HR Management & Compliance

How to Maximize the Impact of Performance Appraisals

Many companies struggle with performance reviews. Modern performance appraisal methods typically consist of scheduled interviews, compensation discussions, and self-evaluation. When necessary, reviewers also offer ways for underperforming employees to improve.

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Source: Photon photo / shutterstock

But these methods are outdated. Most employees don’t find them valuable, and only 14% of workers attribute any performance improvement to reviews. Instead of merely evaluating employees year after year using the same dated tactics, HR professionals can change how they approach reviews and gain valuable insights.

A more nuanced approach to improving performance appraisals moves employees toward success, equips underperformers to overcome obstacles, identifies business practices that may be inhibiting effective appraisals, and sets goals for the entire team.

Why Improving Performance Appraisals Matters

To improve reviews, one must first understand the problems associated with the tactics many leaders currently use. Some performance appraisal methods, for example, home in on task-related skills but fail to account for equally essential soft skills. Similarly, many companies rigidly adhere to performance rubrics and turn the meeting into a confrontation rather than a conversation. This adversarial approach hinders employers from resolving issues because employees enter these meetings already on guard.

Even worse, performance appraisals can feel one-sided if everyone doesn’t have an opportunity to give feedback. Appraisals quickly become another dreaded meeting, and they start to carry less weight; one study found that only 17% of employees felt their performance appraisals were a good use of time. When performance reviews become such a negative experience, they damage employee-management relationships—88% of people reported unfavorable attitudes toward HR departments after review sessions.

How to Give an Effective Performance Review

Leaders and managers should not underestimate the impact of performance appraisals on employee performance. In best-case scenarios, employers work with struggling employees to craft improvement plans to overcome lingering issues. This strategy empowers underperformers to take control of their future and help meet company objectives while providing opportunities for improvement in their performance reviews.

Ultimately, reviews help companies retain top performers by ensuring excellent employees feel engaged, appreciated, and geared toward growth. While improving performance appraisals takes time and effort, the results will speak for themselves. Here are four strategies companies can use to make the performance review process work for everyone:

1. Implement a dynamic review process.

Old performance appraisal methods relied on one-sided reviews, with the employee in the hot seat. To maximize the impact of performance appraisals, include self-assessments and peer reviews. Have employees fill out self-assessments before their meetings, and then compare the results with the evaluator’s assessment. This approach establishes a conversation between colleagues instead of leaving the employee on defense.

2. Measure productivity effectively with KPIs.

Key performance indicators (KPIs) are pieces of data that assess job performance, usually in the form of measurable productivity metrics the employee controls. For example, HR professionals can measure a salesperson’s job performance by looking at sales figures. Unfortunately, some HR professionals don’t use the right metrics. They might measure management success by evaluating staff retention, for instance, which fails to measure day-to-day performance accurately. Instead of using blanket metrics, ensure accurate KPIs by reviewing data specific to employee roles.

3. Take advantage of technology.

When HR professionals analyze employee performance, they typically call on other employees and managers for input. Instead of using paper forms to gather employee feedback, distribute electronic forms via e-mail or apps for quicker responses. This approach helps streamline the process and keeps all information in one place.

4. Protect the company with a paper trail.

Evaluations don’t have to disclose every factor influencing a performance appraisal, but HR professionals should still document all parts of the review, including details of exchanges between evaluators and employees. This enables the company to support and defend any decisions made as a result of the review in case any issues come up down the road (especially legal ones).

Performance reviews may seem overwhelming for leaders and HR professionals, but they are also huge opportunities for growth. No matter the types of performance appraisals you use, truly effective ones will transform employees’ abilities and drive them to achieve their potential while benefiting the business. To maximize the results of your reviews, evaluate your current processes and identify areas for improvement moving forward. The benefits will be worth the effort.

Learn more in this article on JotForm.

Chad Reid is the VP of marketing and communications at JotForm; he’s a frequent contributor to various tech and business publications—and an absolute wizard with a Vitamix.