Performance appraisals mandatory at most firms

Leaders face consequences for incomplete reviews: Survey

Performance appraisals can be of great value to an organization if they are accurately and conscientiously completed by managers. If they are not, they can become a managerial burden that causes stress for everyone and provides little useful information.

But what do HR professionals really think about performance appraisals? Canadian HR Reporter and the Human Resources Professionals Association (HRPA) conducted a Pulse Survey to find out how satisfied HR is with performance reviews, what value they provide and how they impact HR programs.

Performance appraisals mandatory at most firms

Being the best you can be (Analysis)

Performance appraisals mandatory at most firms

By Amanda Silliker

Last summer, the HR team at Groves Memorial Community Hospital in Fergus, Ont., introduced a new performance appraisal system. The old system — a series of check boxes next to skills and tasks — had been in place for many years and updating the program was on HR’s three-year goal list, said Amy Weaver, HR advisor.

“It still has the component of check boxes based on technical skills but, for the most part, the new philosophy we’re trying to impart is more opportunities to have meaningful conversations,” she said. “It focuses more on achievements, opportunities to say thank you and focusing on developing future goals.”

The HR team is also responsible for two other hospitals in the region and the new performance appraisal program was rolled out to the 485 employees across the three locations.

While they may vary in level of formality and frequency, performance appraisals are a common thread among the majority of organizations, according to a Pulse Survey of 746 members of the Human Resources Professionals Association (HRPA) and Canadian HR Reporter readers.

Nine in 10 (89 per cent) respondents said performance appraisals are mandatory at their organization.

At Baylis Medical, formal performance reviews are held once per year on the anniversary date of the employee, and there are unofficial followup meetings every six months, said Leo Pasia, Mississauga, Ont.-based HR manager at the 130-employee company.

“Not all the reviews are happening all at once. Every manager has just a few every month — it kind of averages out — so it’s quite manageable for us at this point,” he said.

At 57 per cent of organizations, managers face consequences for the non-completion of performance appraisals, found the survey. Within the three Fergus-area hospitals, managers’ performance appraisals are linked to the completion of their employees’ performance reviews, said Weaver.

“Management performance appraisals are linked to measurables like lost time, absenteeism in their group, performance appraisal completion — any number of different HR-type benchmarks. And also, anything the ministry holds us up to has become accountable through their performance appraisal,” she said.

At Baylis, the HR team began sending out metrics around performance appraisal completion about two years ago to the management team, said Pasia. Managers can see where other managers are ranking and who has appraisals completed on time or who is falling behind.

“It’s somewhat of an internal competition to make sure everyone gets on track with regards to getting completion on time and not late,” he said. “We’ve been able to improve our metrics quite significantly over the last two years because of tracking this way.”

Managers are given a five-day grace period before and after the actual date when the review should be completed. Anything beyond that is deemed late, said Pasia.

One-half (51 per cent) of managers always or often conduct performance reviews completely and on time, found the survey. One-third (34 per cent) sometimes do so and 15 per cent rarely or never complete them on time.

Three-quarters (72 per cent) of survey respondents said performance appraisals are important in order to support employee growth and development.

At Baylis, managers and employees are encouraged to discuss development opportunities during performance reviews. It not only gives management the opportunity to make suggestions but the employee also fills out a self-appraisal 10 days before the review and can identify growth opportunities himself.

“It’s a good kind of viewpoint for management and for the employee to be involved in this process,” said Pasia. “If the employee says, ‘I need to have Microsoft skills because of the demand in my job,’ that’s something that can be identified right away and the manager can say, right then and there when they see the appraisal, ‘This is the right way to go.’”

Nearly two-thirds (63 per cent) of survey respondents said performance appraisals are important for identifying high potentials. This is especially true at Baylis which has 130 employees spread out across Canada, the United States and the United Kingdom.

“It’s not every day we get to see these people face to face and so once we get the reviews back, at a higher level, senior management, we can start discussing who are those people who are high performers, high potentials and then we can look at strategizing in terms of what their next career step is going to be,” said Pasia.

More than six in 10 (62 per cent) organizations said completing performance appraisals is important in order to set and cascade corporate goals, found the survey.

“Part of the process is there are goals that are agreed upon between employee and manager that tie in directly with the association’s overall strategic goals and we work through that process during the performance appraisals,” said Kimbalin Kelly, director of member programs and operations at the Ontario Chiropractic Association in Toronto.

