Getting Employee Performance Evaluation Right - Empxtrack
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Most companies want to conduct employees performance evaluation on a periodic basis and their Human Resources  department is generally responsible to manage this process. I have often seen that the buy-in and participation from the Line managers is not as much as one would expect. Based on my meetings with a large number of HR managers, Line Managers & Senior Level Executives, I have come to realize that there is much more to Performance Evaluation than what is truly understood by all stakeholders.

This article discusses how HR Managers can create an effective Performance Evaluation system that adds true value to the organization and becomes a useful and strategic employee development tool.

Define the Objectives of the Employee Performance Evaluation System

Do HR managers understand why organizations need to carry out the Performance Evaluation? Some of the common reasons are:
Define the Objectives of the Employee Performance Evaluation System

  1. Salary Increments: Commonly believed to be the only purpose from an employee perspective and typically the least important from the management perspective.
  2. Goal achievements and related bonuses/commissions.
  3. Promotions and transfers
  4. Succession Planning
  5. Identification of Top Performers and Non-performers
  6. Identifying Competencies Gaps for Training Management
  7. Confirmation of probationers

The objectives may differ for different levels of employees but together these help in defining the performance evaluation content, forms, ratings, weights & scales, employee evaluation parameters and the appropriate process for conducting the appraisals.

Understand the Process of conducting the Performance Evaluation

Understand the Process of conducting the evaluation Once objectives for the Performance Evaluation are identified, it is important to define the different steps in the process. The same process may not fit all situations.

For instance, Succession Planning, Promotions and Transfers will typically involve Heads of Departments and Senior level managers in the decision cycle whereas Salary Increments, Goal Setting and Tracking, Confirmation of probationers & competency gap analysis, may require participation of Line Managers and 2nd level managers.

In cases where only white-collar employees are being appraised, we may like to involve appraisees at the start of the process by including a self evaluation and an acceptance at the end of the process. In evaluations for blue-collared employees, the employees may be involved only at the end.

Similarly, in an hierarchical organization the work-flow and relationships will need to be defined well to begin with (especially for special cases such as heads of departments, General Managers etc.) and in a Matrix organization the focus may be on peer, senior and subordinate reviews.

Without getting the performance evaluation process right, it is very difficult to get required participation from the stakeholders.

Communicate repeatedly the objectives of the Performance Evaluation

HR can play a vital role by communicating the objectives of the evaluation process to both employees and their managers. Structured and timely communication can help everyone appreciate the performance appraisal methods and encourage transparency and objectivity. I have found that if HR communicates the process extensively, the level of participation and enthusiasm is higher and the process completes without delays.

The different ways in which communication can be carried out include:
Communicate: communicate the objectives of Appraisals

  1. Publish on the employee portal the start of the appraisals, the process details and key time-lines.
  2. If yours is a large company, it may be a good idea to print some posters and display these at strategic locations.
  3. Definitely include the details of your employee performance evaluation process in the Employee Handbook.
  4. Hold workshops for employees and managers: explain the appraisal process, answer queries, describe scenarios and mention benefits.
  5. Develop an introduction form that should communicate the performance evaluation process from each stakeholder’s perspective. The form should communicate the role of employee, manager, and any other people involved in the process.
  6. Don’t hide any surprises. If you Normalize employee scores, include that in all communications such that employees and managers are aware that final scores may be changed.
  7. If possible, involve senior management in talking about the importance of the appraisal process and its timely completion.

Timely completion of Appraisals is a must

Stated mathematically: Enthusiasm is inversely proportional to the time taken to complete the activity i.e if the evaluation takes longer, the enthusiasm in it will wane. So, what are the ideal time-lines for an appraisal?

In working with many companies I have found that each step in the performance evaluation should take no longer than 4 to 5 business days. As an illustration, the different steps in the appraisal and their time-lines may be :

STEPS in Performance Evaluation

PROPOSED TIME-LINES(business days)

Employee Completing their self-evaluation and submitting to their managers2 daysManagers completing the employee evaluation and submitting to the next level5 to 10 days (depending on the team size)Heads of Departments finalizing employee scores for their departments and releasing to HR2 to 5 daysHR conducting Normalization (removal of manager bias) across the organization, finalizing scores and submitting evaluations for discussions3 to 12 days (depends on the level of interaction required)Managers discussing appraisals with employees and submitting for their final acceptance2 to 5 days (depending on the team size)Employees accepting their appraisal and signing off1 dayTotal Time Taken15 to 35 days

To ensure that the time-lines are met, HR should constantly get a status check on the process and not hesitate to remind employees & managers when behind schedule. Don’t hesitate to involve senior managers if the process is way behind schedule. Read an article on How HR Managers can Design effective Performance Appraisal

Does access to an archived performance evaluation record help?

