Managing Appraisals – A Step by Step Guide

Written by Andrew Johnson, Founder and CEO HRGuide - Thu 24th Oct 2024

Introduction

Appraisals can serve as a crucial tool for employers and team members to assess performance, set goals and foster personal development and succession planning. When conducted effectively, these structured conversations can significantly enhance team members productivity and satisfaction. However, mishandled appraisals can have adverse effects, leading to disengagement, demotivation and even legal implications. Care therefore needs to be exercised when they are implemented. 

Getting Started

An annual appraisal process should normally start up to 2 months before each new financial year. That way, all team members, will have an agreed set of job-related objectives and personal development plan for the coming year and are then able “to hit the ground running” right from the off. In addition, the business should have a clearly communicated vision, mission and a clearly defined 3-year business plan which sets out the strategic goals for the business and each function for the coming years. This can then be used to align and cascade individual and team goals throughout the business. This will mean all aspects of the business plan has an individual accountable for delivering all objectives. Also, all objectives should be aligned and not conflict with each other.

 An appraisal process begins with careful preparation and clear communication. Managers should clearly outline the purpose, structure and expectations of the appraisal to team members and point out that appraisals should be a two-way exercise. It is essential to emphasise that appraisals are opportunities for growth and development rather than occasions for criticism or punishment. By fostering a supportive and open environment, managers can encourage team members to actively participate and provide honest feedback. Line Managers often avoid appraisals, thinking it requires them to do all the preparation ahead of the end of year review. Rather, it should be the team member who takes the time to review their performance against their objectives, collecting evidence and data in support of their performance.

Setting Personal Objectives

Effective appraisals centre around discussing and aligning individual performance goals with organisational objectives. During the appraisal, managers should acknowledge and celebrate accomplishments, provide constructive feedback and identify areas for improvement. Encouraging team members to set personal goals that align with their interests and ambitions can enhance motivation and commitment. Setting SMART (specific, measurable, achievable, relevant and time-bound) goals ensures clarity and facilitates ongoing performance management.

To ensure fairness and objectivity, managers should establish clear evaluation criteria at the beginning of the financial year. Using objective performance metrics and relying on factual evidence, managers can mitigate the influence of biases and ensure a fair appraisal process.

Addressing the Good and Not so Good

Appraisals often involve addressing challenging issues such as underperformance, behaviour problems or conflicts. It is crucial to approach such discussions with empathy, sensitivity and a problem-solving mindset. Managers should provide specific examples and objective evidence to support their concerns and focus on behaviour rather than personal characteristics. Together, manager and employee can explore underlying causes, develop action plans and agree on appropriate measures for improvement. By offering support and guidance, managers can help team members overcome challenges and facilitate positive change.  

Maintaining accurate and comprehensive records of the appraisal process is essential for legal compliance and organisational transparency. Managers should document the discussion, agreed-upon goals, action plans and any additional feedback or commitments made during the appraisal. These records can serve as valuable references for future appraisals, performance reviews or potential disciplinary actions. Additionally, they provide evidence of fair treatment and due diligence, should any legal disputes arise.

Once annual goals are set and recorded in an individual’s appraisal document it can be used to measure individuals performance on a monthly basis through their 1 to 1s. This means that there will be no surprises when it comes to the year end review.

When conducted effectively, appraisals yield numerous benefits for individuals and businesses. Individuals gain clarity regarding their performance expectations, career progression and areas for development. Regular feedback and recognition help foster a positive work environment, boost morale, increase job satisfaction and develop a feeling of belonging to the business. Managers, on the other hand, benefit from improved employee performance, increased productivity and a better understanding of training and development needs. Moreover, the appraisal process can identify high-potential team members for leadership roles, contributing to succession planning and talent management strategies.

Appraisals serve as a vital tool for managing employee performance, promoting growth and contributing to business success.