• How annual appraisals can help performance management

  • 21 Jan 2016
  • Comments 1 comments

Getting it right improves motivation, getting it wrong risks claims

As 2016 gets under way, many businesses are looking back at last year’s performance and ahead to the future. An employee’s annual appraisal has been seen as an ideal opportunity for this sort of reflection to take place, but a growing number of high profile organisations, including Accenture, Deloitte and Microsoft, have chosen to do away with the annual review process altogether in favour of a less rigid, continuous assessment approach.

While a badly run appraisal can cause more harm than good, an effective annual review process can help employers support their employees and improve performance.

It’s important to get the basics right. Employers should make sure:

  • the employee has reasonable notice of the appraisal meeting and is given relevant paper work in advance
  • the employee and appraiser have enough time to talk and an appropriate place in which to meet.

A formal appraisal should be the culmination of the annual review cycle which consists of regular meetings and/or informal chats. It is an opportunity to round up developments, good and bad, from the previous year and should be motivational – an employee’s achievements should be celebrated and progress recognised. The appraisal can also provide a chance to set new or updated objectives for the year ahead and plan how those objectives will be achieved.

While an annual appraisal should not be seen principally as an assessment, it is a chance for the employer to offer constructive feedback, and plan training and support where performance problems have been identified during the year. It is not the place to ambush an employee by raising new performance issues.

Performance measures referred to in an appraisal should be based on objectives, competencies and development goals previously agreed with the employee. The criteria used should be transparent and applied consistently and fairly across employees. If an appraisal is not constructive and open, an employee may believe the process is unfair or may suspect they are being lined up for dismissal. This will certainly harm trust and confidence between the employer and employee and could lead the employee to submit a grievance.

If an employer goes on to dismiss an employee on the basis of poor performance following an apparently unfair appraisal, the employee might make a claim for unfair dismissal and rely on evidence that the appraisal had not been fair in support of his or her case. Even if such a claim doesn’t materialise, the threat of a claim could be used to leverage exit negotiations.

Critics of annual appraisals argue they aren’t actually good at identifying the best performers, can harm performance, and can lead to disengagement and even litigation. They maintain that replacing annual reviews with a more flexible ongoing assessment process allows managers to exercise judgment, rather than having to make decisions based on predetermined assessment criteria.

But this approach may not suit all organisations. Many hard-pressed businesses will lack the resources or organisational structure to carry out continuous assessments and for them an annual meeting between manager and employee will remain a way, albeit an imperfect one, of helping to monitor performance and provide support.

Organisations should also be aware that taking a more flexible approach, and doing away with objective criteria against which employees are judged, could make it harder for them to justify their treatment of employees if that treatment is challenged during a dispute.

Getting rid of the annual appraisal process altogether will not be practical or desirable for many organisations, but drawing on the ideas promoted by those companies that have could be helpful. Holding formal annual appraisals while at the same time taking a more individualised and flexible approach to employees can go hand in hand, and getting this combination right is probably the best way to improve performance.

Roland Susman is a solicitor at Spring Ferguson, a division of Spring Law

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Comments (1)
  • Appraisals all come down to personalities. I can make oral statements about co-workers, but once I commit it to paper it is no longer an opinion but becomes fact.

    A clash of personalities can destroy a worker's career. Comment should be based on evidence, but even that can be twisted to suit a purpose. How can an appraisal change something I did 12 months ago, and why comment now if it wasn't brought to my attention at the time?