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How To Conduct Fair And Effective Employee Appraisals

Monday, September 06, 2010   By Mike Reddy


Most organisations review the performance of their employees on a regular basis (usually annually), for the purposes of determining pay adjustments, promotions, terminations and training requirements. Unfortunately, the very idea of being “appraised”, of having some superior pass judgement on them, is resented by many employees – unfortunate because, in fact, a structured Performance Appraisal is the most objective method their employer can use to reliably evaluate their standard of performance and reward them according to their real merit. Even the most technically sound Performance Appraisal structure can be sabotaged by non-cooperation, usually arising from some idea that it is “unfair”. To operate effectively, you must build a Performance Appraisal system that demonstrates fairness through every aspect of its operation.

Building a fair appraisal structure

“Job creep” can mean that what the supervisor understands a job involves is at variance with what’s actually in the employee’s job description, or what they really are doing. The fairness of a Performance Appraisal system is grounded in a set of current, accurate job descriptions that define the tasks an employee is expected to perform, along with a set of clear explanations regarding what criteria will be used to assess how well they perform them. This information provides a common understanding between employer and employee, and a level playing field among employees performing the same job.

Many off-the-shelf Performance Appraisal software tools work off a generic set of assessment criteria – that’s unfair. Only an appraisal tool customised to reflect the way things are actually done in your particular business, and the particular expectations that you have of employees, can be considered as fair.

Building a fair appraisal report

A common failing of Performance Appraisal is to begin noting observations of your employees just before conducting the appraisal interviews. This limited observation period is unlikely to provide an accurate reflection of performance over the whole period between appraisals.

Ideally, employee’s performance should be observed and recorded in a systematic manner over time to provide a fair picture.

Throughout the period between reviews performance issues must not only be noted, they must be addressed as soon as they arise. It’s easy to pass on a compliment or word of recognition for good work – far less easy to tell someone they are underperforming.  Nevertheless, it’s only fair that an employee know everything that may come up in their review, and that they have an opportunity to improve before the review.

Employees should be informed of who will be submitting information about their performance (supervisor, co-workers, customers, etc). Multiple appraisal channels can improve accuracy and reduce bias, but will only be acceptable to employees if they are satisfied that these appraisers have adequate knowledge and direct experience of their performance to make a fair assessment.

Building a fair Performance Appraisal interview

Providing appraisers with some formal training ensures that they understand the goals of Performance Appraisal, and how Performance Appraisal interviews work (what can be asked, how to deal with difficult situations, how to give feedback, how to stay focused on behaviours and avoid discussing personality etc).  Since the appraiser may also be the supervisor, a professionally conducted interview can neutralise the potential for supervisor bias, and increase the employee’s perception of its fairness.

Ideally, the employee should be allowed to make a self assessment of their own performance. This provides an opportunity to explain any circumstances that may have caused them to underperform, to identify barriers preventing good performance (e.g. out-of-date equipment), and suggest things that could improve their performance (altering procedures, extra training, etc) – that’s fair.

Building a fair performance improvement system

The goal of performance appraisal is to support and improve your employee’s performance, so it makes sense that having identified any barriers to performance, steps are then taken to remove them. It’s unfair to have discussed a shortcoming in performance, recognised its origin in something outside the control of the employee, and then not to address the issue to allow the employee to perform up to the mark.

Mike Reddy is a Chartered Accountant, business coach and advisor helping businesses in Sydney, Melbourne, Brisbane and Gold Coast to easily increase their profits and cash flow. He is currently President of the North Sydney Chamber of Commerce, a Regional Councillor for Sydney North East and a member of the Institute of Chartered Accountants Sydney leadership team. As well as advising businesses, Mike presents business development seminars and webinars and is regularly contacted by the media to comment on small business matters. You can connect with him on Facebook, Twitter and Google+.