12 Performance Appraisal Best Practices

Performance appraisals are perhaps the best way to not only let your employee know how she’s doing, but also to get feedback about how your organization is doing, whether your employees are committed to your goals, and what you can do to improve morale. A performance appraisal that is mutually beneficial to both an employee and an organization requires an effective strategy and starts with preparation.

It’s crucial for you to have a solid performance review plan in place from start to finish so you can avoid stress, engage your employees, and increase productivity. In a BLR webinar titled “Stress-Free Performance Appraisals: Increase Productivity, Engage Employees, and Retain Top Talent,” Sharon Armstrong outlined some performance appraisal best practices to help employers hone the process and get the most benefit.

12 Performance Appraisal and Performance Management Best Practices

1. Think of Performance Management as an entire system, starting in interviews with potential employees and continuing through orientation, training, coaching and counseling, and recognizing peak performance.
2. Stop communicating about performance appraisals and performance management as if it is merely an annual event. The only annual part of it is salary action and/or filing forms. Think of the performance appraisal as an ongoing workplace conversation.
3. Train managers and employees on giving and receiving positive and negative feedback on an ongoing basis.
4. Hold managers accountable for having ongoing conversations around work and goals.
5. Actively seek to align individual goals with organizational goals.
6. Encourage employee participation and ownership in the performance appraisal process. Create an environment where together the manager and employee can question, challenge and discuss goals and objectives to gain clarity.
7. Use the performance management system, Armstrong advised, to link with the organization’s values. &quotValues should be reflected in the organization’s core competencies and they should show up in interviewing as well as in performance appraisals.&quot
8. Link the performance management system with retention, development, and succession planning initiatives. This linkage explains why specific people advance.
9. Get support at the senior level. &quotIf you don’t have support at the senior level,&quot Armstrong noted, &quotyou’re not going to have a robust, effective performance management system . . . if you want a world-class performance management system that really does retain talent and increase productivity, you’ve got to get the c-suite onboard and they’ve got to talk it and walk it.&quot
10. Openly communicate to all employees how your compensation system works. If merit pools average 2 to 3 percent annually, for example, let everyone know this. Manage expectations around annual increases to control the rumor mill and misinformation.
11. Where possible, have a second-level review of performance appraisals, either by HR or second-tier management.
12. Understand the legal pitfalls associated with performance management, such as penalizing employees for taking legally-protected leave (e.g., FMLA leave), and allowing unlawful bias to infect performance appraisals.

Sharon Armstrong has more than 20 years of experience as a human resources consultant, trainer, and career counselor. Since launching her own consulting business in 1998, Sharon Armstrong and Associates, she has consulted with many large corporations, small businesses, and individuals.