Annual appraisal and employee assessment

It's that time of year again—performance appraisal season. Whether conducting reviews fills you with delight or dread as an employer there's no escaping them. They're unavoidable in the world of human resources and managing teams.

But mastering the art of a meaningful, productive review is a skill that will serve you well as an employer.

When done right, performance appraisals can motivate your employees, strengthen their connection to goals, and ultimately drive business results. But, when done poorly, they can damage work relationships, decrease engagement, and even push talented people out the door. No pressure, right?

The good news is that with some preparation and the right mindset, you can conduct performance reviews that inspire and develop your team.

In this article, we'll walk through some best practices for evaluating and coaching your employees in a way that benefits everyone involved. So, grab your evaluation form and favourite pen, and let's get started.

What is a performance appraisal?

A performance appraisal, also known as an employee evaluation or review, is a formal assessment of an employee's work over a specific period of time, typically the past 6-12 months. The manager should provide employees with helpful feedback on their strengths, weaknesses, and areas for improvement.

The goal is to gain insight into your employee's job performance and determine ways to help them develop their skills and advance in their role. It should also cover everything from good performance and poor performance to past performance and future performance.

Performance evaluations are also a good opportunity to talk about your employee’s goals, goal progress and future development.

The performance appraisal is also a key part of the wider framework of a performance management system which includes regular feedback, one-to-ones, and frequent reviews of individual performance.

While there’s no legal requirement to hold performance reviews for your staff, there’re many benefits to appraisal meetings whether it be annually or throughout the year.

Employee evaluation vs Performance appraisal

During an employee evaluation, feedback is typically given on job satisfaction, punctuality, and leadership skills. In contrast, a performance assessment aims to determine if the employee's efforts align with the company's goals and if the employee is the right fit for the job description.

While both evaluations are important, they serve different purposes; one operational and one strategic. They’re so similar that the Encyclopaedia of Business groups employee evaluation and performance assessment together as synonyms.

Why performance appraisals matter: Improving productivity and engagement

Performance appraisals matter because they keep your employees engaged and productive. When done right, employee evaluations can:

• Motivate your team by clarifying goals and offering incentives like raises or promotions when those goals are met. Employees work harder when they know their efforts will be rewarded.

• Pinpoint areas for improvement and further training. Frequent feedback, both positive and constructive, helps your employees develop their skills and boost performance.

• Strengthen the employee-manager relationship. Thoughtful reviews demonstrate you care about an employee's growth and success. This builds trust and a sense of partnership working toward shared priorities.

• Identify your top performers. Reviews help determine who deserves greater challenges and responsibilities. Promoting from within also boosts morale.

Performance appraisals are a must for any employer who wants a team operating at peak potential.

Done with care and careful consideration, the evaluation process can motivate, develop talent, build trust, and uncover your brightest stars—all of which translate to a highly productive, engaged workforce and a thriving business.

How are performance appraisals conducted?

During a performance evaluation, the appraisal process typically involves:

• Employees completing a self assessment of their performance

• Managers or employers evaluating employees based on job function and core competencies

• Managers and employees meeting one-on-one to discuss the review, provide feedback, and set new goals

• Employees signing the final review to acknowledge its contents

• Managers using reviews to determine appropriate compensation and career development plans for employees

Reviews should be constructive, focusing on specific behaviours and actions, not personal qualities. The overall goal is to have an open, honest, and productive conversation about improving performance and employee satisfaction.

How often should you hold staff appraisals?

The more often you evaluate your employee’s performance, the more engaged and productive they'll be. Running them on a biannual or even a quarterly basis is ideal, but annual employee assessments are also fine.

While they can be time-consuming, the benefits to individuals and your organisation as a whole, make it well worth the investment.

Traditional approaches to performance reviews were typically having them done in an annual review. However, a year is a long time for an issue to remain unresolved.

One common critique of traditional performance reviews is that they aren't frequent enough. They focused on past performance with little attention paid to future performance improvement, learning and development.

