CHAPTER 1 Performance Appraisals: An Overview The subject of performance appraisals, also referred to as "performance reviews" and "assessments," initially strikes many first-time managers as being complex and difficult. There are images of intricate forms, close scrutiny by Human Resources (HR), legal pitfalls, awkward face-to-face meetings, less-than-favorable reactions by marginal performers, and disputes over recommended salary increases. In truth, the performance-appraisal process need not be overwhelming or problematic. In fact, it''s quite straightforward. The process begins by identifying objectives, recognizing the benefits for all concerned, and identifying key criteria. Objectives Think back to the last time your work was formally reviewed. Did your manager make clear the overall purpose of the performance evaluation? Did you appreciate how the process benefited you, your manager, and the organization as a whole? Did you fully understand the key aspects of an effective performance appraisal system? Don''t worry if you answered "no" to one or more of these questions. All three are rarely answered affirmatively due, in part, to the fact that many managers fail to have a clear understanding of what performance reviews are intended to accomplish.
Primary Objective of a Performance Appraisal The primary objective of a performance appraisal is to ensure the maximum utilization of every employee''s skills, knowledge, and interests. At first glance, this deceptively simple statement appears to be completely employee-directed. In truth, organizations that focus on the full use of each individual''s abilities and areas of interest have a more motivated workforce; this, in turn, positively affects productivity, thereby increasing the company''s competitive edge. In the end, everyone benefits. Let''s examine this assertion more closely by way of two scenarios. Scenario Number One: Lorie Meet Lorie, hired two years ago to work as a computer analyst for a large bank. Employed right out of college, she was selected for the high grades she had achieved in computer science classes, as well as her experience working part-time performing data entry at the local branch of a bank near her school. During her employment interview, Lorie was asked about her knowledge of, and skills working with, computers.
She elaborated on the fact that she had always being adept at working with computers. At no time did the interviewer ask Lorie whether she actually enjoyed computer work; nor did he ask her whether her short- and long-term goals involved computers. Lorie was pleased to receive a job offer so close to graduation, and she gladly accepted. After several months, however, she began to reflect on the advertising classes she''d taken in college, and how much she''d enjoyed them. She wondered whether she''d made a mistake accepting a job working with computers simply because she was good at it. During her first formal performance assessment, which resulted in a very high rating, she mentioned her interest in advertising. Her boss was chagrined, commenting that she should stick to what she knows and is good at, adding that she could look forward to a bright future with the bank. Following that meeting, Lorie found herself focusing increasingly on her interest in advertising.
Concurrently, her motivation to perform her job duties decreased, as did her performance level. She began to make mistakes--costly mistakes for the bank. Lorie was coached and counseled, but at no time was she asked what she thought was wrong. Finally, just before her next official performance review, Lorie tendered her resignation. During the exit interview with HR she explained that she had accepted an entry-level job at an advertising agency, where she would be able to work at what she really enjoyed. Scenario Number Two: Vincent When Vincent began searching for a job in HR, he was in the midst of a well-thought-out career change. He''d been teaching middle-school math for four years but always had an avid interest in the field of human resources. As a result, he returned to school, where he earned a degree in HR.
He also interned in the HR department of a resort for two summers. He presented himself to prospective employers as having limited skills and knowledge, but a keen interest in HR. During an interview for an HR assistant''s position at a retail company, Vincent was asked many questions about his interest in HR, as well as the knowledge he''d acquired in school and the experience he''d obtained through his internship. It was evident that Vincent''s interest in HR overshadowed his skills and knowledge, but the interviewer felt that the former would make Vincent an asset to the organization. The interviewer''s assessment proved to be accurate: Vincent thrived in his position and was ultimately promoted to HR director. His colleagues and employees were motivated by his enthusiasm and energy and felt compelled to work harder. Three years after Vincent was hired, the company was showcased in a trade publication as having an "ideal HR department." TIP #1 The primary objective of a performance appraisal is to ensure the maximum utilization of every employee''s skills, knowledge, and interests.
Secondary Performance-Appraisal Objectives Performance-appraisal objectives extend beyond the primary focus cited above. They also serve to enhance employer-employee relations. This is accomplished by strengthening the overall working relationship between managers and employees; developing a mutual understanding between managers and employees about performance expectations, goals, and measured criteria; encouraging employees to express themselves openly concerning performance-related issues; encouraging managers to examine their own strengths and areas requiring improvement; and helping managers to coach and counsel their employees as needed. Performance appraisals also permit HR to perform key tasks more effectively by providing supportive data for decisions concerning salary increases, promotions, and disciplinary action; allowing for more productive uses of an organization''s human resources; and yielding information about existing skill levels to support ways to expand beyond the existing talent pool. In addition, by providing feedback on past performance, evaluating an employee''s potential, and supporting developmental opportunities, managers can motivate employees to establish and achieve personal goals that are compatible with organizational goals. TIP #2 Secondary performance-appraisal objectives include enhancing employer-employee relations; permitting HR to perform key tasks more effectively; and motivating employees to pursue goals that are compatible with organizational goals. Benefits and Uses It''s not uncommon for both managers and employees to believe that performance assessments should be used to justify salary increases. Actually, many HR experts urge separating the timing of appraisals from when salary reviews are conducted by as much as three months.
This way, employees won''t think in terms of how their rating translates into dollars; they''ll be able, instead, to focus on the specific observations of their appraiser. So, if performance appraisals shouldn''t be used in conjunction with raises, how should they be used? Benefits and Uses for Managers Let''s start with how performance appraisals benefit you, the manager. First, you will be able to make the best use of your employees'' abilities by becoming more aware of each person''s strengths and areas requiring improvement. Second, you can isolate atypical employee behavior and performance; that is, you can identify outstanding performers and provide them with additional incentives and more challenging work assignments. You can also spot marginal performers and give them greater guidance and direction. Third, performance appraisals help you become introspective and determine whether you are doing your job as a manager: Ask yourself: Am I available for questions? Am I clear in my expectations? The answers to these and other questions will improve overall employer-employee relations. Finally, once employee skill levels are properly identified and you''ve determined whether you''re functioning effectively as a manager, you can focus more fully on developing your own career goals.