusing on recent performance instead of evaluating the entire performance period.

Bias. Allowing non-job-related factors to prejudice an appraisal is unfair to the employee and may be unlawful if based on characteristics such as race, national origin, gender, or religion. Employers should avoid having influence of irrelevant factors (such as participation in employee after-work programs or physical appearance) on an appraisal.

Strictness/leniency. Some reviewers might believe the performance standards are too low and therefore refuse to give high ratings, while others insist on giving everyone a high score.

Contrast. This happens when the employee is compared to other employees, rather than on the basis of an objective review of the job performance.

The Written Appraisal

Experts suggest that before managers begin writing they should review their notes of the past year. These observations provide the basis for the evaluation. Then an outline is prepared listing achievements and areas that need improvement. Finally, the performance is measured against the standards of the job, and goals set during the previous review.

The key to a well-prepared, effective appraisal is objective, job-related data that support ratings.

  • Using examples to document both positive and negative accomplishments
  • Listing specific ways for the employee to improve on the negatives
  • Listing specific compliments for the positives

The Appraisal Meeting

The performance appraisal meeting is an important part of the process. The best approach is for the manager to act as a coach to help the employee meet his or her goals. Here are some ideas:

  • Before the meeting, let the employee know the purpose of the meeting, what to expect, and how much time to allocate.
  • Hold the meeting in private, and allow plenty of uninterrupted time for discussion.
  • Conduct the meeting within a week of the official review date.
  • Discuss specific examples of both positive and negative issues and compare examples to job responsibilities and performance goals.
  • Discuss the role of the employee and his or her performance as it relates to the department and to the company as a whole.
  • Show confidence in the worker’s ability to improve areas that need strengthening and to continue to show success in positive performance areas.
  • Allow employees to give their opinions, examples of their successes, and areas for improvement.
  • Discuss specific actions the employee can take to improve or develop and actions the manager can take to help (e.g., finding out what kind of training opportunities are available).
  • Separate job performance and behavior from the person.
Setting Goals

At the end of the meeting, the manager and employee should establish goals for the next review period. (It may be appropriate for both to work together on an action plan to meet the goals, or it may be more appropriate for the employee to return at another time with a written action plan.) Action goals are preferable. For example, “We will have weekly meetings and you should come prepared to discuss production quotas, error rates, etc.” Goals should also be capable of measurement: “We will increase output by 20 percent.” In addition to new goals, the action plan should cover the employee’s plans for improving problem areas. Having employees play an active role in the goal-setting process will help them feel more involved in the company and help foster a desire to perform well and achieve those goals.

Concluding the Meeting

The goals should be on the appraisal form. The employee is then needs to sign the appraisal to acknowledge receipt. If the employee disagrees with anything on the appraisal, he or she should have an opportunity to write a response. Generally, the time period limit is a week. A copy of the response should go into the employee’s personnel file with the appraisal.

Separating Salary Review from Performance Appraisal

Traditionally, salary reviews and performance appraisals have been combined into a single event. While the two are intrinsically linked, a problem with this approach is that it promotes “tunnel vision.” All the employee focuses on is, “How much am I getting?” The employee’s preoccupation seriously undercuts the impact of the counseling aspect of the exercise.

One way to avoid this is to separate the two events. Hold the performance appraisal first. Then, on another day, deal with the raise issue. If this is done, employees should be advised in advance that there will be two meetings.

While there is no question that individual job performance should be a major factor in the decision to grant a pay increase, it is only one of the many factors that must be taken into consideration. Other factors include:

  • The employer’s overall financial situation
  • The department’s or division’s budget for raises
  • The employee’s length of service
  • The employee’s qualifications
  • How much other employers in the local area are paying for similar jobs
  • What the employee requires in the way of incentives
  • General economic conditions—the inflation rate, changes in the cost of living, etc.

Avoiding Legal Claims – Communication is Key

Performance appraisals have become the subject of lawsuits ranging from discrimination claims to lawsuits alleging that an appraisal program created an employment “contract.” Employers concerned about these problems should consider the following steps.

First, the employee handbook should make it clear that the description of appraisal and discipline programs is “advisory” and management may alter it at their discretion.

Second, to avoid charges that the procedure is biased, merit-rating systems and the pay differentials that result from them should be based on job-related factors—that is, on objective evaluation of performance relative to specific requirements of the job. The following steps will help protect an organization against charges of discrimination:

  • Have up-to-date job descriptions, and evaluate employees’ performance relative to the requirements specified in the descriptions.
  • Thoroughly train supervisors on effective procedures for merit rating and feedback to employees.
  • Give employees the chance and a place to note their comments/disagreements regarding their evaluations.
  • Explain and monitor the organization’s evaluation programs. Make sure that managers sign off on their subordinates’ reviews. Larger organizations may want to consider reviewing appraisals to see if there is any statistical evidence of bias.


The law does not require the writting of merit or salary reviews. However, records of wage decisions are essential if an organization is to have a defense against any charges of discrimination.

If an employer claims that an adverse employment action is based on poor job performance, having a record of performance appraisals that support the employer’s claims can be very useful in defending against charges of discrimination, retaliation, or wrongful termination.

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