When I left the RAF and moved into entrepreneurship as a leadership development specialist, I was surprised at just how many people had never received a performance appraisal.
You see in the RAF, they’re the norm. We have an appraisal process that requires at least 2 formal conversations with our manager annually, to discuss our performance, our ambitions and the potential we’re currently showing.
There was the main appraisal, and an interim one. The interim appraisal, or “6-monthly” was to set expectations. It captured current performance and potential, and included what our manager needed to see from us to achieve the recommendations at the year end.
The main annual appraisal was what the promotion boards used to determine suitability for promotion. The career management team also used them to assess suitability for specialist employment.
In this blog, I’ll ask the question: are performance appraisals necessary in the workplace today? I’ll explore the historical context of them, the benefits, risks, and conclude whether or not, in my opinion, they’re necessary.
The Purpose of Performance Appraisals
Performance appraisals have their origins in performance management processes, dating back as early as 1908. It started with an American Mechanical Engineer named Frederick Winslow Taylor, who later became a management consultant, in his publication: The Principles of Scientific Management.
The approach later became known as “Taylorism”, its fundamental concept was to find out how the work product of an individual contributed to their potential.
Henry Ford, later adopted the principles with his mass production of motor vehicles, breaking down each task into simple processes so that unskilled labour could learn to do any role. Taylorism, or least Ford’s interpretation of it, became very popular in the former USSR, particularly under Lenin. It meant that employees could produce mass output, almost entirely self-trained.
In 1914, Taylor introduced a performance appraisal process. This adapted the focus from one of output, to development of potential. By the 1950s, performance appraisals had been adopted by many countries across the world.
Initially they were confidential, the content kept from the individual, by the 70s, the negative aspects were shared so staff members knew what they needed to work on.
The 80s & 90s saw a shift to 360-degree feedback, which wasn’t particularly popular because of the amount of time and budgeting required for it. It was this period that the shift in focus moved more towards motivation, and developing skills such as teamwork, communication etc.
Moving into the 2000s 360-degree feedback became more popular, but a lack of appreciation on how to manage it effectively, means for every good example, there are just as many poor ones. Companies seemed to then favour regular “check-ins” rather than formal processes.
Current predictions in performance management moving forward seem to suggest a retrograde in the frequency, favouring quality interactions, rather than frequency.
Objectives and Goals
According to Indeed’s Feb 23 blog, these are the main objectives of a performance appraisal:
- Improve productivity.
- Identify mistakes.
- Provide promotion opportunities.
- Set employee goals.
- Offer a chance for employee development.
- Boost confidence.
- Record employee progress.
- Provide insight into training needs.
The truth is, there are so many “experts”, “gurus”, “consultants” etc. out there with so many theories on best practice, identifying true best practice can be hard.
360-degree feedback is often referred to as the “best” method. While it’s true it allows open communication up and down the hierarchical chain, it relies heavily on critical thinking, honest reflection, intelligent analysis, non-judgemental honesty, and an open-mindedness that only a small percentage of the population possess.
Personally, I have heard a few great examples of where 360-degree feedback worked brilliantly, I’ve heard many, many, more, where it went very horribly wrong. Anyone can implement 360-degree feedback, but it requires high skill to be managed effectively, and your staff need to be taken on a developmental journey to use it effectively. That will need a separate blog of its own to do it justice.
The good news is there are no “performance appraisal police” who are going to force you to ensure there’s a specific type of feedback you use. You get to choose what type of appraisal process works best for you and your business. You also get to choose what the desired outcome of that is. My advice is be selective in the advice you choose to follow, while also not trying to force your company to fit a model. Adapt the model to fit your company.
The resources page of One Degree’s website has an appraisal template that clients have found useful, once they’ve adapted it to their environment and needs.
Benefits of Performance Appraisals
Employee Development
Theoretically, performance appraisals significantly enhance employee growth, output, capacity, and potential, by providing them with confidence in what they’re good at, while being constructive in identifying developmental needs.
If you’re reading this blog, there’s a good chance you’re at least a middle manager, and as such are required to deliver performance appraisals, and have received them in the past. I don’t think I’d be too outrageous in suggesting a good many of you have received performance appraisals that did not motivate, nor developed confidence. Many will have left the feedback feeling, at best, deflated. I know exactly how that feels. If I’m being 100% honest, there’s a good chance – particularly in my younger and less experienced days – I was guilty of doing that too.
This is because it’s rarely the information contained in the appraisal, it’s the manner in which it’s delivered that makes the difference. Key to effective performance appraisals are the feedback skills of the person delivering them.