Managers expect behavioral changes in their employees based on past years discussions. In addition, employees and managers decide on an Access to archived-appraisals achievement plan for the next year which could include target achievement plan, development plan, mentoring plan etc.. Without access to these notes, recording achievements in the next years evaluaiton is not only difficult, but it makes the process less objective.

Add to this the challenge of changed employee-manager relationships over the year; each year’s appraisal becomes a new beginning instead of a continuation of the employee’s performance over many years.

How can the HR department help in this?

For one, HR should introduce a process of goal setting where employees and managers define the goals at the beginning of the year and submit to HR after finalization. Don’t worry if the goals are not SMART to begin with.

Secondly, HR should provide access to past appraisals and goal achievements of employees to the managers.

Of course, this can be a challenge if you are spread across many locations or have difficulty in managing thousands of electronic or paper based appraisals. We shall discuss this in the Performance Evaluation System as an Enabler section ahead.

Integration of employee evaluation with other data is important

In most organizations, performance evaluations are largely carried out on goal achievements and competencies or skills. Are these the only two areas on which managers should appraise employees? Would it be helpful to know details of many intangibles such as:
Integration with employee career profile

  1. Number of rewards/ recognitions
  2. Involvement in a disciplinary case,and violation of safety norms
  3. Timeliness of employee (How many times was the employee late, how many times did the employee take leave without permission from the manager etc.)
  4. Type & duration of training attended
  5. Employee counseling records.
  6. Participation in external events that got the company some recognition
  7. Publications/ contributions to professional journals.
  8. Opinions of other employees and seniors, especially for employees in leadership roles.
  9. Length of service and other employee related data, especially past experience & qualifications
  10. Employee achievements note with review by the manager & seniors.

Our experience, while working with many organizations, reveals that most managers remember the last few months of employees contributions (or the lack-of it) and rate employees on that bias. To avoid this, we strongly recommend that multiple data points are linked to the appraisal and are freely accessible to the manager to accurately rate an employee.

Performance Evaluation System as an enabler

The biggest challenge to implement an effective Performance Evaluation process is the large volume of data that has to be collected and managed on a daily basis. In addition, linking Performance Evaluation System as an enabler data from various sources, providing up-to-date status reports to the management, validation of completed appraisals, normalization of scores, and finalization of appraisals for increments, promotions etc. is a time consuming and laborious task.

Availability of on-line help, for example details of rating – that pops-up when the manager wants to rate a competency can help managers quickly complete the appraisal.

Recording on the employee’s Goal Sheet the periodic achievements & status of completion of each goal along with counseling notes of the manager is not possible without technology.

An integrated HR platform such as Empxtrack can help in quickly meeting the objectives of the Performance Evaluation Process with minimum additional effort.

The ready-to-use Performance Appraisal module with multiple form templates, numerous work-flows, built in validation and automatic calculation of scores, reminders and escalation messages, on-line help and availability of instant status updates helps in putting the process on an auto-pilot and can save significant time for both HR and the line managers.

Empxtrack is an integrated HR software that combines all aspects of employee life cycle in an easy-to-use browser-based application. It integrates Goal Setting and Tracking, Performance Appraisal, Training management, Time, Leave and Attendance, Recruitment, Rewards and Recognitions or other employee related data. All these can be automatically captured or imported in Empxtrack and can be linked to the Performance Appraisal module for an effective, transparent and objective evaluation.

Read more on Employee Performance Management (EPM) in our white paper published on our web-site earlier.

To help design an Appraisal System for your organization or to enable an existing process on a web-based software you may Contact Us with details of your requirements or read the online help on Configure Empxtrack Employee Performance Evaluation System

44 Comments

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  4. I agree with the views expressed by Milan. But it is also a requirement that the initiatives taken by an employee are appreciated, weighed and rewarded. And if the direction is wrong, then the employee has to be guided provided his intentions are positive for the Organisation. For this you need a transparent evaluation system – May call it Performance Review, Performance Feed Back, Annual Mentoring Session, Annual Appreciation System …….. Anand

  5. In your opinion, what are the challenges from employee end related to performance appraisal that an HR can face ?

    1. Hi Vikash,

      Regarding the challenges from employee end related to performance appraisal, some of the immediate thoughts that come to my mind are as follows. Firstly a performance appraisal system may not include extensive and ongoing feedback that an employee can use to improve his overall performance. Employees may want to give their feedback to HR, “in confidence”, or may even wish to reject their appraisal – indicating a conflict situation. Secondly if goals are not clearly defined, many employees may feel disappointed and may not be able to perform as per the expectation.

