Performance appraisal is an essential management technique. Here's some practical advice on
how to introduce performance appraisal systems into your company.

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Performance appraisal: how to do it

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by Martin Finnigan

Performance appraisal is an essential management technique. Here's some practical advice on how to introduce performance appraisal systems into your company.

It is one of those difficult areas of business that seems to be a necessary evil - all the books say that a company should have a performance appraisal system, employees often express the desire for one, and (if my workload is any indication) businessmen are keen to find out about them.

Why then is performance appraisal one of the areas of management most commonly complained about by employees and managers alike?

The major mistake made by companies is the failure to recognise what constitutes a performance appraisal system. It certainly is not just about a set of forms that must be completed by various individuals. Nor is it just an opportunity to have an annual chat with the boss to 'get it all off your chest'.

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Seen in isolation, performance appraisal is simply a procedure which involves the assessment of an individual's performance on a regular basis. That's fine, but it goes much deeper - performance appraisal lies at the heart of good business practice. A performance appraisal system can only function if the business has a clear idea of where it is heading, and has taken steps to ensure that it is taking the workforce along.

Of course, nothing is that simple. Or is it?

Try this - if you are a business person, ask the following questions of your own company. If you are an employee, copy this and give it to your manager, or ask the questions among your peers and pass the results up the chain of command. You never know what might result!

What follows are a series of questions that can be used to rate the performance appraisal mechanisms in organisations. You should able to answer the questions and get a rating regardless of whether a formal performance appraisal system is in place, and you may be very surprised by the results - there is nothing that says a performance appraisal system must be written down or formalised!

The questions draw on my own experience in line management and consultancy, and from the UK Investors in People initiative which provides an excellent framework for business development.

For each of the questions, answer:

      • 1 = strongly disagree

      • 2 = disagree
      • 3 = not sure
      • 4 = agree
      • 5 = strongly agree

Record your answers and total them up at the end.

  1. Management have a clear idea of where they want the company to go
  2. Every employee understands where the management are trying to take the company
  3. All departments have clearly defined goals
  4. The department goals fit together to help the company get to where it wants to go
  5. Every employee understands how his or her job contributes to the overall department and company goals
  6. Each employee and their supervisors/managers agree what is expected of the employee
  7. Each employee, together with his/her supervisor/manager monitors whether he/she is achieving what he/she is expected to
  8. Each employee's training and development needs are reviewed regularly to ensure that they continue to have the skills they need to achieve what is expected of them
  9. Supervisors/managers ensure that employees understand why particular training and development actions are taking place
  10. Supervisors/managers ensure that employees understand what they are expected to do better as a result of particular training and development actions
  11. Employees are happy with the quality and frequency of feedback they receive from their supervisors/managers
  12. Supervisors/managers and employees are trained for their roles in the appraisal process

How did you score?

Under 24 - the company is like a sailing ship without a sail. Lack of a performance appraisal system is the least of the worries. Management probably have little idea of where the company is heading, and the workforce almost certainly do not. I would not be surprised if you hit some rocks....soon. Get some help.

25 to 40 - the internal systems are poor and may be causing discontent and motivational difficulties in the workforce. It will be possible to improve matters, but firm action is needed. Management must decide on corporate goals, decide what they need to do to achieve them, and then tell the workforce not once, but every day. Communicate, communicate, communicate - that is the key.

41 to 50 - I'm impressed. The company has all the basics in place and they are probably working well. There is obviously room for some improvement in specific areas, and I suggest looking in detail at the areas with the lowest scores.

Over 50 - Wow - write a book on how you did it!


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