The BOOST acronym is a useful in remembering how to deliver effective feedback:
- Balanced – The feedback should be balanced between what the individual’s strengths are, and an honest review of where (and how) they need to improve.
- Observed – Feedback should only focus on what actually happened. Ifs, buts, & maybes, are killers of effective feedback. Avoid using hypotheticals such as: “if this happened”, or “this could have happened”. Also, avoid using other people’s testimony, just use your firsthand knowledge.
- Objective – Personality traits are dangerous territory when delivering feedback. They’re subjective and open to bias and judgement. Stick to actions and behaviours.
- Specific – Be specific, citing real-world evidence to back up your feedback. Vague statements are unrelatable, therefore likely to have no impact.
- Timely – Feedback must be delivered at the earliest opportunity. People’s careers are impacted heavily by their appraisals, so they need to be offered the chance to improve where necessary as early as possible. Managers also need to consider how long is needed. Trying to squeeze an appraisal between meetings can leave them feeling rushed and unimportant.
A common approach to the balanced aspect is the Rat Sandwich – a layer of what they’re good at, a layer of what needs to be improved, finishing with a layer reinforcing the strengths (otherwise known as the feedback sandwich). The theory was that you raise their energy by telling them a strength, discuss what needs improving, then let them leave motivated by reinforcing strengths.
This model was discredited in 2016 as studies identified that human beings tend to remember the first and last things said to them, forgetting the bits in the middle. In the feedback sandwich model, this means the bits they need to improve are forgotten.
When I was teaching feedback while in the RAF, we used a model known as 2 medals, 1 mission. Known outside the military as 2 do’s and a don’t. The idea is you raise their energy being telling them a strength, this is reinforced with another. The conversation then focuses on what they need to do to improve so they can achieve their career ambitions.
Performance Improvement
A common mistake I’ve seen being made many, many, times, is managers being reluctant to tell someone where they need to improve. This is because they’re nice people, and either don’t want to say something that will disappoint the other person. Or, it’s because they don’t have the skill or confidence to handle a potentially difficult conversation.
My belief is that failure to tell someone where they need to improve is unkind. You wouldn’t believe the number of people I’ve known over the years, who have been promoted because their boss wasn’t fully honest in their annual appraisal. They focussed on the strengths, and not highlighted areas to develop. This means that promotion boards only see strengths, then promote them before they’re ready. This sets them up to fail. It means they lack effectiveness at the higher level, while impacting the staff they’re now responsible for. The kind thing to do is be honest with them. Constructively tell them where and how to improve. They’re then ready and able to take on the responsibility of the higher level when they get there.
Enhanced Communication
Something that’s widely accepted is true is that there are 2 fundamental requirements for an effective workplace – engagement, & fulfilment. I.e. providing work that’s meaningful and relatable to the strategic intent, and engaging with your staff. Real world workloads and pressures, does mean that regular engagement can be difficult. A professional performance appraisal process gives managers justification to take time out of their deliverables, and engage with their team.
Now, I don’t advocate that managers should only engage with their team once a year. But, we do have to acknowledge the real world, and time can be tight. Regular engagement, including a professional performance appraisal, that’s delivered well, balanced, and motivating, means that we’re able to really understand our team. What their ambitions are, what their vision is, where their true talents may lie, how we can employ them in a way that energises them, raises their output because they’re doing motivating work, and allows us to tap into their true potential.
Goal Setting and Alignment
One of the challenges managers, particularly middle managers face is aligning the goals of the organisation, with the goals of the individual. Hospitality and retail sectors experience this regularly. The vast majority of their entry level staff apply to work there, not because they see it as a career, but as a way to supplement school/college/university. This means motivation is automatically much lower than when a company hires someone who has a vision of a long term career with them.
Aligning individual goals to employee goals is essential in creating self-motivated teams. It gives them the ability to see their future with you, because the vision of what they want to achieve is possible while working for you.
This is one of the reasons why smaller companies experience challenges recruiting and retaining local talent. In a small company, there are only limited rungs on the ladder. A talented individual with a vision of heading up departments, or being in the C-Suite, may struggle to align their vision with a small to medium sized business – especially if the people in the top jobs are relatively young, or family members. Larger companies are able to offer promotion prospects, talent management processes, executive development schemes, with budgets to make them effective. That doesn’t mean that talent retention is impossible for smaller companies, and it’s a reason why effective performance appraisals are essential.
By conducting effective performance appraisals, managers are able to understand when the vision of their staff is. They’re able to reverse engineer that vision to identify the developmental steps required to set goals that motivate, and encourage team members to want to perform for you. This increases loyalty, staff satisfaction – and therefore customer satisfaction, industry reputation, and growth potential.
