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Springfield, MO

Opinion: 6 problems with performance appraisals

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There’s hardly anything in business that gives employees and their managers more anxiety than a performance appraisal.

Everyone dislikes performance reviews, and they make little difference in performance for the employee or the organization. Now, that’s a real signal something’s broken.

With all the emphasis on employee experience, retention, engagement and collaboration, it’s stunning how many leaders still use a flawed review process.

Something needs to change and fortunately there are workable solutions to improve appraisals. Here are six common problems and several smart ways to fix them.

1. Often late, or not given at all. Some employees haven’t had a performance review in years and others consistently have theirs several weeks or even months late. The impression an employee understandably gets is that management doesn’t consider employee evaluations important.

One solution is to give performance appraisals the same priority as completing monthly financial or sales reports on time.

2. Hurriedly completed. Some managers admit that they let reviews stack up and wait until the last minute to complete them. It’s difficult to take your annual review seriously if your manager fills it out only minutes before meeting with you. Most of the employees I’ve interviewed place a high importance on receiving an accurate, thorough and fair review.

The obvious remedy is to set aside sufficient time to prepare. A good review will give an employee a sense of meaning and importance for their contribution to the organization and challenge them to improve in specific areas.

3. It’s a monologue. The use of a one-way communication appraisal doesn’t help motivate or retain good employees. One CEO described for me how it backfired on him when he emailed his employee reviews rather than walk down the hall and have a discussion. Duh.

Use a two-way communication format that incorporates employee feedback, allowing individuals to clarify job expectations and to vocalize their views honestly.

4. Harmful ratings. A growing number of companies have abandoned quantitative reviews. Citing the harm that traditional scoring systems can have on areas like employee morale, retention and performance, the use of qualitative reviews have gained popularity.

Another problem occurs when leaders emphasize high scores and link it with getting a pay increase. It can dissuade employees from taking necessary risks because they fear it might influence their future reviews and compensation. Personally, I dumped ratings for qualitative employee evaluations 30 years ago after experiencing the negative impact it had on my staff in three different businesses.

To fix ratings problems, first consider the overall effect your reviews may be having on employee performance. Tailor performance appraisals to better fit the culture and employee experience people expect today.

5. Giving inflated or deflated scores. Some managers are reluctant to give employees low ratings because they want to avoid creating conflict or demoralizing their people. Inflating scores, however, camouflages poor performers and disheartens the team’s highest performers.

Perhaps worse, managers might give intentionally lower scores because the company has a high marks quota or ceiling. The intent is usually to limit pay increases or to weed out lower performers. I don’t think either reason has the best merit.

One solution is to either provide managers with the necessary training to score employees appropriately or drop scoring systems completely for a better approach.

6. Infrequent feedback. Giving once-annual feedback is insufficient because it leaves employees in the dark. One millennial told me she left her previous employer because it was too stressful waiting all year for her formal review to learn whether she had met the manager’s expectations and how he wanted her to improve. 

Leaders should consider using informal, recurring conversations throughout the year to supplement a formal review. You can’t expect much improvement when employees must wait a year for feedback.

Effective performance appraisals can be positive change tools if the typical problems are solved.

Consultant and professional speaker Mark Holmes is president of Springfield-based Consultant Board Inc. and SalesRevenueCoach.com. He’s also the author of “The Five Rules of Megavalue Selling.” He can be reached at mark@salesrevenuecoach.com.

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