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Performance management: How appraisals can add business value

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Business valuePerformance management should be a central part of any organisation’s HR process, particularly in a downturn when talent needs to be maximised. The appraisal process plays a key role in this, says Richard Doherty.


Creating and maintaining a comprehensive and uniform performance management programme enables HR departments to align line managers and employees with the goals of the business. As a starting point, every employee should have an appraisal. Yet for many organisations, appraisals have become an administrative chore rather than actually providing true value to both employees and the business as a whole.

Because of the process, many managers simply ‘check the box’ instead of spending valuable face time with employees to actually help improve and drive performance. It is therefore hardly surprising that recent research from Investors in People found that 29% of people thought that their annual appraisal was a waste of time rather than being a key part of their career development.

“The appraisal process can involve a blizzard of emails and paper and the chasing of line managers across multiple departments.”

A badly-managed performance management process can cause talented people to become disengaged with the company or even leave – lack of opportunity for internal development or promotion invariably results in an unhappy workforce, higher absentee rates, lower morale and decreased productivity. In most cases people leave their jobs due to not seeing a career path rather than for purely financial reasons.

From the perspective of the HR department, the appraisal process can involve a blizzard of emails and paper and the chasing of line managers across multiple departments, all of which can be quite unstructured.

Many hours are spent on creating, distributing and processing appraisals and reviews in a paper-based environment only for them then to be lost in administration, paperwork and co-ordination. So rather than monitoring the quality of appraisals and identifying training gaps across the business, the majority of HR managers’ time is being spent chasing feedback, compiling paperwork and ensuring that deadlines are met. All of this can create a vicious circle for HR departments.

Another criticism of appraisals is that they sometimes feel like a management chore with managers simply going through the motions each year. One of the primary reasons for this is a lack of preparation and training, as companies often delegate appraisals to line managers with little or no HR experience who are often ill prepared for the task.

Technology and performance management

Thanks to technology, organisations now have access to the tools that enable them to facilitate a more proactive approach to the appraisal process. Performance management software can significantly reduce the amount of time spent paper chasing, as automated reminders, status reports and process escalation can all help ensure task efficiency and completion in line with company objectives.

This software can also provide organisations with visibility into employee performance and goals alignment throughout the year, which should be a key element of any organisation’s overall talent management strategy.

Maintaining an individual’s appraisal and performance review in a single repository, which is accessible to managers across the business, can be a critical tool in ensuring management continuity, especially in periods of large organisational change.

“A bad appraisal process can result in lost money to business.”

By removing the administrative tasks associated with its appraisal programme and having an enhanced visibility of the process, HR teams can now spend much more time assisting managers, ensuring reviews are carried out and analysing its results. For participants, less time is taken to complete the process, which can increase productivity, while producing a more positive impression of the appraisal and development strategies in the company.

Enhancing employee engagement

Whilst appraisals are usually a six-monthly or annual event, feedback should not be confined to formal review sessions. Instead, employee feedback should be ongoing. Regular and consistent performance management can be a powerful employee engagement tool. It creates an opportunity for managers and employees to review performance, share positive and negative feedback and to identify objectives and development plans.

Appraisal follow-up is vital. Too often, follow-up is neglected which only adds to employee frustration and undermines the importance of the entire appraisal system. If goals are laid out they must be constantly reassessed. Those organisations that neglect their employees’ development run the risk of losing their talent pool and damaging their business success.

Ultimately, a bad appraisal process can result in lost money to business. The tools are now available to make the appraisal system much more beneficial to everyone involved. It is up to organisations to take a good look at the processes they have in place and assess whether they truly benefit the business’s overall performance and talent management objectives.


Richard Doherty is VP Operations (UK) at Jobpartners

3 Responses

  1. non systemic nonsense
    Is there no understanding that organisations are a network of internal customers and suppliers and that cause and effect are not well known in other than the deterministic mindsets of the people who believe the kind of stuff in this article. 26% is a proportion which is high enough to pay attention to and not be sneered at – As a senior operational manager I could think of engaging in a conversation about the issue with the 74% of the others and I bet there would be a significnat switch to joining the other 26%.
    When will we begin to understand the nature of variation of performance and establish performance management in an intelligent way.
    There is a viable alternative to the dubious approaches to do with appraisal – why are HR people so behind in understanding this is a new world we are working in now and people given the right climate are willing to learn how to know how well they are doing ‘as they do it’ – appraisal systems are retrospective we are today concerned with as near real time feedback as is possible – but the measurement needs to be concerned with measuring the system/processes before looking,blaming by implication the performance of people. Too much of UK business is managed through muddled thinkers with midsets of Taylorism living in a Newtonian world and displaying the MBA badge.. “as if”….
    David Smith

  2. Annual Appraisal
    One of the oldest problems known to mankind – communication.
    WHy are many appraisals systems disliked – 29% or more – because in most cases they have a negative designed into them – in other words of you wnat me to improve I must be doing it wrongly.
    The next point is that managers do not have a sytem that proves the real value of an employee – or how to express this.
    The next point is that it becomes a chore because after six months of no feedback- you start off on the wrong foot and any appraisla meeting looks like taking an hour or more.

    If we relook the whole process, do away with the old – this can be turned around quite simply.
    Managers are there to manaqe people as part of the business need – show them a way to do this monthly and gain commitment for both sides Management and Staff to improve and you will win the battle.
    If anyone would like more infomration on this please feel free to contact me.

  3. Half empty or half full
    Interesting article, many thanks.

    I took your early statistic that 29% of people thought their annual appraisal was a waste of time the other way round – 71% presumably valued the experience. In a previous life I ran a call centre and if I knew that any initiative would get 71% approval I would have jumped at it.

    You rightly point out some good ways to improve further on that statistic but I sometimes wonder whether it is a cynical senior management – perhaps with poor experience in the past – who start with a presumption that appraisal is a problem / dull / useless. There is another statistic around about employees always feeling they are “feedback poor” and that to me is the telling statistic in this area.

    Like you, I feel that appraisal is essential and performance management is just common sense. With a good dollop of good practice and a bit of technology to remove the administrative burden, the performance appraisal process becomes a useful, sensible, natural part of a manager’s monthly tasks.

    Brendan

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