Additionally, feedback was generally provided by only one person, the line manager, which can result in a narrow perspective.

So, performance development reviews have become more frequent as people get serious about employee wellbeing.

When developing your plan of action, make sure to outline the regularity of your performance reviews and set expectations in your employee handbook so that your staff have a better understanding of what to expect.

However, it's important to remember that regular communication with your employees should not be replaced by more frequent feedback and appraisals. Take the time to provide constructive feedback and check in on their wellbeing whenever you can.

How to appraise employee's performance

There're several forms of appraisal processes for assessing performance the most common are:

• Ratings scales: the employer rates employees against a set of criteria.

• Self assessment: the employee rates their own performance.

• Management by objectives: staff are reviewed on how well they meet set goals.

• 360-degree feedback: performance is reviewed by multiple people in different roles.

In order to properly measure performance, using a performance management system makes sure your employees receive feedback that is constructive and future focused.

No matter what format you use for your performance reviews, an important part of the evaluation process is the staff appraisal form.

The performance appraisal evaluation form

An evaluation form is a document that helps you to structure the employee evaluation meeting. This appraisal form lists questions that allow an individual to review their work in the time since their last appraisal.

It can be completed by both employees and their managers depending on the format you choose for your performance evaluation. Having people complete a self-appraisal form is the best way to learn about any problems they have.

As mentioned before there’s no legal requirement to hold staff appraisals, so, there’re no rules on what your staff appraisal form should include. However, most businesses follow the same format for their employee evaluations and questionnaires.

A typical performance appraisal form will cover the following categories:

• Successes: Highlight your employee's skills and work they are proud of.

• Weaknesses: Cover tasks the employee has found difficult.

• Development: Discuss further development, additional training and long-term goals.

• Additional Remarks: An opportunity to bring up any other issues.

The appraisal form should be completed and submitted to the manager ahead of the appraisal meeting. The employee comments on the actual performance and review will help to lead the following meeting.

The performance appraisal meetings

The completed appraisal form should lead the performance review meeting. The answers provided in the form will give you key insights, but you will learn more and be able to resolve issues by following up in the meeting.

Discussing the provided answers lets you attempt to resolve any grievances or plan for action to be taken.

But there’s more to an appraisal meeting than just reviewing the completed form together. Although, this discussion should take up most of your meeting, you should also provide your own feedback.

Other aspects of the meeting should include:

• A general discussion on their performance to begin with

• Review of targets set in the previous performance review

• Provide feedback on their performance

• Discuss and agree on new development targets

You should also review any other performance metrics that you are tracking, such as sick leave and lateness, in this meeting.

Giving constructive feedback during performance appraisals

Be timely and transparent

Giving feedback in a timely manner, whether positive or constructive, is key. Meet with employees regularly so they know where they stand. Be transparent about areas that need improvement so there're no surprises come review time.

Meet face to face

Have an open and honest dialogue face to face, making sure it's a two way discussion. This allows for a genuine exchange and the opportunity to ask clarifying questions. Make eye contact, keep an open posture, and actively listen to build rapport and set the employee at ease.

Provide concrete examples

Give specific examples of behaviours that support your key points. This helps the employee understand precisely what they’re doing well and where they need to improve. Speak in observable, measurable terms. Share how their actions impacted others or the company.

Offer next steps

Discuss clear action steps the employee can take to improve and set concrete goals and metrics to measure progress. Ask open-ended questions to make sure the next steps are realistic and achievable. Be available to provide guidance and support. Consider scheduling a follow-up meeting.

Track progress

Follow through on next steps by scheduling regular check-ins. See if the employee's own performance ratings and behaviours have noticeably improved. Provide recognition and positive reinforcement when progress is made. Make revisions to action plans as needed.

Providing feedback that is constructive is challenging but when done respectfully and regularly, it's the best way to help good employees become even better. Keep an open mind, focus on behaviours, not personal attributes, and approach performance appraisals with the genuine intention to improve and support. Your employees will appreciate your candour and guidance.

