Performance appraisals: methods, effectiveness, and organizational impact

¶ … companies have a formal or informal performance appraisal system, which, if done correctly, will recognize and appreciate successes as well as address and offer suggestions on how to make improvements. An appraisal is a structured procedure of facilitated personal reflection that permits employees to review their professional responsibilities and outcomes and identify strengths and weaknesses. These evaluations are a valued educational process that establish the foundation for enhancing personal development and contribute to partnerships between a worker and his/her employer. They provide companies with the opportunity to measure their personnel's organizational assistance and determine where they would work best as part of a larger team effort. When completed appropriately, the performance appraisal includes a standard evaluation form, performance measures, feedback guidelines, and disciplinary procedures.

John Iezzi, president of Iezzi Management Group in Richmond, Virginia, works in the professional services arena. However, his recommendations in HR Focus (2003) concerning how to develop performance appraisals can easily be utilized for employee evaluations for any organization. He calls his approach "the 4 P's"-- performance, production, profitability, and prospects for the future -- and says that "Reviews based on these criteria will go a long way toward improving morale and giving people an opportunity to alter their behaviors to achieve their objectives."

PERFORMANCE consists of: 1) General technical competence in one's field;

2) Research abilities; 3) Written communication, the ability to write in a precise and conclusive manner; 4) Oral communication, the ability to listen and express oneself concisely and effectively; 5) Efficiency and promptness; 6) Maintaining the workload, which involves the volume, accuracy, thoroughness, and neatness of work; 7) Ability to get along with customers and the public in general, as well as to encourage confidence;

8) Identification with the company and project a positive image; 9) Personal traits, such as judgment, character, tact, maturity, and self-confidence; 10) Participation in community and professional activities.

PRODUCTION includes billable and productive hours in the professions; setting and achieving goals and objectives in industries. PROFITABLITY concerns the employees' ability to contribute to the company's bottom line. PROSPECTS FOR THE FUTURE consists of regularly telling employees about their chances for advancement.

Judy Capko (2003) suggests that performance evaluations include five steps:

1) Develop an evaluation form. Appraisals must be fair, consistent and objective, so both the employee and company benefit. This can be achieved by using the same evaluation form for all employees, which stresses the essential job performance areas. For most personnel positions, performance appraisals will assess job knowledge and skills, work quality and quantity; work habits and attitudes. The evaluator needs a wide variety of descriptors. Individuals in management positions should also be evaluated for their skills, ability to encourage and offer direction, general communication skills and capability of developing teams and solving problems.

2) Identify performance measures. Effective appraisals allow the manager to evaluate an employee's job ability objectively by using standard measurements. These can reduce the amount of time and personal stress involved in completing the evaluation form. It may take considerable time to devise these measurements in the first place, but it is time well spent. 3) Set guidelines for feedback, so that all supervisors and managers offer consistent performance reviews. They should know the kind of feedback to offer, how to give it and in what manner to receive input back from the employee. Feedback also needs to be balanced; employees gain self-esteem by hearing about their strengths and learn and grow by recognizing their challenges.

4) Create disciplinary and termination procedures. Sometimes, even following a thorough appraisal and discussion of strengths and weaknesses, a worker will not make any necessary improvements. It is thus necessary for the manager to have a clearly written disciplinary and termination plan that outline actions to be taken when performance deteriorates. These include in order: a verbal warning, written warning, and termination in unresolved situations. 5) Set an evaluation schedule of when the appraisals are conducted and how long the employee has to respond.