How to Conduct an Employee Appraisal

Most people know what to expect when it comes to a traditional performance appraisal, but there are some extra tips and tricks to make them as useful for your team, and ultimately, your business. 

Conducting an effective employee appraisal is an essential part of managing a high-performing team. Why? Well, appraisals give managers the opportunity to evaluate an employee's performance, set future goals, and create development plans. When done correctly, appraisals provide valuable feedback that helps employees grow in their roles while aligning their efforts with the company's objectives. But, if they’re not handled properly, appraisals can feel stressful or even demotivating for employees, so it is important to get to grips with the key steps for conducting fair and constructive employee appraisals. 

In this guide, we’ll take you through everything you need to know, including goal setting, providing regular feedback, evaluating performance, creating development plans, and ensuring everything is documented for HR records.

What is an employee appraisal?

Employee appraisals are also known as performance reviews or evaluations in some businesses. In short, they are a formal assessment in which a manager reviews an employee’s work performance over a specific period. An appraisal typically involves evaluating how well the employee has met their job responsibilities, achieved goals, and contributed to the team or organisation.

During an appraisal, the manager and employee discuss the employee’s strengths, areas for improvement, and development opportunities, which helps ensure that employees receive structured feedback and that their work aligns with the company’s overall goals.

What is the purpose of an appraisal at work?

The main reason organisations carry out appraisals is to evaluate employee performance, but they also serve several other critical functions as well. Here are some key purposes of an employee appraisal:

• Evaluation of performance - Appraisals provide an opportunity to measure an employee’s achievements against set goals and job expectations, and are a great way of knowing whether an employee is on track or not. 
• Goal setting - Appraisals are a great way for managers and employees to collaboratively set goals for the next appraisal period, focusing on areas that require improvement or growth.
• Opportunity for feedback and development - Regular feedback encourages continuous development, helping employees improve their skills and productivity.
• Recognition and motivation - Appraisals allow managers to recognise an employee’s contributions, which can boost morale and motivation.
• HR documentation - Appraisals document an employee's progress and performance, which is crucial for HR records, promotions, salary increases, or performance-related decisions.
  
  
  

Steps to conducting a fair and effective employee appraisal

Step 1 - Prepare for the performance appraisal

Preparation is key to conducting a successful appraisal, so always start by gathering all the relevant information on the employee’s performance throughout the review period. Here is a starting list of things you may wish to include:

• Any performance data or metrics related to their work.
• Feedback from colleagues, clients, or other peers.
• Notes from previous appraisals or one-on-one meetings.
• Progress reports on goals set in the last review period.
• Additionally, review the employee’s job description to ensure you’re evaluating them against the correct expectations. Having a clear understanding of the employee’s responsibilities will allow for a more accurate and objective appraisal.

Top tips for preparing for a performance appraisal:

• Set aside some time - Make sure you schedule a specific time for the appraisal that allows for an uninterrupted conversation and plenty of warning for you and the employee to prepare. 
• Consider the environment - Make sure the setting is private and comfortable, so both you and the employee feel at ease during the discussion.
• Give the employee time and resources to prepare - Let the employee know in advance about the appraisal so they can reflect on their own performance and prepare any feedback or questions they may have.d

Step 2 - Set clear goals and expectations

One of the most important parts of an employee appraisal is goal setting. In order for the appraisal to be effective, both the manager and the employee must have a clear understanding of the goals that should have been set at the beginning of the review period.

When setting goals, they should be SMART: Specific, Measurable, Achievable, Relevant, and Time-specific. This ensures that the employee knows exactly what is expected of them and that their progress can be easily tracked.

Key questions to consider during a performance appraisal:

• Have the goals from the last appraisal been met? If not, what challenges were faced?
• Are the goals still aligned with the company’s priorities, or do they need to be updated?
• What new objectives should be set for the next period to support both personal development and company goals?

Step 3 - Ensure feedback is provided regularly to help guide the appraisal

While the appraisal itself is a formal process, feedback should be given regularly throughout the year as waiting until the appraisal to address performance issues or praise accomplishments can make the process feel disconnected from the employee’s day-to-day work, and a bit ‘out of the blue’.

Providing regular feedback ensures that employees are aware of how they are doing in real-time and means that managers can coach and guide employees before issues become major problems, in turn helping to build trust. During the appraisal, reference any feedback you’ve already given, whether positive or constructive, so the employee can see how their performance has evolved over time.

Tips on providing regular feedback:

• Always be specific - Use specific examples when providing feedback. Instead of being broad with feedback, give specific examples and projects where employees really made a difference, or where there was room for improvement. 
• Have a balanced approach to giving praise but also being truthful with critique - It’s important to balance recognition of achievements with areas where improvement is needed as this makes the feedback feel constructive rather than overly critical.

Step 4 - Only ever be objective when it comes to reviewing performance

When evaluating your employees’ performance, it’s extremely important to use objective criteria to ensure you are being fair and unbiased with your feedback. Basing your appraisal on quantifiable data, measurable outcomes, and specific behaviours helps avoid bias and provides a clear picture of the employee’s contributions to the business.

Consider the following performance evaluation criteria:

• Communication - Is the employee able to clearly and effectively communicate with colleagues and clients? Have you had any feedback from peers or clients?
• Quality of work - Does the employee consistently produce high-quality work?
• Productivity - Has the employee met productivity expectations in their role?

When reviewing each of these areas, back your assessments with examples and evidence. This ensures the employee understands the reasoning behind your evaluation and can work on specific aspects of their performance.

Step 5 - create a clear development plan for your employees

One of the most important components of a constructive appraisal is creating a development plan for the employee’s growth that they can refer back to and use as a tracker to keep on top of performance and areas of growth. Based on the feedback given, identify areas where the employee can improve and develop new skills, then outline steps and resources that can help them achieve their goals.

Key components of a personal development plan:

• Outline new responsibilities discussed - Assigning new tasks or projects that align with the employee’s career aspirations can keep them engaged and motivated.
• Training and learning opportunities - The personal development plan should recommend any training programmes, workshops, or courses that your organisation offers that would help the employee enhance their skills.
• Mentoring and coaching - Particularly for those who may be struggling, consider pairing the employee with a mentor or offering coaching to help them navigate challenges.

You should work with the employee to agree on these development areas to ensure that they are both realistic and supportive of their career growth. They should be agreed by both you and your employee, so you have a clear direction of travel for their professional growth and development.

Step 6 - Document the appraisal for HR records

Once the appraisal is complete, it’s important to document the discussion, performance evaluation, and any agreed-upon goals or development plans to make sure that both the manager and employee have a record of the conversation, which can be referenced in future appraisals or if any issues arise.

Proper documentation is also essential for HR purposes, especially when appraisals impact decisions related to promotions, salary increases, or disciplinary actions. Ensure that all records are stored securely and shared with the relevant HR personnel.

Conducting fair and constructive appraisals

Conducting an employee appraisal is an opportunity to provide valuable feedback, set meaningful goals, and support the personal and professional development of employees. By preparing thoroughly, setting clear expectations, providing ongoing feedback, and focusing on growth and development, managers can create a fair and constructive appraisal process that is beneficial for not only the employee, but the organisation they work for too.

Remember, the goal of an employee appraisal is not just to evaluate past performance, but to pave the way for future success. When employees feel supported, recognised, and rewarded, they are more likely to be engaged and committed to the success of the organisation, which is why appraisals are a crucial part of any successful business.

Get in touch with GoodShape today to learn how our services can help you streamline your appraisals process.