Six Steps of the Performance Appraisal Process
Business owners must be able to gauge whether or not an employee is meeting performance standards. Developing a process that enables managers to appraise performance through objective metrics is imperative, so that a manager can define any underlying human resource issues versus operational issues. It is possible to customize the process, although there are six primary steps in the performance appraisal process.
(I) Establish Performance Standards
Performance standards are not arbitrary. These standards are necessary with each job position, because the performance standards are used to fulfill the mission and vision of the company. Performance standards are established through job descriptions, employee handbooks and operational manuals. Standards are subject to adjustment, based on changes in business needs.
Performance standards include everything from attendance to sale goals. Businesses must set a company culture of expectation fulfillment that is consistent for everyone. Giving some people a pass on meeting standards creates problems with team morale and potential legal issues when firing employees.
(II) Employee Communication
Establishing performance standards isn’t enough. Business leadership must clearly communicate these standards to employees. Even though standards are written and distributed in company manuals, there also should be a specific onboarding process that summarizes the company’s expectations.
Regular meetings reviewing the standards and expectations reiterates to employees that everybody must meet certain minimum requirements to retain employment or to be eligible for raises or promotions.
(III) Measure Employee Performance
Clearly defined standards are easy to measure. Leaders track and regularly review how employees are performing. Attendance might be reviewed weekly when the schedules are made, whereas sales goals might get reviewed monthly. Business leaders need to determine how often different performance standards are reviewed, based on how it affects business achievement.
For example, if a florist has a production line and one person does not keep up with the daily flower arrangement quotas, a manager needs to review that employee’s performance sooner rather than later, before it negatively affects sales or morale among the others on the team, who must absorb the negligent employee’s workload.
(IV) Compare to all Employee Metrics
Employers usually set performance standards, based on experience and industry data. Every business and its employees are unique. However, comparing one employee against all others who perform the same tasks gives an employer an idea about whether or not the underlying issue is the employee or if it’s a bigger issue of training or operations obstacles.
As with the example of the floral production line, one employee who is not keeping up differs considerably from the entire team not performing. In the latter situation, a manager must look at improved training or must hire more people to keep up with demand.
(V) Employee Feedback
Performance appraisals must be reviewed with employees to be effective. Sit down with each employee to review the standard expectations and provide feedback about what has been done well and what areas need improvement.
Make sure all feedback is written in objective terms and speak to employees in a professional, positive manner. Use performance review meetings to not only give employees feedback but also to gather feedback from employees about personal performance, sales goals, professional goals and feedback on company protocol.
(VI) Action Plan Development
Set an action plan for future performance appraisals. Build bigger goals around areas of employee success and provide specific plans of action where improvement is needed. Get employees invested in growth by asking them to include personal expectations and goals as part of the development plan.
Have employees sign the plan, and to accept its contents, including agreeing to the action plans. Once signed, make a copy for the employee and make another for the human resources file.