  6. My brother recommended I might like this blog. He was once entirely right. This post actually made my day. You cann’t imagine simply how much time I had spent for this information! Thank you!

    1. Hi Isha,
      Let us discuss next week about how we can help you in your PhD synopsis.

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      Regards
      Tushar

  7. i think performance appraisal is much required for improving skills of employeesss.. u mentioned very good points here.

  8. Thanks Tushara,

    You have made a great contribution to the HR society as a whole and to me in particular, as I have found some information, which I have been looking for.

    I have often found that the toughest part is to take people in to confidence about the purpose of performance appraisal, as companies do not pay much attention to salary increment / promotion part in connection with the PA Review report of the employees. This results to a non-bothered attitude in at least some of the employees.
    I am of the opinion that earning/losing part should be more concerned with the result of a accurately conducted Performance Appraisal Report.

    Thanks,

    Shafi.K.P
    HR & Administration Manager
    Palm International LLC,
    Dubai, UAE.

  9. Employee involvement: a key to performance appraisal systems worldwide. It’s amazing that such dinosaurs (performance review systems, not the people) are still around. They must be, however, since a book has been published called “Get Rid of Performance Reviews’. Yet despite the outcry against reviews, there’s nothing wrong with them that can’t be fixed by getting managers off of center stage. Top management can fix the basic problems the review system faces.
    Critics argue that performance reviews not only don’t accomplish what they’re supposed to do – that is, improve performance, enhance employee skills and achieve planned outcomes – they have unintended negative consequences. In many cases, unfortunately, that’s true. But it doesn’t have to be that way. What companies need to abolish is not performance review itself, but the idea that it’s a “management tool. Here are some practiced paradigms that must be discarded:
    Performance Review is designed, as the name suggests, in support of managers. If you believe this, your management is one of the roadblocks to exceptional performance. The most useful performance review support work relationships between employees (managers too are employees). Both parties need to address the question of how to best serve the goals and outcomes and align their work efforts.
    Performance review is a management tool. Managers are not necessarily the best qualified to assess their staff’s accomplishments. In fact, they may have a very limited or biased view. A more complete and accurate picture results when employees and managers seek feedback from a variety of customers, team leaders, professional peers, and others inside or from outside the unit.
    Performance reviews include judgments from a “higher authority”. Judgments produce compliant workers – people who are told what to do – not innovative ones. People hate performance reviews because most of them are fault-finding. How much better to ask, “What did we learn from this? What can we each do different the next time?”
    The manager is responsible for obtaining input from the employees. 21st century employees can’t assume a passive role in performance review, providing “tough-minded” self-assessments and valuable insights only on request. They must take the initiative, soliciting feedback from their managers and others. No risk taking to solicit the complete picture and no learning means no improvements.
    Managers should be trained in performance reviews, then prepare their employees for the process. If performance review is to be a productive partnership with employees taking the active role and both parties committed to exchanging knowledge and ideas, managers and employee need to be trained together.

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  15. Business without strategy make it hard for employees to set work objectives.

    There are different approaches to setting leadership behavior goals, in addition.

    Goals leading nowhere + different approaches to leadership goals endanger of business productivity + measurement of accomplishments respectively.

  16. That’s true that line managers can be involved in the compensation process too, however, having so extensive process requires a strong HR leadership at top. Unfortunately, HR still holds back seat in small, medium and medium large companies. how can hr escalate to strategic role?

  17. Thank you Gireesh for your comments.

    As discussed above, the appraisal objective would decide the process and this needs to be communicated to the stakeholders at the start.

    The salary increments may depend on other factors too such as normalization, compa ratio, goal achievements besides soft parameters such as length of service, criticality of employe etc.

    If line managers are involved in increment finalization then they may be in a better position to discuss the same with their teams and there may be higher acceptance.

    EmpXtrack Compensation Planning module at http://empxtrack.com/performance-management-system/pay-for-performance allows managers to be involved in the process

  18. Great Job explaining the complete appraisal management process. I am sure HR community will be greatly benefited by this.

    However, the real challenge lies in getting consensus of employees on appraisal process and the end result of the appraisal – i.e. compensation or promotions.

    Whatever amount of efforts companies put in maintaining secrecy of the salaries, employees always come to know the compensation plans of their peers. This gives them basis for comparison.

    Consider a situation, where an employee get good scores in appraisal, but his/her increment is lower than the ones who get low scores; and if this person come to know?? They are sure to start looking out.

    One solutions to this is by maintaining the grades across the company so there is no need to maintain confidentiality. However, the differentiation in the salaries can be done by increasing the loyalty components, age factors etc.

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