It may be tempting to dismiss them as little more than a formality, but get your staff appraisals right and you have a vital business tool at your disposal. They can identify skills gaps, motivate staff and help you implement your growth strategy. Here’s how to design effective review procedures that will work for everyone
You’ve probably been there at some stage: an awkward sit-down with an employee, comprising a few minutes of box-ticking, followed by a vague agreement of what they could be doing better. At best, most people see appraisals as irrelevant and boring. At worst, they’re viewed as a waste of time. But they were created to help managers and their staff communicate more effectively, and if done right, the humdrum box-ticking is actually a great way to help motivate employees, monitor performance and set targets. So those who see appraisals as pointless are missing out on a crucial way to give their businesses a boost. The key is to make sure they work.
A 2008 survey by online psychometric testing company Talent Q found that bad appraisals cost the economy an average of £2.3bn a year. Get them right, however, and you could boost productivity levels by 2.7%, and improve service by 11%. This reveals the business potential of appraisals – but only if they are used properly. However, the study also found that many companies did not use them at all, with only 58% of employees questioned saying they had undergone any kind of formal review.
“Appraisals are about putting time and thought into your team and their roles in the organisation – that’s pretty important stuff,” says Natalie Sanderson, a director at Ascent PR. “It’s about giving feedback, recognising what [employees] are great at, how they can progress further, where their weaknesses lie, and of course, how these can be addressed.”
But she takes it a step further. “It’s an opportunity to talk,” she continues. “Talking with a person one-to-one helps you to make a connection and find out what makes them tick. The appraisal gives the employee an opportunity to be heard in an environment where they feel relaxed and able to share their thoughts.”
Crucially, appraisals are as much about listening to your employees as they are about talking to them.
Upgrading your workforceFar from being pointless, the appraisal gives you a perfect opportunity to communicate with your staff about how they fit into your grand plan. Nigel Potter, the director of group services at media planning company Total Media, says annual appraisals only come once the management has decided on its goals for the business. “Development discussions” are then used to help employees manage their strengths and weaknesses to slot into the business strategy. “The entire programme is designed to help us achieve those business goals,” Potter says. Just make sure that you clearly explain to your staff exactly what those goals are and how they fit in.
On top of boosting business performance and helping companies hit strategic targets, the better your appraisal programme, the better both your staff and client retention will be. After all, your employees’ performance directly affects how your business is perceived by outsiders. What’s more, appraisals should cover your employee’s personal development and, crucially, training needs. This shows your commitment to investing in them, which will boost loyalty and their desire to stay with you. This also helps you to plug any skills gaps that may have arisen in your business. So use appraisals as a way to determine what’s missing from your employees’ talent base, and what could be added.
“It’s very important to have a workforce that’s constantly developing and improving its skills,” Potter says. “It’s good for client retention because you’re creating a better service, and it’s vital for reducing staff turnover because the workforce feels more empowered.”
As your business’ strategy evolves, so will the roles in your company, and appraisals provide an opportunity to go over employees’ duties. “Quite often job descriptions subtly change throughout the year, but if you don’t have an accurate one, it means that if there are any problems, it’s very difficult to say anything,” says Dr Fiona Robson, a senior lecturer at Newcastle Business School.
Help or hindrance?
Seeing the value of appraisals is one thing, but it’s also vital to get them right – something Robson says many companies simply don’t do. “It’s one of those areas with the potential to have a lot of impact, but if it’s not well managed from the start, it becomes difficult to re-engage people,” she explains. “If you don’t sell it in the right way, that filters down to the employee, so it becomes a paper exercise.”
To prevent appraisals from becoming more of a hindrance than a help, you need to be well organised. Communication is the key. Start by giving staff two weeks’ notice that they’ll be having an appraisal. That will give you and them a chance to prepare exactly what you want to say. “Otherwise, you get into the room and forget everything you were going to say, or you decide not to say it,” Robson says.
If your employees are nervous (or worse, apathetic) about their discussions, she suggests having an ‘appraisal champion’ on hand to explain the process – someone who has been there before and can shed some positive light on the process. It might also be helpful to show your staff the form and give them the chance to think about some of the questions involved.
It’s important to let your staff know that appraisals aren’t about pulling them up, but rather a genuine chance to discuss what has happened in the past, and more importantly, what’s going to happen in the future. One of the ways Potter manages to do this is to have the employee lead their own meeting. For him, development is more important than performance. “If you can encourage the person to chair their own discussion, they are taking responsibility for their own learning and development, whereas otherwise it’s the manager saying: ‘I think you need to do this.’
It helps in so many ways,” he says, not least because it’s far less intimidating for staff. It’s good practice to agree on actions to be taken after the appraisal. This will give you a way to measure your employee’s performance over the following months. Encourage them to voice their opinions, though. If they don’t think those actions are achievable, it’s important you know this.