How to Establish a Performance Appraisal Process

1. Get senior management involved.
2. Notify the participants in the appraisal process.
3. Specify the purpose of the appraisal process.
4. Establish benchmarks for employee performance.
5. Develop appraisal forms and procedures.
6. Train the appraisers on the appraisal process.
7. Familiarize employees with the appraisal process.
8. Monitor and revise the process once it’s underway.

Get Senior Management Involved

• Setting up a timeframe and strategy for the process
• Clarifying the company’s goals and values
• Completing forms for and conducting meetings with their direct reports

Notify the Participants in the Process

• Senior management: To lead the effort
• Supervisors: To complete forms and hold meetings
• HR employees: To approve and collect appraisal forms
• Employees: To attend appraisal meetings and perhaps complete self or supervisor appraisal forms

Identify the Purpose of the Process

• To provide formal feedback about employee (and perhaps supervisor) performance
• To encourage employees to set and meet personal goals for professional development
• To help management make informed decisions about promotions, raises, and other personnel changes

Establish Benchmarks for the Appraisal

• Job description
• Departmental goals
• Company-wide goals
• Company’s mission and values

Develop Forms and Procedures

Forms

• Does the form meet the company’s objectives? Some companies use performance appraisals to make personnel changes, while others use them merely as an opportunity to give employees regular feedback. Your form should reflect and fulfill your company’s main objectives for the process.
• Will the form result in improved performance? Improved performance is one objective common to all companies that conduct performance appraisals. Above all, the form should set up a plan and timeframe for improving and assessing employee performance.
• Does the form require excessive paperwork? If the company isn’t equipped to process significant paperwork and documentation, stick with a 1- to 3-page appraisal form.
• Does the form require extensive training? The form should be simple enough so that supervisors can learn to implement it within just a few minutes.
• Will the form foster a productive meeting? The form should cover all of the performance areas that supervisors might like to discuss in a one-on-one meeting. To ensure that the form sets up a beneficial appraisal meeting, it should require supervisors to address specific performance areas and support their comments with detailed examples.

Procedures

• Who appraises whom? Most companies require supervisors to evaluate their direct reports. Other companies introduce variations—for instance, two supervisors appraising one employee. In smaller companies, the chief executive might be involved in all the appraisals. The only crucial guideline to follow is this: the appraiser must have firsthand knowledge of the employee’s performance.
• How often should appraisals be conducted? Though most companies conduct formal appraisals annually, some also hold brief checkups or progress reports every 3–6 months. The best schedule for your organization depends on a variety of factors, such as the length of the appraisal form you use (the more time-consuming the form, the less often appraisals should take place); seasonal time crunches (the holiday season, for instance); and so on.
• How should supervisors fill out appraisal forms? Some companies use simple paper-based forms that supervisors fill out by hand. Others have costly software-based systems. Though these computer systems eliminate time-consuming administrative tasks and allow upper management to evaluate performance data across the company, they’re typically used only by very large corporations.
• What role should anonymity play in the process? Companies that require employees to appraise supervisors’ performance must take steps to protect the employees’ identities. Unless employees feel absolutely certain that they won’t be identified as the source of comments provided to supervisors, they’ll likely avoid being entirely honest in their appraisals. One way to preserve anonymity is by having employees complete supervisor appraisals using word processing software rather than by hand.

Train the Appraisers in the Process

• The purpose of the appraisal process
• The timeframe of the appraisal process
• The legal issues involved in the appraisal process
• The language appraisers should use and avoid in completing forms and conducting appraisal meetings (see Performance Appraisal Language)

Familiarize Employees with the Process

• Company’s reasons for conducting appraisals
• Employees’ responsibilities throughout the process
• Issues and outcomes related to the appraisal, such as promotions, raises, job training, or disciplinary action

Monitor and Revise the Process