Implementing a Performance Appraisal System
What does an employer do if it wants to implement a performance appraisal system or audit an existing system? The following outlines fourteen sequential steps for employers to follow:
Step one --Define purpose, objectives and strategy. Clearly state the purpose of the system, in writing and have review throughout the organization. Get support and consensus for the project. Consider establishing a task force of managers and supervisors to initially design the system; however, include line employees at an early point in the process. Other planning strategies include:
- Benchmark competitors and industry leaders.
- Determine whether or not a consultant should be employed. If yes, design a project budget and controls before interviewing candidates.
- Whether or not a consultant is used, appoint a project manager and create time lines.
- Establish accountability.
Step two --Conduct job analysis. Information on jobs necessary to establish an evaluation system is collected. The type of information needed will vary from employer to employer depending upon the business, the jobs to be analyzed, and the objectives of the system; however, most performance appraisal systems include:
- Work quality parameters, such as errors, scrap, waste and complaint data
- Measurement units
- Production standards
- Existing reporting systems
Coordinate the line information with job criteria and hiring specifications. Create measurable and objective standards for each job.
Step three --Obtain employee input and feedback. Review the job standards with employee groups. Seek input and revision. What does not make sense? What standards really do not exist or are ignored? How is success really defined? For each challenge, review with line management. The purpose is to discuss the criteria before the system begins, both to avoid errors and mistakes and to develop a system in which everyone feels ownership.
Step four --Review standards for objectivity. Every system incorporates some subjective judgments. Where possible, measurable standards should be used. Every measurement must be job-related.
Step five --Design a standardized method of appraisal. This step involves the creation of the method or system of appraisal. Without standardization, there is no system. However, the system may be as complex as a behaviorally anchored rating scale or as simple as a three-level rating scale --"needs improvement," "good" and "best." More sophisticated methods will require validation by established statistical tests.
Example : For a very simple example, consider a job where attendance, specifically punctuality, is important. The organization could determine that the average time that a person is late, when late, is 2.5 minutes. That determination can then become the standard for acceptable behavior. Being late by a greater amount of time equates to unacceptable behavior and punctuality within 2.5 minutes or less (or no tardiness) equates to superior performance. Without standards and uniformity in ranking, supervisors and managers will use standards of their own that may, or may not be, valid, and undoubtedly will not be consistent.
Step six --Develop documentation. As a general rule, if something is not measured, it is not important. One of the major reasons performance appraisal systems fail is that the scorekeeping methods are faulty. Documentation must be kept and supervisors who fail to do so should be penalized. Much as job criteria are established for line employees, one of a supervisor's job criteria is to maintain current, complete documentation for appraisal purposes.
Documentation should be:
- Accurate
- Factual and verifiable
- Based on direct observation
- Recorded in a timely manner
- Specific, clear language
- Consistent for each member of the work unit and for each incident
Once the measurement methods are determined, the appraisal form itself and the specific mechanics of the process can be outlined, discussed and finalized.
Step seven --Conduct initial management training. Initial training is a key implementation step. Train the managers and supervisors first. Training should focus on the definitions, standards, methods and forms. Additionally, trainees will benefit from reviewing communication methods and role-plays even though these situations are generally independent of the specific performance appraisal system and apply to various types of situations in the workplace. Include in training information to assist raters with difficult situations. For example, fear of conflict is a reason why many supervisors do not enforce performance appraisal systems.
Step eight --Conduct employee training. A successful performance appraisal system requires "buy-in" by most employees. Although this step is often ignored, it is crucial is generating credibility. Employees should be advised of:
- Purposes of the system and how it was designed
- How the system will function including the forms, procedures and timing
- Training methods and content
- How information will be handled and protected
- How long information will be retained
- How performance appraisal ratings or scores will impact compensation, career paths, training opportunities, promotions, retention and tenure.
For a system to have credibility, employees must agree that the standards used to measure performance are known and are fair, and that the supervisor uses the system in a manner that equitably evaluates strengths and weaknesses for future performance.
Step nine --Incorporate independent performance monitors. Performance appraisal should include monitoring systems that are independent of line managers, if possible.
Example : Computerized attendance systems can monitor punctuality, unscheduled absences and personal leave notice and use. These systems can be designed to submit exception reports for specific behaviors or levels of behavior. Perfect attendance can be recognized; supervisors with high absentee rates can be advised and provided support necessary to change behaviors. Further, these types of systems can be used in lieu of time-consuming supervisor-maintained systems.
Depending on the job, productivity, accidents, work quality and error rates can be monitored independently. These types of data collection and reporting are valuable for many reasons, including:
- They ease supervisors' workloads,
- They are more accurate than manual records,
- They save space and cost,
- They are easily updated, and
- There is a wider application for these reports to aid management decision-making beyond performance appraisals.
Step ten --Communicate results. Every method of performance appraisal stresses the importance of feedback. The more an employer can "empower" an employee to control his or her job performance, the more the employee can feel investment in the company's success. It is much easier to understand the relationship between performance and profits when an employee knows exactly what is expected and has the tools necessary to change behavior.
Step eleven --Provide continuing resources as needed. No system, including a performance appraisal system, is totally self-contained. Successful performance appraisal systems devote resources to the dynamics of the actual performance appraisal meeting. Support the performance appraisal system with:
- communication skills training for conflict situations and appeals;
- counseling resources including employee assistance programs (EAPs);
- orientation programs including explanations of the evaluation program;
- articles in company newsletters; and
- explanations in employee handbooks.
Step twelve --Act to improve performance. The basic purpose of any appraisal system is to provide a method for performance to be improved --for supervisors and employees to have tools to impact performance. Programs that are used to provide support for supervisors include training programs, pay-for-performance systems, bonuses, disciplinary actions, recognition programs, awards programs and counseling. It is not enough to identify a good or bad situation; the supervisor must have the ability to act to address it and must have the management support to do so.
Performance appraisals should be reviewed by both line management and human resources staff to ensure that the form is completed properly and timely, to address problems if any, and to make sure there are actions in place and being used where appropriate.
Step thirteen --Audit, evaluate and report periodically. This is a critical responsibility of management. Compare results of the performance appraisal system with its purposes. There should be tangible evidence linking the purpose of the system with its results. This is the step most often neglected in the performance appraisal process.
- Are error rates lower?
- Is turnover reduced?
- Have customer complaints diminished?
- Is new product development more efficient and effect?
- Are budgets more accurate?
If the system is not achieving its purposes, identify the issues uncovered and address them. This may require that you begin the process (in whole or in part) again. Report achievement periodically to senior management. Be sure to audit the system for disparate treatment, disparate impact and other common biases and stereotypical assumptions. Coordinate the review with affirmative action planning and monitoring where applicable. Be proactive.
Step fourteen --Continue benchmarking and study. As with any area of applied psychology and sociology, there are new methods and strategies as a result of research. Stay current with the literature and with new trends in performance appraisal. Technology has given a great boost to recordkeeping abilities in the workplace. Flexible work schedules and telecommuting make performance management more important in managing results and ensuring effective goal-oriented communication.
Reprinted with permission. © CCH
Implementing a Performance Appraisal System. What does an employer do if it wants to implement a performance appraisal system or audit an existing system?
Implementing a Performance Appraisal System
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