At Grove Memorial’s three hospitals, one section of the performance appraisal assesses employee performance in relation to the strategic plan, the mission, vision and values, and the code of behaviour, said Weaver.

As a result of the performance appraisal process, 50 per cent of survey respondents said they have been able to implement best practices in succession planning. At Grove Memorial, HR included an optional question on the performance appraisal around an employee’s future plans for retirement, said Weaver.

“We are an aging population and it may be a good opportunity for people if they are thinking about it to say, ‘Oh yeah, we haven’t talked about it yet, but I am thinking about a year out,’” she said. “You’re not held to it, but it does give the manager a better idea.”

One-half (49 per cent) of survey respondents said performance appraisals have helped them put best practices in place around compensation.

“We pay for performance, so if you’re a high-performing employee you’re going to be recognized, whether it’s through a bonus or through an increase in salary,” said Kelly.

Two-thirds (66 per cent) of senior management are at least somewhat satisfied with the value of performance appraisals, found the Pulse Survey.

“From my discussions with senior management, they’re very happy with the results of our performance reviews,” said Pasia. “They’re looking at top performers, ensuring they’re compensated properly, ensuring they’re being trained properly… it’s something that is high value for us.”

Being the best you can be

By Alice Kubicek

HR textbooks state performance appraisals (PAs) are necessary and particularly invaluable for programming and planning decisions.

But the feedback from the latest Pulse Survey by Canadian HR Reporter and the Human Resources Professionals Association (HRPA) confirm the process is perceived by managers as nothing more than a stressful burden.

Why? Unless conscientiously completed by all managers, the aggregate information from PAs does not accurately represent overall organizational needs. There was a common theme of inconsistency in:

• the reporting by managers within the required timeline

• the reporting of valid data

• the reliability of ratings for planning and decision-making

• the ability to provide constructive feedback to employees

• following up on the PA process and applying the information.

Only seven per cent of senior managers were very satisfied with the value of the PA results and consider them to be indispensable. In these cases, the information drove compensation and succession planning decisions and financial investments in training and development.

However, where regarded as a useless exercise, the reliability of PAs is being questioned. Respondents expressed concerns about formulas such as the forced 20-70-10 distribution of high, average and poor performers. Sometimes, the process is rushed and managers find it difficult to address performance deficiencies with honest feedback. And some PAs appear to be written for the reader, not the participants.

Some other interesting takeaways from the survey:

• PAs are compulsory at 89 per cent of organizations, but only 13 per cent mete out serious consequences for managers who do not complete them.

• Nine per cent reported managers always complete PAs on time, correctly and completely without prodding by HR, while 15 per cent are unlikely to complete them at all.

• 34 per cent of organizations who use PA data are only somewhat satisfied with the quality of information, while 28 per cent are somewhat to very dissatisfied.

• 59 per cent of the senior team is relatively satisfied with the value of the PA results.

This last statistic sounds encouraging. In one case, a senior management team pressed for a formal and structured system following a consultative process with enthusiastic staff, resulting in a competency-based system with an objectives-setting step. Yet, although unanimously approved, only one senior team member actually completed the appraisals for all employees. Why?

“Lack of time to devote to it, not wanting to engage in uncomfortable discussions because they had never raised performance issues in the past… simply did not agree with (PAs),” said the respondent.

It is difficult, therefore, to trust the rationale of planning decisions if based on PAs alone, even at organizations with best practices for design and implementation.

Clearly, more work is required to mitigate the lack of confidence in the PA process. But if we rely less on the performance appraisal as a formal and structured annual feedback session and more on goal-setting and open dialogue about needs, perhaps we would have better results.

We can start by honestly questioning the value of PAs at our organizations. To what extent can they be relied upon to make valid and reliable compensation, succession planning and employee development decisions? Does the quantity of completed returns provide usable information? Is it a make-work project inspired by HR textbooks?

Let us not demand more than can be realistically expected from managers. The real and only information they need to ask employees is: “How can I help you become the best you can be?” After all, isn’t that the real reason why we conduct performance appraisals?

Alice Kubicek is managing director at management consulting firm akpsGlobal in Ottawa and sits on the Human Resources Professionals Association’s board of directors. She can be reached at

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