Conducting effective performance appraisals: best practices for managers

Once you have clear performance goals in place, conducting effective appraisals is key to maximising an employee's career and potential. Here are some best practices for managers:

Focus on continuous feedback

Don’t just limit performance conversations to annual reviews. Meet with your employees regularly to provide constructive feedback, coach them, and make sure they stay on track to achieve their goals. Frequent check-ins with line managers, whether formal or informal, creates opportunities to recognise good work and make minor course corrections before issues become major problems.

Be specific and provide examples

Vague or subjective comments like “you need to improve communication skills” are not helpful and can be frustrating for employees. Provide examples and evidence to support your feedback that is concrete. Give examples of what good communication looks like to set a clear standard.

Focus on development

The goal of performance reviews should be developing and motivating employees, not just evaluation. Discuss how employees can build on their strengths and improve their performance. Ask open-ended questions to get their input on areas they want to develop and how you can support them. Develop a concrete action plan together with specific steps for developing skills and check-in regularly on their progress.

According to the Performance Management Revolution article by the Harvard Business Review, there has been a shift from traditional approaches to performance management to solely focus on learning and development. Making this an important element.

Share the praise

Don’t save up all feedback for the annual performance review. Praise employees specifically and genuinely when they do good work. Publicly recognising contributions in team meetings or company newsletters can further motivate employees and build morale. Spread the praise and positivity!

Conducting caring, compassionate, and solution-focused performance appraisals will lead to a more engaged, motivated, and productive workforce. Keep the lines of communication open and make developing your employees an ongoing priority.

Frequently Asked Questions about Performance Appraisals

Our clients ask loads of questions about appraisals, so we’ve answered some of the most common ones below.

Why is performance appraisal important?

Employee appraisals are vital to growing your business. They allow you to:

• Measure and reward staff performance

• Identify skills gaps and development opportunities

• Spot potential in your best-performing employees

• Give staff a chance to speak up about any issues

What are the methods of performance appraisal?

There're many different methods you can use when holding performance appraisals, including:

• Management by objectives (MBO): Employee and manager agree performance targets that the employee must aim to meet before the next review period.

• 360-degree feedback: Feedback is collected from a number of different sources, such as managers, colleagues, customers, and direct reports.

• Self-appraisal: Employees review their own performance before you meet with them. This is sometimes included as a stage in the 360-degree feedback review.

• Behaviourally anchored rating scale (BARS): Rate employee performance based on several criteria.

No method is better than any other, but some might be more suitable for your own business goals.

What should you say in a performance review?

No matter which method you use for your performance review, there're certain topics that you should always cover when measuring performance, yourself.

• Talk about strengths and weaknesses

• Talk about any recent achievements

• Discuss long and short-term career development opportunities

• Define clear performance goals

• Offer a chance for staff to provide feedback

• Ask if any support is needed

• Discuss employee happiness and engagement

• Cover salary expectations and offer a pay rise where applicable

Not found an answer to your question? BrightLightning gives you the answer to thousands of employment relations and HR questions in seconds.

Get help with performance appraisals today with BrightHR

You've now got the knowledge to conduct an effective employee review. But do you have the right tools?

BrightHR does! We can help you with all your performance management needs from unlimited secure cloud storage for all your employee assessment documentation to BrightBase, our easy-to-use online portal filled with thousands of expert guides and document templates to help with any HR queries you might have.

Sure, performance appraisals can be awkward and uncomfortable, but when done right, they empower both you and your employee.

Approach each review with an open and curious mindset, focus on listening, ask great questions, and provide thoughtful feedback. Document specific examples and set clear goals together. Most importantly, express your genuine appreciation for their hard work and commitment to the team.

If you follow these best practices, performance reviews can become an opportunity to strengthen your working relationship and motivate staff to achieve even more.

So, take a deep breath and dive in—you've got this! With the right mindset and preparation, you'll be conducting reviews like a pro in no time.