Performance Appraisals Process and Guide

How do you make the performance appraisal process genuinely meaningful and effective? It’s not enough to check that employees are meeting the key performance indicators (KPIs) that their roles require. In a time of decreased employee engagement and high employee turnover, performance appraisals are a brilliant way to find out what makes employees and teams tick – and to use those insights to benefit both employee and organisation. For this to happen though, a thoughtfully-prepared and open-minded process is required. 

Whether you’re a team leader responsible for conducting performance reviews, or an HR professional looking to improve your review processes, you’ll find direction for more meaningful evaluations in this performance appraisal guide.

First: what exactly is a performance appraisal?

A performance appraisal or performance review is the regular evaluation of an employee’s work performance and their contribution to the organisation. You can use these appraisals to address underperformance and clarify expectations. But they’re also an opportunity to learn so much more: about your workplace culture and group dynamics; where to invest in learning and development; and how to optimise your employee relations. 

Performance appraisals can identify where employee goals and organisational goals align, so you can nurture a mutually beneficial relationship. And because the best performance appraisals are two-way streets, they can help you improve employee engagement, retention and satisfaction. 

What about pay?
Regardless of whether your organisation connects performance appraisals to pay reviews, the focus is always best placed on the employee’s development and career progression.

A step-by-step guide to the performance appraisal process

Of course the specific performance appraisal process will be unique to each organisation, but there are some essential steps that apply across the board.  

1. Having the framework in place

Every performance evaluation could be empty and meaningless without the right performance management framework in place. This means getting everyone on the same page and ensuring employees know what their responsibilities are, with clearly defined position descriptions and KPIs. Employees should understand how their role fits within the broader organisation, and how it aligns with the broader organisation’s purpose. 

Set appraisal schedules accordingly (whether that’s monthly, quarterly or annually), letting employees know when they can expect these reviews to take place. Encourage everyone to consider their growth and goals in between appraisals, and to keep track of their achievements and impact in between appraisals.
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2. Preparation

As the time nears for an employee’s performance appraisal, it’s time to review past performance and objectives and to gather relevant documentation. Look over previous appraisal summaries, and go over any notes collected since. Gather feedback from relevant leaders, managers and colleagues as required so you can gain an overview of the employee’s performance. If you’re getting employees to fill in a for before the appraisal, make sure you have these back in your hands well ahead of the day.

There’s no one-size-fits-all performance appraisal template for the review itself, but a clear structure will be essential in making performance appraisals more productive. Generally, this means preparing to identify employee strengths, highlight areas for improvement, hear employee feedback, and explore relevant training options and other support. If you’re addressing a previously addressed performance issue, make sure you have specific examples – whether good and/or bad – to clarify any tough conversations you might need to have.

Share a brief appraisal agenda with the employee ahead of time, and encourage them to bring any notes or plans with them that will be relevant. 

3. Conducting the appraisal

Hold the appraisal in a quiet, distraction-free environment and make it clear from the start that this should be an honest and constructive experience. It’s good to start off by reviewing past performance and achievements in a positive light, before moving onto areas for improvement. Crucially, constructive feedback shouldn’t be a complete surprise to the employee at the appraisal. This is because any underperformance issues or concerns will have ideally been raised as they occur. Instead, use the appraisal to take a broad look at anything that might have been holding them back or hindering their progress. Keep much of the conversation future-focused. You can gain better insights with open-ended questions, such as: 

• Which deliverables are you most/least proud of lately, and why do you think they had those outcomes?
• How fulfilled are you feeling by your role and purpose within the organisation?
• What would you like to achieve in the month/quarter/year ahead? 

Share your vision for the employee’s progression, ask for theirs, and find where employee and organisational goals might align. Finally, work with the employee to document their goals. These objectives should be specific, measurable, attainable, relevant and timely (SMART). Offer any learning, development or other support the organisation can provide to help with those goals, and set either a deadline or intervals to check in on them.

To finish, ask if there’s anything else the employee would like to discuss.   

4. Handling difficult feedback

Two-way feedback is incredibly important, and an employee appraisal can be a rare chance for employees to bring up concerns or issues in a safe space. Take the time to actively listen, make sure to fully understand the feedback, and then work together on a solution.

