According to Wikipedia, a Performance Appraisal (PA) is a systematic and periodic process that assesses an individual employee’s job performance and productivity in relation to certain pre-established criteria and organizational objectives. Other aspects of individual employees are considered as well, such as organizational citizenship behaviour, accomplishments, potential for future improvement, strengths and weaknesses, e.t.c. To collect PA data, there are three main methods: objective production, personnel, and judgemental evaluation. Judgemental evaluations are the most commonly used with a large variety of evaluation methods. A PA is typically conducted annually.
Performance management however is the process of creating a work environment or setting in which people are enabled to perform to the best of their abilities. Performance management begins when you determine that a job function is needed. It ends when an employee leaves your organization. When developing the system, ensure there is a clear job description for the position that highlights the purpose of the job, the duties and responsibilities.
Job Descriptions should clearly describe the employee’s current duties and performance expectations. Position descriptions should be specific, clearly defining the job function, required skills, deadlines, and goals, and should delineate expectations for the employee’s relations with peers and the customers. Job descriptions should be kept current. Once you have job descriptions in place; you need to establish performance standards that describe what constitutes below-average, average, above average performance. Start by thinking about the best and the worst case scenarios until you reach realistic standards for measuring performance after which you select appropriate people with the right hiring process.
When the person has been employed, the Supervisor should have a meeting where the requirements of the job and what it is to accomplish is discussed. At this meeting performance standards, outcomes, and measures are discussed and agreed on. The Supervisor should define the priority of each job responsibility and goal. He should define performance standards for key components of the job and also discuss performance goals with measurable outcomes with the employee.
Performance management will take into consideration the design of effective compensation and recognition systems that reward people for their contributions. It provides promotional/career development opportunities for staff. The employee is also to be oriented properly and effectively, educated, trained and empowered to do the job.
It is usually suggested that Performance Appraisal be done every six months, for effective feedback. Midway into this process, that is quarterly, performance development discussions should be held. The employee can also call for meetings to ask for help in meeting his goals or ask for more training or tools to be provided. Hold interim discussions and provide feedback about employee performance, preferably daily, summarized and discussed, at least, quarterly. (Provide positive and constructive feedback.) All meetings and agreements should be documented and signed by both parties always.
Supervisors should set SMART (Specific, Measurable, Agree-upon, Realistic and Time bound) goals.
It is extremely important that Supervisors should maintain a record of performance through critical incident reports. (Jot notes about contributions or problems throughout the quarter, in an employee file.) Provide the opportunity for broader feedback. Use a 360 degree performance feedback system that incorporates feedback from the employee’s peers, customers, and people who may report to him. If an employee at the end of the appraisal cycle fails to meet one of the set criteria, he is regarded as having failed to meet all and should be placed on a Performance Improvement Plan. This is when the Supervisor develops and administers a coaching and improvement plan.
Where an employee decides to leave the Company the supervisor should conduct an exit interview to understand WHY valued employees leave the organization.
Organisations especially small businesses are encouraged to take the path of Performance Management because it is more objective and can ensure that all that is required for the employee to perform optimally is done. Unlike the Appraisal only method, which can be subjective, easy to disprove and claims of bias can be made against supervisors.
Small business owners should ensure that their Company’s appraisal system is a two-way system not one-way.