As Spring comes around, many business owners will be preparing to carry out staff appraisals. We spoke to Alice Jordan about why the old model of performance appraisals is outdated and what businesses can do differently to maximise staff motivation and engagement.
What is a performance appraisal?
Alice Jordan (AJ): “Performance appraisals typically take place once or twice a year. It is often a paperwork exercise that managers see as a tick box exercise and employees don’t value. It usually involves an appraisal form. A manager sits down with an employee and it would be fairly prescriptive - these are the questions that get asked and then the employee would be rated as to how they are doing against a scale. This might be used to give the employee pay or promotion news but you should separate these conversations.”
There has been a lot of talk about the traditional performance appraisal being outdated - what’s the problem?
AJ: “Statistics from the Corporate Executive Board show managers hate doing performance appraisals (95% see them as a tick box exercise), employees don’t like appraisals (75% see them as unfair) and a number of them find them demotivational. 66% say they interfere with productivity and, according to Deloitte, only 8% of respondents said appraisals add value. They are not an effective use of time and there is limited evidence available to say having an appraisal improves performance and engagement of people.”
Are most small businesses doing appraisals?
AJ: “There will be some business owners who are not doing anything. Those with 0-20 people, they may say I don’t need to because I am working so closely with my employees. Then there will be people who come from larger organisations who will be much more innovative in their thinking and then there will be some who will have been told by their accountant, adviser or traditional outsourced HR function that they ought to do appraisals. This group are doing them because they have been told they should. They use a traditional appraisal approach because they are being advised by people who don’t know the more contemporary way.”
What does a contemporary performance appraisal look like?
AJ: “A traditional appraisal sets objectives for six to twelve months ahead. We know the world moves on really quickly. What used to happen with appraisals is that you would have a longer-term objective and the employee might think “I will stick it in my drawer and look at that again in six months’ time”. In a more modern appraisal system, an employee would still have objectives, but they would be more near term. An employee should have a formal chat with their line manager once every three months as a minimum, with weekly or monthly chats around how are things going.
“These chats should focus on where they should put their energies and efforts for the next three months and these should be aligned into the business. The focus now is how do I help a staff member perform better? For the business, the benefit is the employee gets better at what they are doing and the employee is being developed. That is a key driver in what motivates employees at work.”
Who should carry out performance talks with employees?
AJ: “It should be the line manager of the employee. In today’s world, the role of the line manager is more about being a coach and facilitator. The only way you can do that is if you spend more time with the person. It is about small bites and small conversations rather than one big long one. Done well it enhances the relationship because you get to have a deeper level of understanding.”
What should the new form of appraisal achieve?
AJ: “We want to make sure employees are as productive and as aligned to the businesses vision as possible. We have to have a mechanism to engage people and employees expect to be developed and have feedback. Whilst we don’t need to have the traditional appraisal because it is outdated, we do need to have something from a business perspective that makes sure we are getting the best that we can from our people and engaging that person so they stay with the business.”
- Alice offers access to online training The Future of Performance Management in SMEs through her website.