Sometimes, a solution could even help the employee develop professionally. For example, the employee might be the best possible person to spearhead a new initiative if they feel passionately about something that’s working as well as it could. If they’re feeling bored or unfulfilled, the solution might be to work towards a leadership role or a strategic move across departments. Of course if the issue is about a serious matter, such as discrimination or harassment, it’s essential to handle this appropriately and set an investigation in motion as soon as the appraisal ends. 

5. Post-appraisal steps

Once the appraisal wraps up, it’s time to record the discussion and set objectives in a clear performance appraisal document and action plan. It’s a good idea to provide a copy of the appraisal documents to the employee, and many organisations will also ask the employee to formally acknowledge or sign off on these documents. Check in regularly with the employee about their goals, and adjust support as needed as they work towards their individualised KPIs. Just as it’s important to address performance issues as they arise, it’s also important to acknowledge and celebrate employee achievements as they occur. 

Post-appraisal, it’s also time to act on any broader issues that arise. These might be individual to one employee, or they may be patterns that become apparent across multiple employee reviews – such as a communication or feedback process that isn’t working effectively. Reading between the lines can help you pinpoint areas for improvement within the organisation. For example: if employees are feeling disengaged with the organisation’s vision, then that might be a sign that either leaders haven’t been effectively connecting everyone with that vision, or even that the organisation’s vision might need a review. If employees are struggling to work alongside other departments, there might be a need to focus on broader team-building activities or on the use of better collaboration tools. Of course, this will depend on what’s raised within performance appraisals.

5 types of performance appraisals that employers can use

Performance reviews can take several forms, with each offering unique value. These forms can be used separately or in combination, and include:

Top-down review

This is the traditional style of employee appraisal, where the manager reviews their direct reports and provides feedback on each employee’s performance. While a lot of organisations have steered away from exclusively top-down reviews in many years, structured feedback certainly still has its place in modern performance appraisals. Even the highest performing team members benefit from knowing what their leaders expect and appreciate from them.

Self-assessment

A self-assessment performance review (or pre-appraisal review) gives the employee the opportunity to rate their own performance, reflect on how they’re contributing to the organisation, and recognise how they can grow. Self-reflection can really help to nurture employee engagement, as employees are encouraged to take ownership over their learning and development. They’re not merely going through the motions in a dead-end job; they’re active players, and always working hard towards something bigger and better.

Peer assessment

In peer assessment, co-workers or colleagues are given the chance to evaluate each other’s performance and contributions. Feedback can sometimes feel particularly potent and more democratic coming from peers, and employees may have more enthusiasm to grow and improve if they can see how it’ll benefit a team they feel bonded to. 

Peer-review feedback can also provide useful insights into team dynamics. This type of feedback can illuminate how well team members are collaborating and communicating in the day to day. It can help to uncover hidden conflicts, as well as identify quiet leaders who others tend to look to for guidance. 

360-degree feedback

360-degree feedback involves a more holistic understanding of an employee’s performance and contribution from their wider work circle, which can include their manager, peers, direct reports and even clients or customers. 360-degree feedback can help an employee gain a wider picture of their strengths and weaknesses, and the broader impacts of each. And if there has been previous conflict or tension between an employee and their supervisor in the past, 360-degree feedback from multiple levels can offer wider perspectives and the sense of a fairer appraisal.

Negotiated appraisal

A negotiated appraisal uses a mediator and a separate preparation process to identify positive aspects, areas of improvement and areas for improvement. Because this appraisal style is mediated by a neutral party between the employee and their manager, it can be useful where there is tension or where objectivity will be particularly important to the process. Put simply, it can take some of the ‘sting’ out of the process for both parties. Where a negotiated appraisal is conducted by a performance management specialist, the manager often also benefits by picking up new management and communication strategies as part of the process.

What are the benefits and risks of performance appraisals?

It’s worth taking a look at both the benefits and the risks of performance appraisals, as doing so can help keep performance appraisals fair, effective and compliant. 

