Performance Appraisal - Common Pitfalls to Avoid

My own view of appraisal processes is that they are extremely useful but only if set up properly and used in the right way. The purpose of an appraisal process should be to optimise the success and contribution of each employee. If this is achieved, then improved performance from the majority of employees will ultimately positively impact the performance of the business. While this theory is fine, in practice appraisal systems too often don’t’ delver on their promises and end up with a bad name. Too often I have seen a business that did not get the full benefits from their appraisal processes mainly because managers make one or more basic mistakes.

Here are just a few of the most common pitfalls to avoid.

1) The board and other senior managers think that appraisal is ‘for everyone else’. For appraisals to be successful, they must be lead from the top and clearly linked to the business’ strategies and goals. My own view here is that leading by example is key – if you are a senior manager and don’t take appraisals seriously, then why should your managers?

2) Nobody is accountable for implementing the appraisal process properly in the first place. When implementing an appraisal process, appoint a project manager to implement the new process. Use the project manager to monitor progress and report completions to the board. In this way everyone wit understand what progress has been achieved and what else needs to be done.

3) Implementing a highly complex/comprehensive system. I have seen incredibly comprehensive and complex systems that in theory might be great but in practice turn off managers and staff, so they don’t use it. Therefore start with the basics first - use a simple paperwork system to record targets/objectives and an annual (or biannual) review of achievement. As managers and staff recognize the value of the process, more ‘features’ can be added in such as a 360° appraisal.

4) Have a system that ranks staff. Ranking your staff will kill an appraisal system. I have seen sales staff not pass on leads to their colleagues because they want to top the league table. It is often easier for an individual to improve their ranking by undermining the performance of others than it is to improve their own performance. The result of this is destructive and divisive ways of working, which will not improve business performance (remember the purpose of appraisal?)

5) Setting vague or inappropriate targets. It is vital to set clear and realistic performance targets, and not simply tell you staff to ‘do your best’. How will you or they objectively measure whether they have ‘done their best’? It is a recipe for disaster.

6) Having conflicting targets and measures. It is important to have congruent targets and measures across the organisation. I once worked for an business whose supply chain manager had a target to reduce purchasing spend, and the production managers had targets to maximise productivity. Guess what happened? The supply chain manager complained bitterly that deliveries were frequently late and the production managers blamed the supply chain manager for buying cheap paper that slowed the printing presses down!

7) Reviewing performance inadequately, for example by focusing on one specific incident rather than reviewing the entire period which the review covers. Also avoid the "halo" and "horns" effects. Just because an employee performs badly in one area does not make his/her overall appraisal bad. The same goes for good appraisal. The key to successful reviews is to gather factual data about an individual’s performance and then assess it objectively.

8) Not providing adequate development support for staff. One key aspect of the appraisal process is the development of staff to provide them with the capabilities to achieve their targets. People can only improve their performance if they are given the right opportunities to learn and develop. This may be in the form of on the job guided learning or on a formal management training course. Businesses that ignore this step do so at their peril.

As I mentioned at the beginning, my belief is the purpose of an appraisal process is to optimise the success of each employee and ultimately the business. By taking steps to avoid pitfalls I have highlighted managers should have every opportunity to realise this goal.