If you Google “performance appraisal,” you’ll receive more than seven million results. So there are a lot of perspectives on the subject. But, in general, how an organization appraises performance is a critical component of its performance management system. It’s also a key area linked to organizational results where HR should make a significant contribution.
How does human resources ensure an effective performance appraisal system, particularly given that many people don’t like either giving or receiving appraisals?
No matter how excellent a system HR designs, it won’t make a difference unless people down through the organization actually use the system and maintain its integrity.
Employers struggle in this area. The traditional process of annual performance rating and ranking is widely considered broken. Organizations have found the process hurts engagement, alienates high-potential employees, demonstrates a dubious link to pay-for-performance, wastes time and creates unhealthy competition.
Organizations continue to apply new solutions. Microsoft recently made headlines by saying it was abandoning the ranking process. Other organizations are experimenting with newer concepts such as crowdsourced performance appraisals, using social technology and feedback from across an organization as well as externally.
There isn’t one performance solution that works for all. HR professionals who are connected to the business and the organizational culture should take the lead in designing a performance appraisal system that drives the right consequences and results for their organization.
For example, a crowdsourced performance appraisal system may be the best solution for employers engaged in contingent and remotely executed work, particularly since the majority of employees today work in service or knowledge-related jobs.
The key is for HR to ensure the organization doesn’t simply water down the appraisal process just because people find it tough to identify meaningful development areas or deliver challenging messages. Bill Conaty, former head of HR at General Electric under Jack Welch, often refers to the phrase “differentiation breeds meritocracy…. sameness breed mediocrity.” And HR, as stewards of the people system, should keep this top of mind.
That said, one strong theme around the evolution of performance appraisal systems is the shift from annual, moment-in-time appraisals to ongoing feedback and coaching — a more continuous and collaborative process. At Cadillac Fairview, we’re in the process of better integrating and streamlining these two approaches, as well as using technology to ease the associated effort required from people in the business.
We still see a place for the annual performance appraisal to calibrate employee results and behaviours, as well as to provide critical input into such areas as incentive payouts and talent reviews. We also see a place for regular manager coaching as an enabler of both employee results and development, as well as a way to reinforce the manager-employee relationship.
Regardless of an organization’s appraisal approach, HR professionals have a specific opportunity to boost the effectiveness of any performance appraisal system by coaching the organization to avoid wasting time in the middle of the appraisal.
Given that systems can have a direct impact on employee results and development, the biggest leverage to be gained from the system is when employees receive candid feedback about their dominant strengths, as well as their true weaknesses to avoid them becoming performance derailers.
Quality over quantity
Over the years, I’ve become more focused on quality over quantity in performance appraisals and routinely coach managers to skip needless explanations on satisfactory performance results. If someone hit a target and “achieved expectations,” a detailed description saying the person successfully achieved the target, worked hard and was a key member of the team may contain some feel good value, but it has little or no impact on real performance.
Such commentary falls into the category of wasting time in the middle of the performance appraisal and it would be better to leave this comments section blank. Instead, spend time pinpointing the top one or two results the employee achieved, then reinforce the specific behaviours or talents she demonstrated to reach the better-than-expected results — the more observable, measurable and specific, the better.
The same applies to performance misses or leadership development areas. It would be a safe bet that every HR professional has seen comments such as “worked hard but due to a variety of factors, didn’t quite complete the initiative” or “develop leadership skills” or “get to know the business better” et cetera.
These types of comments are better than whitewashing performance misses or choosing safe, generic development areas like taking a course or touring company locations.
However, managers who do this are again wasting time in the middle of the performance review and doing little to replicate or improve actual performance.
Instead, managers should spend time identifying one or two specific, measurable and observable behaviours that led to missing a target or would help the employee achieve greater results. For example, an employee would more greatly benefit from knowing that “when she gets anxious in team meetings, she tends to cut people off and dominate the conversation without listening,” or that “he regularly appears distracted when others are talking, fails to give eye contact and fidgets with his iPhone.”
The manager can then help the employee see the consequences of this behaviour, identify the triggers and set a specific action plan to address it. That’s where managers can pull real value from the performance appraisal process.
This concept has been validated through research, including a standout Gallup study of more than two million people over decades described in the book Now, Discover Your Strengths, by Marcus Buckingham and Donald Clifton. In essence, it’s more productive to develop your strengths than correct your weaknesses. So managers have the opportunity to make a significant impact on employees by helping them uncover dominant innate talents, to incorporate their strengths into their leadership style, and to combine them with the right skills development for powerful results.
Secondly, managers should help employees identify their true weaknesses and manage around them effectively.
Years ago, I started the practice of writing my employees a letter each year that outlines key accomplishments, strengths and development areas. I do this upfront, without the constraints of a performance appraisal form. I still complete the required company performance appraisal but when I do, I complete it quickly, with clear messages that pinpoint the highs and lows, without commentary about the middle of the performance and development spectrum. Employees have routinely told me they appreciate and value these letters.
It takes skill and insight for managers to pinpoint specific, clear and behaviourally anchored strengths and weakness, particularly focusing on the ones that will have the biggest impact on an employee’s performance.
It’s an area where I regularly coach leaders and encourage them to incorporate 360-degree perspectives. But it’s worth the investment and, in the end, it reduces the amount of time managers spend on performance appraisals, helps employees realize new levels of performance and has the greatest business impact.
HR professionals should be organizational experts here and coach others, as well as help build organizational courage so that giving candid, pinpointed feedback is both accepted and expected.
Recall the wise words of Harvey Firestone who founded Firestone Tire back in 1900: “The growth and development of people is the highest calling of leadership.” These words remain true today and HR professionals who help others avoid wasting time in the middle of the performance appraisal are helping connect these words to better performance and results in their organization.
Norm Sabapathy is executive vice-president of people at Cadillac Fairview in Toronto. For more information, visit www.cadillacfairview.com.
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