Any organization’s success is determined by a combination of various factors that need to fall in place at the right point of time. One of them is the performance appraisal process. To make sure that employees are performing at optimum levels, it is recommended that their performance be evaluated from time to time. It helps both the management and employees understand the current level of employee performance and compare it with the standard level of performance.
Performance appraisals are generally not popular among both employees as well as their reporting managers. Employees usually complain that the evaluations are not fair, not specific and definitely not frequent enough. On the other hand, managers have to spend tedious amount of time and efforts in evaluating every single member of their teams.
Typical problems of traditional performance appraisal process:
While it is important to conduct performance appraisals, it is not considered among the most important processes that the management should follow. For some managers, it is a part of their secondary responsibilities and hence lacks efforts. When done halfheartedly, appraisals do not focus on the more important aspects and are used to determine only the compensation of employees based on their performance throughout the year.
There are many factors that need to be considered while appraising any employee’s performance:
- Managers are not properly trained to handle this responsibility. Thus, they aren’t able to efficiently conduct appraisals.
- In the absence of standard ratings across the entire organization, employee ratings tend to be more subjective than objective. Employees are not assigned any measurable outcomes, hence the evaluation is more qualitative than quantitative.
- Lastly, performance appraisals are not used to improve performance but to assign a monetary value to the efforts of employees throughout the year.
The performance appraisal process should be able to provide inputs to employees about how they’re doing and identify areas of their strengths and opportunities for improvement. Consider the different types of performance appraisal methods that companies can use individually or in combination, depending upon the needs of the situation and their growth stage.
Many experts stress that performance appraisals must fit or be consistent with the organization’s personnel practices, culture, and strategic mission or goals if they are to work as the organization intends.
How companies normally carry out the performance appraisal process?
One of the biggest problems of performance appraisals is that the process focuses on the person and not on the situation. Some companies rely on performance appraisal systems wherein a group of employees that have the same set of skills and responsibilities are clubbed together. They are all assigned targets that need to be achieved in a specific period of time. The measurement criteria remains same for everyone.
Let us consider the performance of 2 salespersons over a period of 3 months, where both have the same set of skills and expertise and are usually at par on performance. Between January to March 2018, Employee A was able to convert 10 leads into customers whereas Employee B was able to convert only 3 in the same time. On the face of it, given the lack of fair measurement criteria, it would appear that Employee A has far outperformed Employee B in terms of sales.
However, in this case, there could be various reasons for the difference in performance of either employees. If Employee A was asked to sell a popular product that is highly in demand, then he or she will find it easy to close more sales. While Employee B could have been asked to sell a product that is either relatively new and is not particularly in demand, then he or she will find it difficult to convert any leads, unlike Employee A.
Here, according to the traditional performance appraisal process, emphasis is given only on the ability of the person to perform and their output. It does not consider the situation at that point of time. Each employee was given a different product where one was in high demand, while the other one was relatively new and not well known among prospects. The second product will take time to gain awareness among consumers so it will be some time before it develops the same or similar momentum as the first product.
Thus, we can see that while both employees were on the same level, they were selling in different situations. The performance appraisal did not consider these situations and focused only on the outcome. Which is why Employee A received much higher rating as compared to Employee B.
Such unfair practices, although unintentional, can create a discord among team members and lead to unhealthy competitions. Another reasons why employee engagement levels are significantly lower in these companies.
How to make the performance appraisal process more effective:
One of the primary ingredients of an effective and efficient performance appraisal system is context. While assessing employee performance, managers need to note down the situational factors that were responsible for (or affected) the outcome that they were able to achieve. It ensures that the management understands the types of systems, processes, structures, circumstances or events that facilitated or constrained this employee’s performance. Thus, there is no scope for subjectivity and all decisions are taken based on real observations.
For companies that follow a 360 degree feedback model, it gets more easy to note these situational factors. Not only can managers note these down, but employees too can add whatever they felt helped or hindered their performance. There are lesser chances of missing out on important aspects, in addition to looking at the situation from two different perspectives. So what may appear non-consequential from the manager’s standpoint, could actually be a big deterrent from the employee’s point of view.
To sum up, performance appraisals of employees can only be as effective as the process itself. So it is necessary that organizations first improve the appraisal system before proceeding further. It will also create a huge impact of employee engagement levels subsequently.