1.

Design a legally valid performance review process

Patricia King, in her book, Performance Planning and Appraisal, states that the law requires that performance appraisals be: job-
related and valid; based on a thorough analysis of the job; standardized for all employees; not biased against any race, color, sex,
religion, or nationality; and performed by people who have adequate knowledge of the person or job. Be sure to build in the process, a
route for recourse if an employee feels he or she has been dealt with unfairly in an appraisal process, e.g., that the employee can go to
his or her supervisor's supervisor. The process should be clearly described in a personnel policy.

2. Design a standard form for performance appraisals

Include the name of the employee, date the performance form was completed, dates specifying the time interval over which the
employee is being evaluated, performance dimensions (include responsibilities from the job description, any assigned goals from the
strategic plan, along with needed skills, such as communications, administration, etc.), a rating system (e.g., poor, average, good,
excellent), space for commentary for each dimension, a final section for overall commentary, a final section for action plans to address
improvements, and lines for signatures of the supervisor and employee. Signatures may either specify that the employee accepts the
appraisal or has seen it, depending on wording on the form.

3. Schedule the first performance review for six months after the employee starts employment
Schedule another six months later, and then every year on the employee's anniversary date.

4. Initiate the performance review process and upcoming meeting

Tell the employee that you're initiating a scheduled performance review. Remind them of what's involved in the process. Schedule a
meeting about two weeks out.

5. Have the employee suggest any updates to the job description and provide written input to the appraisal
Have them record their input concurrent to the your recording theirs. Have them record their input on their own sheets (their feedback
will be combined on the official form later on in the process). You and the employee can exchange each of your written feedback in
the upcoming review meeting. (Note that by now, employees should have received the job descriptions and goals well in advance of
the review, i.e., a year before. The employee should also be familiar with the performance appraisal procedure and form.)

6. Document your input -- reference the job description and performance goals
Be sure you are familiar with the job requirements and have sufficient contact with the employee to be making valid judgments. Don't
comment on the employee's race, sex, religion, nationality, or a handicap or veteran status. Record major accomplishments, exhibited
strengths and weaknesses according to the dimensions on the appraisal form, and suggest actions and training or development to
improve performance. Use examples of behaviors wherever you can in the appraisal to help avoid counting on hearsay. Always
address behaviors, not characteristics of personalities. The best way to follow this guideline is to consider what you saw with your
eyes. Be sure to address only the behaviors of that employee, rather than behaviors of other employees.

7. Hold the performance appraisal meeting

State the meeting's goals of exchanging feedback and coming to action plans, where necessary. In the meeting, let the employee speak
first and give their input. Respond with your own input. Then discuss areas where you disagree. Attempt to avoid defensiveness;
admitting how you feel at the present time, helps a great deal. Discuss behaviors, not personalities. Avoid final terms such as
"always," "never," etc. Encourage participation and be supportive. Come to terms on actions, where possible. Try to end the meeting
on a positive note.

8. Update and finalize the performance appraisal form

Add agreed-to commentary on to the form. Note that if the employee wants to add attach written input to the final form, he or she
should be able to do so. The supervisor signs the form and asks the employee to sign it. The form and its action plans are reviewed
every few months, usually during one-on-one meetings with the employee.

9. Nothing should be surprising to the employee during the appraisal meeting

Any performance issues should have been addressed as soon as those issues occurred. So nothing should be a surprise to the employee
later on in the actual performance appraisal meeting. Surprises will appear to the employee as if the supervisor has not been doing
his/her job and/or that the supervisor is not being fair. It is OK to mention the issues in the meeting, but the employee should have
heard about them before.

Why Ratings Based Appraisals Fail 

In the January edition of The Public Sector Manager / Workplace2001 newsletters, we discussed why the use of RANKING
procedures to compare employees to each other can create disastrous consequences. Fortunately, ranking systems for performance
appraisal aren't used that frequently compared to the use of RATING systems. Unfortunately, RATING systems are also problematic,
and are used in a huge number of organizations. 

First, what is the difference between a ranking and a rating system? A ranking system evaluates employees based on whether they are
better, equal or worse than their peers. It is a comparison. A rating system compares employee performance to some set of criterion,
and produces either a number or a letter grade that supposedly represents the employee's level of performance. With a RANKING
system it isn't really possible for everyone to be ranked as excellent (or at the top of the heap), even if all employees are excellent. A
rating system permits everyone to be rated highly, if they warrant it. 

Rating systems are so popular that computer programs have been developed to undertake the evaluations. In addition, most 360
evaluation processes are based on ratings systems, with the ratings obtained by not just the supervisor, but peers, customers, etc. 

The question is whether they "work". 

