5 tips for effective employee appraisals and evaluations

Yes, effective employee appraisals require goal setting and examining achievements and mistakes from the past year. However, to be a truly high-performing organisation, performance reviews need to focus on looking forward as well as backward within the context of the overall business strategy. It’s time to update our thinking so that people—not just businesses—benefit from the process.

The very best performance appraisals create a holistic experience for your employees that ultimately leads to more productive people and more profitable businesses. It’s about combining coaching, feedback, SMART goals, learning and career development, and remuneration. Each of these talent management elements must come into play to achieve holistic and effective employee appraisals that ultimately have a positive impact on the business.

Framework for more effective performance appraisals

Here are five important things to bear in mind as you reconsider your framework for more effective performance reviews:

Create an always-on, informal process

Not everything has to be about using a tool or a system. Impromptu personal conversations can be the source of all sorts of new ideas and deeper insights into the daily challenges and difficulties faced by your people. It’s worthwhile taking the time for lunch with direct reports and simply asking, “How are things going?” Having an always-on process that combines formal and informal employee evaluations is at the heart of creating a more holistic and effective employee review experience because people are treated as people. Informal conversations also provide an opportunity to offer coaching and feedback in a less stressful situation.

Remember the key principles of feedback

According to behavioural scientists, feedback should be given mostly in the form of praise and should not include constructive criticism. Think in terms of constructive dialogue instead. Criticism highlights something that is wrong, whereas dialogue is about brainstorming and finding solutions. Dialogue opens the door to a productive two-way conversation on equal terms. In this vein, consign the positive-negative-positive sandwich to the past as well. People long ago learnt to see through it and tend only to focus on the negative.

Managers need coaching, too

Being a boss does not automatically make someone skilled at conducting performance appraisals. Managers must learn how to align each individual performance goal with broader business objectives and help people focus on what is important to the organisation. Managers often need help joining those dots. Managers may also require guidance to ensure that the goals set for their staff are realistic, yet also engaging enough for people to wish to pursue them, lest the goals feel like mundane boxes that simply need ticking.

Do not unlink remuneration

If performance reviews are not linked to remuneration and retention, people question the purpose of conducting evaluations at all. Decoupling reviews from remuneration is a trend that goes back at least 10 years and is based on the notion that reviews create a culture of fear. However, performance management and remuneration should be linked if the aim is to help people develop and achieve individual goals that align directly with broader business objectives, because employees feel confident that they will be rewarded if their work performance meets or exceeds expectations. Just remember, however, that compensation needn’t always be financial. Other rewards for high performers may include additional paid leave, training opportunities, and awards.

Tackle business-level challenges directly

Financial pressures and belt-tightening can put managers—and the entire employee appraisal process—in a difficult position, particularly if there is a shortage of funds for increasing high performers’ remuneration. That makes clear and consistent communication crucial. Motivating your employees to embrace the wider purpose of your organisation and its vision, strategy, and goals is essential at these times, and there are ways to achieve this while still maintaining an effective performance review process.

Remember, performance management should be less about evaluating people and more about providing a great experience. It’s about setting your people and the business up for success. Organisations are changing their performance management strategies, opting for a continuous approach that is more open and less arduous for employees and managers alike—and supports ongoing coaching, feedback, and alignment as priorities shift over time.

Shift from thinking that reviews are about giving pats on the back for doing a good job to viewing the review as an opportunity to provide growth and development opportunities in the form of an evaluation. After all, at the end of the year, people look at the collection of experiences their managers chose to highlight and discuss and then essentially decide whether they want to commit to another year at your organisation. Retaining the best people requires ensuring that the review process is continuous and holistic in nature. Creating honest, human moments for reflection and improvement throughout the year, and in a variety of ways, results in people being more engaged with their colleagues and their work, better individual performances, and better business outcomes.

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