Performance Reviews

7 biggest misconceptions about the Performance Appraisal process

By on June 26, 2018

In the past, we have written at length about performance reviews or appraisals, as they are sometimes called. This article addresses some of the most common myths about performance appraisals (that can only be attributed to outdated management thinking).

Performance Management Myths and Facts

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1. Winging performance appraisals on the spot:

Performance appraisals cannot and should not be done on the spot. Managers need to carefully collect all the information associated with the employee’s performance and ensure that the performance management process covers all achievements and shortcomings of team members systematically. These managers need to prepare well in advance to efficiently conduct performance appraisals.

For example, based on the role of the team member manager needs to assess competencies (refer to this handy list of 500+ performance review phrases). Taking continuous performance feedback & routine tasks into account is equally important. They provide the much-needed context.

2. Performance reviews will fix everything that is wrong:

Some employers are under the impression that adjusting employee salaries will ensure optimum productivity in the workplace. This is only partly correct. Apart from salaries, there are other factors that ensure employees maintain and improve their performance and productivity levels. In fact, performance management surveys show that monetary rewards often undermine intrinsic motivation and desire to succeed in the workplace. But not paying enough attention to compensation isn’t going to help either: The human resource management team would be handling a lot of resignations if compensations were not in the ‘expectations’ ballpark.

There needs to be a strong feedback culture that can help employees increase their contribution. Relevant and contextual feedback (whether positive or negative) should be an integral part of reviewing performance. Employees should not only get to know their assessment scores, but also the reasoning behind their reviews as well as be given guidance wherever applicable.

Here feedback should not be unidirectional. A 360-degree feedback culture will be more suitable in such cases. Organizations that incorporated this practice have consistently experienced higher rates of employee engagement and goal attainment as compared to those who have stuck to annual review and feedback.

3. Performance reviews talk only about compensation:

Typically, the tangible outcome of performance reviews is the salary increase that usually motivates employees, but there’s far more to it. There are other intangible aspects that also need to be considered. For example, training and development, feedback about performance, guidance, and coaching for areas that need improvement, etc.

In the absence of an effective performance management system, a singular focus on the determination of compensation can be seen. This makes managers in such companies rarely make any effort to develop employee skills and abilities while conducting performance reviews. They should ideally take necessary steps to encourage employees to develop their skills in areas of interest to the employee.

The purpose of performance evaluation is to provide developmental feedback that will help the employee continue to grow in their skills and ability to contribute to the organization. It is an opportunity for the company to communicate what they expect from their employees.

4. Performance appraisals depend entirely on the completion of goals:

In many organizations, performance management systems determine appraisals solely on the basis of the completion of goals. If a high performer were to achieve 100% of his or her goals, then he/she would be liable to receive full increments. And if he or she fails to meet that target, the increment amount would be reduced in proportion to the failure. This is common practice across many organizations that ignores overarching strategic priorities.

However, this may not be suited for every situation. For example, the above example is apt for organizations that set goals by adhering to Management by Objective (MBO) goal setting framework. According to MBO, achieving a 100% target is the benchmark of goal completion. There is a significant difference between MBO and OKR (objectives and key results). In the case of Objectives and Key Results, the accepted goal completion target is between 60% to 70%. Thus, despite achieving the recommended target, if the individual receives an appraisal of only 60-70%, then it would lead to discontent.

Performance reviews should be designed around these conditions to ensure employees are not dissatisfied. According to the methodology used, the performance review process should talk about their efforts as well as the results of these efforts. Good performers tend to hold themselves to a higher standard: setting the bar a little high and making it clearly visible can give them enough motivation to push themselves.

5. Performance review process is a one-way street:

Viewing performance review as a one-dimensional task that needs to be conducted for an employee is definitely not the right way to go about it. Rather than for employees, it needs to be done with employees as it is an ongoing collaborative process. Traditional performance reviews considered this as a mere administrative task. On the contrary, this should be taken as an opportunity to motivate employees to perform better than their current state and provide help as they go along. It is a much better way of ensuring they actively contribute towards the achievement of organizational goals while progressing in their career goals.

6. Performance appraisals need to be an annual activity:

Historically, it has been observed that performance appraisals are generally disliked by managers as well as employees. There is a simple reason behind this: it is simply not possible to efficiently evaluate the performance of employees for the whole year in one go. Annual performance review tends to focus only on the latest achievements and shortcomings of the candidate. Whatever happened at the start of the year may not necessarily be recollected by managers if the information is not documented efficiently. Thus, appraisals are often biased and subjective.

Instead of annual reviews, the performance review process should be conducted more frequently or at timed intervals to ensure there is continuous employee development.

7. Employee Engagement and performance reviews are not related:

The two key drivers of a good engagement are:

  • On-time contextual recognition
  • Performance development

Good performance reviews can ensure both these key drivers are addressed meaningfully and increase employee engagement in the organization. Managers, human resources teams, or relevant authorities can leverage this process to clearly communicate about what the organization expects and most wants and needs from these individuals. Also, poor performers tend to be more disengaged than their high performer counterparts.

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