Criticisms and Challenges of Performance Appraisals
Subjectivity and Bias
One such criticism of performance appraisals is separating an individual’s performance from the company’s performance. An individual who performs well in a company that has a bad year, may suffer the consequences of not receiving performance related bonuses, for example. This can be demotivating because the individual feels as though they deserve to be rewarded for hard work, but the financial position of the business means they’re unable.
Other potential issues include: distrust or, or poor relationships with line managers, setting of unreasonable goals, inconsistency of rating across the organisation, and manipulation of ratings – i.e. driving them down to justify not awarding bonuses or pay rises.
An unfortunate truth is that whenever a human being is involved, there’s always a risk of negatives. While I firmly believe in the decency of humanity, with a population of over 7-billion people, if 99% of the world are good people, that still leaves over 7-million who aren’t. This means that it would be naive to try to claim these criticisms don’t apply.
Business leaders can mitigate the risk of these criticisms by being a values led organisation. Employing people based on shared values, promoting managers who embody those values, and assessing people on their alignment to those values will give you the best chance of making performance appraisals effective and meaningful, rather than a box-ticking exercise that gives no benefit.
Stress and Anxiety
Discuss the negative impact appraisals can have on employees’ mental wellbeing.
Exam anxiety is widely accepted as something that can significantly impact someone’s exam performance. It doesn’t matter how much study has been done, how prepared they are, and how much expertise someone has in the subject; make them take a test, and they crumble. Performance appraisals can have exactly the same effect. Every goal could be achieved, all targets overachieved, a manager asking a team member into their office can induce the same feelings as exam anxiety.
Managers need to be cognisant of this risk. This is where cultures of continual feedback, and regular engagement can help. Creating environments where staff feel safe being in a 1:1 situation with their manager will only increase the effectiveness of, and improve the quality of communication within, the appraisal process.
Time and Resource Intensive
I alluded to the time constraints of managers, particularly middle managers earlier. This is a real concern, because a well delivered, balanced appraisal, can take time. Research is needed to find the evidence, time is needed to write them, and feedback, when delivered properly becomes an open conversation. Making the time, treating them as a non-negotiable task, is essential in getting the full value from them.
Alternatives to Traditional Performance Appraisals
Continuous Feedback Models
Many alternatives to the traditional performance appraisal process exist. One such is a continuous feedback model. This model does exactly what it says on the tin. Employees regularly receive feedback on what they’re doing well and where they need to improve. This can be costly, particularly in terms of time. It can create a culture of open feedback, honesty, and continuous improvement.
On paper a lot of the alternatives sound as though they’re the “right” thing. The danger is adopting them without the right knowledge or mindset. Plus, encouraging continuous feedback cultures, or 360 degree reporting, without investing in the skills required to facilitate them correctly, can have very negative consequences. When trying to adopt these cultures, whilst also pushing for better and better results, can result in conflicting priorities, creating confusion in middle management in how they need to allocate their time.
The important thing to have at the forefront of your mind when considering what type of appraisal and feedback models you want in your business, is what’s going to work, not just what you want.
For managers to manage effectively, they need clarity on what’s expected of them. If one conversation encourages them to invest time in continual feedback, then the next is challenging them on meeting tight deadlines, you’re creating a conflict in their priorities meaning things will be missed, or rushed.
To answer the question in the title of this blog in its simplest form, then yes, performance appraisals are needed. They’re an excellent method of identifying candidates for promotion, for highlighting training needs, and recognising talent. When delivered correctly and professionally, they’re also excellent mechanisms to improve employee engagement, fulfilment, satisfaction, and motivation. These serve to improve customer satisfaction, better industry reputation, and higher growth potential. Overall, effective performance appraisals, that focus on staff development and motivation, provide businesses with better margins and increased profitability.
The one true downside is the time investment to ensure they’re done effectively. Managers need to have investment made in them to ensure they have the so-called “soft skills” of leadership required. Managers also need the confidence to tell someone when they’re not performing to standard, and the support when that’s challenged. They also need the ability to think critically, non-judgmentally, and analyse the true skill and need of an individual irrespective of personal relationships with them.
There is no such thing as a one-size-fits-all approach to performance appraisals. The best practice advocated by one “expert” may be very different to that revered by a different “expert”. Neither of which may fit your organisation. Business leaders need to be intentional in the selection of the methods used, really analyse what the need is, what the intended outcomes are, and what skills are needed by managers at all levels to deliver them effectively.
For expert support on workplace performance and enhancing employee growth, contact Andy today.
