Performance appraisals can be vital for attaining company goals and employee skills improvement. See how to conduct performance appraisals here
Updated: November 13, 2024
Performance reviews or appraisals can trigger a range of emotions in employees. Some employees feel anxious, while others feel appreciative. Other employees may feel confident and look forward to hearing about their performance assessment straight from their immediate supervisor.
When done well, performance appraisals or reviews can offer a range of benefits for both the employee and employer. For starters, employee appraisals or performance reviews can be a useful tool for improving your company’s productivity and performance. Other benefits that these appraisals can provide include:
So, how can a company like yours conduct performance appraisals? How do you conduct performance appraisals professionally and properly? In this article focusing on how to conduct performance appraisals, HRD gives performance review tips for managers and HR staff. We’ll also provide answers to the most common questions about performance appraisals.
A performance appraisal is an evaluation of an individual employee’s performance. On the company’s side, this is an assessment of an employee’s contribution to the company. The performance appraisal process is meant to be an objective assessment of an employee’s skills, strengths and weaknesses, and accomplishments. It is also mainly used to measure an employee’s progress (or lack of it) in terms of their performance when compared against the company’s and the employee’s objectives.
When appropriate, a performance appraisal can be used as a constructive feedback tool for each employee and a reference point for changing behaviours that can lead to improved performance.
While conducting a performance review is not required by any labour laws in Australia, the Fair Work Act of 2009 prescribes guidelines on how to conduct a performance appraisal. The provisions or guidelines in the Fair Work Act outline the different employee rights and responsibilities and set the standards for ensuring fairness when it comes to conducting performance appraisals.
Whenever a business in Australia does a performance review, both the employee and the employer should be aware of a couple of legal guidelines, including:
To do a performance appraisal professionally and ensure that it provides good results, here are the recommended steps:
First, establish the purpose of the performance appraisal. Make sure that the employee understands the purpose of the meeting with their immediate supervisor, manager, or HR staff. You can do this by making a joint meeting agenda for the performance review as a guide for the direction of the meeting.
Remember, a performance appraisal is not a lecture; this is a two-way conversation intended to cover all the issues that concern an employee’s challenges, strengths, weaknesses, and achievements.
If an employee has issues relating to their performance or behaviour, it’s important for the employer to outline the issues and offer helpful solutions. This can include how to mitigate workplace conflicts.
Here’s a video you can share with your employees to help them prepare for their evaluation beforehand. It offers several useful tips on how to conduct a performance appraisal smoothly and make it more effective.
Part of conducting a performance appraisal in a professional manner is to have the meeting transcribed. Documenting what was said and agreed upon during the performance appraisal is good for practical and procedural reasons. A good way to do this is to create and give out performance appraisal forms. This is an excellent device for assisting employees with goal-setting and tracking individual employees’ tasks.
Performance appraisal forms give employees the ability to do self-evaluation and monitor their progress, and not to mention serve as the basis for succeeding performance reviews. These are also invaluable for helping HR managers and employees get objective and accurate evaluations. Performance reviews or appraisals are of great importance, especially since these can retain high performers or employees who have consistently exceeded expectations.
For any performance evaluation to be effective, giving constructive feedback is crucial. HR staff, managers, or immediate supervisors can get feedback from different sources like the employee’s colleagues, clients, and other reporting staff.
Feedback from relevant resource can give employees and their managers a more comprehensive look at their performance. Some companies refer to this type of evaluation as a 360-degree evaluation.
Create a structured format to make the performance review process simpler and go more smoothly, such as by providing feedback gathered before your meeting. After sharing the feedback, allow the employee some time to process this before discussing it further at the appraisal.
During the appraisal, give your evaluation and make sure that it’s based on clearly set goals and expectations. The evaluation must begin and be documented at the start of the employee's review period. If you give an employee evaluation that’s grounded on targets or objectives that they were unaware of, this will only make them feel blindsided.
Bear in mind that an evaluation is supposed to be a two-way conversation, so give them the opportunity to provide some input. Employees, especially during their evaluation, are more likely to be honest and approach the meeting with a positive attitude if they feel listened to and have the trust of their supervisor or manager.
A good strategy during the evaluation is to let the employee speak first, then reply with constructive feedback and input. Once you’ve tackled each discussion point in your meeting agenda, summarise the salient points, then agree on the goal setting. Make it a point to discuss the employee's successes and what worked, and plan how they can continue to progress.
Studies have shown that only over half of Australian workers think that employee evaluations are effective, and some companies feel that they aren’t important and have gotten rid of them entirely.
However, this does not diminish the importance of employee appraisals for the companies who still do them. So, to ensure that the appraisals you give employees are of value, both the employee and their supervisor should come up with an action plan. This action plan should be a collaborative effort, so that employees feel better supported and motivated to improve their performance and skills.
At this stage of the appraisal process, it’s imperative that you work with each employee to develop a realistic action plan that not only helps them improve their performance, but also helps the company achieve its goals. Keep in mind that when an employee understands how their role and performance impact business operations, they are more likely to become motivated to do their part.
When formulating the action plan, consider each employee’s individual goals and development opportunities and infuse them into the action plan. Conclude the performance evaluation by summarising all that was discussed. Make a detailed list of who will assist the employee in executing the action plan, how and when the plan will be implemented, and which tasks will be prioritised.
It’s the job of HR to regularly track each employee’s progress and provide them with regular positive feedback and suggest areas of improvement if necessary. HR should also review the action plan from time to time to ensure that it is still relevant and current.
There are several types or examples of performance appraisals you can use. Here are the most common ones:
This type of approach involves feedback from various sources, including supervisors, peers, subordinates, and clients.
This appraisal type rates each employee based on a numbered scale of different traits and behaviours that are desired and associated with their role.
Colleagues evaluate each other’s performance in this type of appraisal.
This is a list of specified traits or skills that get a checkmark if the employee has them or achieved them; they don’t get a check if they haven’t achieved the goal or developed the trait.
A grid type appraisal consists of nine boxes that map out the current state of the workforce and shows where the individual employee is positioned on it, based on their performance.
This is an appraisal type that ranks each employee based on certain metrics. Ranking appraisal works by placing high performers at the top of the list, with lower-performing employees at the bottom.
There are varying opinions when it comes to conducting a performance appraisal. There are companies that prefer a more informal conversation, while some high-profile companies have done away with appraisals and action plans altogether. But in companies or small businesses that don’t have any performance appraisals or evaluations, many employees wish they had them.
At least one website made a study that provided several interesting insights about performance appraisals and how Australian workers felt about them. In their study, it was found that:
As for what they get out of formal appraisals, here what Australian workers had to say:
Despite these numbers, it’s important to consider which type of performance appraisal can work best for your company and the industry or business it’s engaged in. For instance, companies that work entirely via a remote or hybrid setup find that performance appraisals are important for their remote workforce. It’s likely that knowing how to conduct performance appraisals is more useful in this case, since the goal-setting and action plan components benefit workers who are not and cannot be closely supervised.
Ultimately, HR and management take centrestage in implementing their performance appraisal process. How, when, and how often the employee evaluations are conducted depends on your company’s needs and capabilities for effective documentation, feedback, and coming up with action plans.
If your company also wants to create an employee recognition programme or update an existing one, knowing how to conduct a performance appraisal is invaluable for recognising and rewarding top performers.
An employee performance appraisal still has value and is indispensable for some of the top HR professionals here in Australia. Don’t forget to bookmark our Best in HR section and get to know some of the most innovative HR teams on the continent.
Did you find this piece on how to conduct a performance appraisal valuable for your organisation? Let us know in the comments.
