Are Annual Staff Appraisals worth it?

It’s the first quarter of the year and time for appraisals.  Second only to firing, business owners cite appraisals as the task they dislike the most.  Is anyone a fan of appraisals or is it old fashioned nowadays.  A once a year review is too late and often comes as a surprise to the employee.  How can people judge an entire year of work, some of our members felt that they were a waste of time with forced ranking eliminating great people and damaging the business culture.

This topic was discussed by our members at a recent meeting of the Business Exposure Group.

Are there any benefits of performance appraisals?  Is it just documenting what is already known.  Should we feel obligated to do appraisals just because everyone else does them?  70% of businesses conduct appraisals only once a year, but are appraisals just for the employer to clarify and articulate their vision.

Often an appraisal is just based on opinion and not on performance measurement.  It can undermine harmony and fail to encourage personal best performance.  Disagreement over judgement can create conflict that can fester for months which is counterproductive.

Most of our members felt that appraisals should be separate to the annual wage rise. “Appraisals should be a fair validated way for salary reviews / record of low performance when we let someone go / way of monitoring effectiveness of the manager”.

But for some it is political correctness gone mad.  In sport you have a winner 1st, 2nd, 3rd.  So, why is it such an issue in the workplace.  Rather than talking about what the employees have learned and how they can grow, they instead resort to a number out of 5.  The most valuable part of an appraisal is the development planning conversation; what can be done to improve.  Yet, this is often left to a small bit at the end.  And, if that happens, then the appraisal just becomes an HR box ticking exercise.

A regular ‘performance management’ system is better than a yearly appraisal.  People are inspired by positive constructive feedback, and the appraisal process almost always works against this.  New ways could include:-

Feedback rich culture for all employees

Separate discussion about performance from career development

Let employees create their own goals

Force managers to give ongoing feedback

Force employees to self-assess

Encourage high performance

Set goals regularly. Quarterly goals in businesses with performance management show 30% better returns and those that do monthly goals get even better results

Some business owners questioned whether it is worth the cost, eg a manager costs £50 per hour, employees £30 per hour.  So say 3 hours each time allocated = £240 x say 20 staff = £5K in total to appraise 20 employees.  Apart from taking up too much time, it can also be unpleasant to rate someone.

An appraisal / performance management certainly has value in building relationships between employer and employee. In many cases, it is the only time an employee gets uninterrupted access to their employer.  One of our members commented that when appraising one of his employees they stated ‘In 10 years of working this is the first time anyone has even bothered to sit down and tell me how I am doing’.  But, if we don’t do performance appraisals well, then we are better off not doing them at all.

These meetings are where you formalise the performance of the employee, not where you spring bad news on them.  Forget feedback – it invites defensiveness.  Use feedforward, it focuses on what you want the employee to do in the year ahead.  It focuses on how they can do better, not what they have done wrong.

Employers are now starting to use cloud bases appraisals.  The technology of sharing relevant performance will turn performance management into an ongoing process.  It’s about targeting a specific area of weakness – not a career path, and it’s about inviting constant feedback from a variety of stakeholders who can have constant input into the work development of our employees.

Above are just some thoughts on how best to monitor individual staff performance!

 

 

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