First, the benefits. As already covered, performance appraisals can: 

• Help to clarify roles and expectations
• Enhance communication between employees and leaders
• Recognise great work and concerted efforts to improve
• Motivate employees to actively work on their career goals  
• Boost employee morale, engagement and satisfaction
• Provide a neutral, uninterrupted opportunity for employees to raise concerns and ideas 
• Identify any broader issues or areas of improvement for the organisation.

And now to the risks. The risks outlined below aren’t reasons to avoid performance appraisals. Instead, they’re important factors to remain aware of as you conduct the performance appraisal process. It’s worth having strategies and counter-measures for negative possibilities, including: 

• Unfair evaluations based on likability, rather than performance

Even when Darren keeps turning up shockingly late, he might get a pass because he’s a friendly guy. 360-degree feedback and peer assessment, as well as the structured use of performance metrics and KPIs, can help to keep things fair for all.

• The setting of unreasonable goals

Striving towards a big goal is great. Striving towards a goal that feels basically impossible can lead to feelings of helplessness or bitterness – or even complete disengagement. Instead, encourage goals based on the employee’s vision, and push them just enough to see them soar.

• Biased feedback from the employee’s work circle‍

Bias can be an issue even with 360-degree feedback. People might have personal biases, or biases based on race, gender or age (whether they’re conscious of these biases or not). Customers might provide bad feedback, but actually be frustrated by a process rather than the person they deal with. Using objective evaluation criteria and multiple points of feedback can assist with the bias issue, as can staying aware and recognising bias when it arises.

• Frustration or resentment if the employee feels they’re not being understood

This risk often comes with a performance appraisal where the manager either isn’t actively listening, or they aren’t acting on what they’ve promised. It’s essential to set everything aside and genuinely hear where the employee is coming from. Then, make sure any plans or promises have follow-through and follow-up.

• Further conflict, if current tension is not handled appropriately.

If there’s an elephant in the room, it’s time to talk about it. Let everyone be heard. Bringing in a third party can help to diffuse terse matters, and this objectivity can often cut through the noise and keep everyone focused on the issue at hand.

The key takeaways to conduct a successful performance appraisal

Always be prepared:
Prepare your agenda, feedback and ideas before you walk into the appraisal. Gather and review pre-appraisal forms early to gain the full picture. Speaking generally about a concern won’t help anyone. Instead, prepare specific examples ahead of time.

Avoid surprises:
No employee should feel ambushed with critical points. Address performance issues as they occur, and use performance appraisals to review and support. Conduct appraisals on a set, regular basis, and make sure everyone is on the same page regarding expectations, KPIs and goals.

Hone those assessment skills:
An appraisal run by a standard performance review template may not yield the meaningful results you need. It’s important for managers and HR professionals to have the inherent skills to be able to navigate tough conversations, actively listen and identify patterns.

Minimise distractions:
Performance appraisals are one of the few chances to catch up with employees one-on-one in an undisturbed environment. Conduct the appraisal privately to ensure everyone has undivided attention, and make the most of this productive conversation.

Encourage two-way communication:
Employee involvement and feedback is absolutely vital to a meaningful performance appraisal. Encourage employees to give their own feedback, to ask questions so they fully understand their appraisal, and to drive their goal-setting. Take the time to listen and understand.

Be honest:
When employees sense a transparent and fair approach, they’re more likely to be whole-hearted about the review process. Only give sincere feedback, and address uncomfortable issues honestly and with respect. Don’t leave any elephants in the room unaddressed. 

Final words on performance appraisals

Performance appraisals aren’t just more HR paperwork: they’re an incredible opportunity to revitalise motivation, understand your team and align the core purpose of both employee and employer. Open communication and a structured, considerate approach as covered above can help you get more out of these essential reviews. 

Of course, the performance appraisal process isn’t always smooth, and it can sometimes help to get specialist support – either in setting up your performance management framework, or in assisting with conversations where balance is key. Maybe your organisation could use some help navigating underperformance ahead of possible terminations, or perhaps the solution is more ongoing and consistent through outsourced HR. Whatever HR challenges you face, HumanX can bring expert advice and support to the table. Get in touch today, and let’s start a conversation on how to support and bring out the best in your employees.