Problem One: Appearance of Objectivity 

In our organizations we have legal and philosophical pressure to evaluate employees in an objective, consistent and fair way. There is
no question that being objective is critical. Because of our desire to conform to those needs, we create systems that use numerical
scales (for example 1-5) to evaluate employees. As an example, the University of California uses the following rating categories (in
addition to some other components): 
 

 Job knowledge: Evaluate the use of information, procedures...etc required for current jobs.
 Quality: Evaluate the accuracy, completeness, etc of work.
 Planning/Organization: Consider areas such as varying work demands, developing efficient measures,...
 Initiative: Consider the self-starting ability, resourcefulness, and creativity applied to the duties of the position.

If you look carefully at the criteria above, you will see that they don't eliminate subjective judgements at all. One manager's idea of
"self-starting ability" can be quite different than another's idea. How does one objectively evaluate "creativity". 
 

This wouldn't be a major problem except that often we act as if the ratings ARE objective. We make pay and promotion decisions on
information that is at best quite subjective. We forget that any rating is only an indication of how one person (the manager) applies a
fuzzy criterion. In terms of legal consequences, a poorly and badly designed set of criterion is probably not sufficient to protect an
employer. Dismissing an employee based on, let's say, a low ranking on creativity is going to be really problematic unless one can
justify that rating in terms of hard, concrete events (failed to create a new product between January and December). But if we use the
criterion above, we don't need rankings. 

Ratings systems give people a false sense of security, protection and objectivity. 

Problem Two: Development Issues 

One function of performance appraisals is to help employees develop so they can contribute more effectively. Do rating systems, in
and of themselves, contribute to employee development? The answer is No. 

In order for staff to develop and learn they need to know what they need to change, where (specifically) they have fallen short, and
what they need to do. If a manager assigns a 1 (unsatisfactory) on a scale of 5 to the dependability criterion, what information does
that convey (by itself) to the employee? Not much. It just says the manager is dissatisfied with something. In order to make it
meaningful and promote growth, far more information must be added to the appraisal process. When were they undependable? In
what very specific ways? What changes need to occur? Those are the critical growth questions. 

One argument offered by ratings proponents that the manager can use the rating scale as a springboard to discuss those details. That's
true. However, why do the ratings. A manager dealing with an employee who is habitually late can simply document the lateness, and
discuss with the employee what needs to be done to remediate the problem. No numbers, and no very rough, subjective categories. 

Simply put, ratings, on their own, do not convey sufficient information for people to improve. And since they don't do that, why use
them? 

Problem Three: Fairness Issues 

If, as we suggest, ratings systems are too subjective (but appear objective) and ratings do not help employees get better, there are some
serious problems from the position of the employee. 

First, since the criteria for ratings are so often loose, most employees are going to resist being classified at the low end of the scale.
Employees who are low rated are more likely to resist the subjective evaluation of the boss, argue, claim personal vendettas, etc.
Simply put, they are easy to argue with, just because performance compared to vague criteria are unmeasurable. So, the manager says
performance is unsatisfactory (1) and the employee believes it is excellent (5). Where do you go from there. 

It is far more sensible to eliminate the rating completely, and use critical incident reports or firm, measurable objectives where there is
less possibility for interpretation. Which is less likely to cause resistance on the part of an employee? Telling someone you think they
rate an unsatisfactory classification for dependability, or providing employees with an attendance sheet that documents that they were
late eight times in the month? 

Why Is Rating So Popular? 

If ratings are not objective, are not needed to promote employee development (and productivity), and create friction and argument in
the workplace, why are they so popular? 

The answer is simple. Organizations can use a common, "one-size-fits-all" form that can be administered quickly and easily. It doesn't
cost as much as an Management by Objectives approach which has potential for providing objectivity and the perception of fairness. It
also doesn't provide objectivity and fairness. 

It's cheap and it doesn't take a whole lot of time. Or is that really true? In a short-term perspective it IS true. However if a rating
system doesn't help people do better, are there costs that are incurred as a result of having such a system? Probably. A poor system is
expensive later. In legal issues, grievances, and the cost of performance problems that are not addressed using a rating system. 

Final Comments 

In a short article we can't complete a fuller picture of all the issues. We invite those interested to order our white paper entitled
"Performance Management - Why Doesn't It Work" for a more detailed, but focused discussion. In closing let's consider some of the
following regarding performance appraisal. 

1. Many organizations report that once a person's salary is no longer tied to doing rating type appraisals, they cease to be done. The
reason: Badly implemented systems cost too much in terms of time, money and discomfort on both staff and management sides. 

2. 360 Appraisals (rankings from multiple sources) are worse than regular manager-employee rating systems. They create more
subjective data, with rankings from one source contradicting ratings from another. Hugely expensive. 
 

3. Where ranking systems appear to be succeeding (and the value they add is not usually assessed), they work IN SPITE of the ratings.
A good manager can make a rating system work. A poor manager who relies solely on the ranking system is going to do more damage
with it than if they did nothing at all. Conflict, bad feelings and argument are going to occur.  

Next month we will be completing this series by addressing the question: 

If ranking systems aren't good, and rating systems aren't good, how do we do performance management?