Annual performance reviews can be a double-bind dilemma for businesses—they are damned if they conduct perfunctory assessments, and damned if they completely shun the process. Not just line managers, many human resources executives too confess conventional annual reviews can be a waste of time. Employees have their own set of misgivings. According to Salary.com, six out of 10 workers don’t see the point in the mandatory form-filling exercise. But altogether skipping annual appraisals is a definite no as well. It sends out a negative message suggesting the company is not interested in helping staffers leave a mark. Also, salary hikes can be given without performance reviews, and they’ll keep employees happy in the short run, but genuinely good people may decide to find greener pastures where their efforts are really recognised and rewarded.
Annual reviews are not meant to be ordeals. According to Robert Bacal, the author of Performance Management, “Performance management is about having everyone succeed and improve.” When handled well, performance reviews are an effective means to boost motivation levels, morale and productivity. The trick is in getting it right, and being a little creative. Read on to see how you can improve your own skills at doing this.

Attitudinal Shift

Adopt a holistic outlook: Begin by explaining the scope of performance reviews. The sole focus should never be just the employees’ measurable performance and weaknesses. To be forward-looking, take into account every barrier to success, including the challenges thrown up by the work environment, market conditions and work flow processes. Which is why, author Robert Bacal says asking employees what made their jobs more difficult, and what they need in the next year to become more productive, is the single most important question.
When framed so, reviews become dialogues between managers and employees, not a one-way street. Widening the scope is especially crucial when newcomers are appraised, says Archana Raha, business head, Axiome Consulting. “If road blocks are not cleared at the initial stages, employees may not settle down. Many times such matters become the root cause for their exit,” she says.

Ongoing reviews: A year is a very long gap, adds Raha. She recommends introducing a six-month review cycle. Human resource consultant Sunitha Ravi, in fact, suggests quarterly reviews, to enable employees to continuously work at their shortcomings and strengths. “Generally employees’ performance peaks in the first and last quarter. They have a clear visibility of their goals in the first quarter and are also fresh and relieved from the pressure experienced in the previous quarter. The last quarter is usually a scramble to meet targets for a positive appraisal. Quarterly appraisals help keep up the momentum around the year,” explains Ravi.
In high-pressure functional departments like sales, frequent reviews for junior and mid-level staff members can help boost morale especially if they’re combined with spot awards. Team members also benefit from an ongoing communication process with managers, by weekly or fortnightly interactions aiming at inquiring how employees are faring and sharing their performance metrics.

Use measurable goals: Setting measurable goals at the start of the review period makes appraisals more objective and effective. “Such goal setting works best when employees can align the aims with their career objectives and when managers spend time explaining the deliverables to juniors to get their buy-in,” says Ravi. Also, workers stay focused on their goals when they understand the role they play in the larger picture.
Measurable goals allow managers to quantify achievements—as a percentage of the pre-set goals—during year-end appraisals. Although goal-setting exercises can be performed for every kind of task, it can be tricky for jobs where the outcome is qualitative in nature or is dependent on the performance of an entire team.

Get multiple reviews: Being at the receiving end of an inaccurate performance review or one marred by the boss’ biases is a huge let down for employees. Fortunately, 360 degree feedback surveys can help average out scores. This involves ensuring workers are reviewed by more than one person, such as their manager, colleagues and themselves as well. According to Sridhar Iriventi, VP, TechDemocracy, “Technology tools can help obtain such all round feedback in real-time rather than at specified intervals.”
Getting several people to weigh in on the performance of a worker helps avoid the biases that cloud subjective reviews. It also creates a more positive work environment and generates realistic constructive feedback for employees. As Iriventi puts it, “This approach obviates the need to make an issue about appraisals. Often, employees dread ‘judgement days’ irrespective of how well designed the process. By experience and statistics, we know the maximum churn is after the appraisal.” For the best results, compare the self-appraisals with the other evaluations. Resolving the discrepancies between the reviews provides employees a clear picture of their actual contribution.

Money Matters: Use total compensation reports: Businesses compensating their people with significant perks could benefit from preparing individual employee statements showing the total compensation paid over the course of the year. “Suppose an employee has been put to work on a special project and received special incentives in return. Then reminding the employee of the growth opportunity and extra emoluments received, acts as a morale booster,” says Varada Murthy, founder, People First HR Consultants.

Separate pay and performance reviews: Discussions about pay raises and performance appraisals are best kept separate. Linking these two issues makes employees defensive. If workers understand that reviews are aimed solely at their professional development, they are more likely to open up about challenges they face and take an interest in solving them.
Iriventi also points out that salary allocations and reviews should be aligned with the organisation’s strategic plan whereas performance reviews are localised and should be handled tactically by empowering the line of command. So, it makes sense not to talk about money when you conduct appraisals. “In the case of high performing and key staff however, organisations may need to conduct mid-term evaluations and compensation revisions simultaneously,” adds Raha.

Effecting Improvements

According to Ravi, “Appraisal process changes are best implemented bottom up because change happens seamlessly when the larger population voluntarily embraces the new guidelines.” So it’s easier to muster up support and build pockets of success in the middle ranks.
This approach also sends a clear message about the management being committed to the well-being of employees. Enabling mid-level supervisors to take the lead in introducing methods can do wonders for their self-esteem. “But improvements should be communicated and discussed with line managers prior to implementation,” cautions Murthy. Traditional performance appraisals are infamous for being uncomfortable interviews that must be tolerated for the sake of pay raises. By introducing interactive evaluations, you can generate a lot more interest. Frequent reviews can help boost morale if they’re combined with spot awards

Generate more interest

These are just a few ways in which you can generate more interest in the review process:

Require self-appraisals: Reviews can be made more effective by shifting the onus of leading the process to the employee. For this, ask employees to fill in self-appraisal forms requiring them to rate their overall performance, list and quantify the measurable outcomes of their goals for the next year, and identify ways in which supervisors can help build their skills.

Team and manager reviews: If you are willing to go a step further, ask employees to review a manager’s performance as well. This would create more interest in the process. You can also conduct team reviews to determine the overall efficiency of departments. This helps correlate individual performances with group outcomes.

Conduct reviews to rate the office environment: Asking employees to rate the office environment is a good way to boost their morale and satisfaction levels and let them vent about issues they feel need to be addressed. Use employee morale surveys to identify ways to make the office a more productive place.

Tips to improve reviews

Follow these tips to improve the outcome of reviews:

Schedule well: There is nothing like a rushed review to leave an employee feeling cheated. You owe it to your employees to make sure that you give them sufficient time to express their problems without being interrupted.

Prepare for the review: It isn’t enough to take an interest in an employee’s file just prior to the big day. Cite examples of desirable and undesirable behaviour—through the course of the year—to make the process more realistic and personal. But this means managers must be engaged with their team members through the course of the year.

Begin positively: Don’t put the employee on the defensive. Begin by appreciating their achievements. Setting a positive tone puts the employee at ease and elicits a better response.