One author wrote that if you want to make performance appraisals really difficult then link the individual's pay to their numerical rating.

Without judgement, we take the position that some organisations wish to use the performance appraisal process to help them determine the level of renumeration – salary or bonus – of individuals. If that is the  case, then how should the performance appraisal process be run to best achieve this?

First, let us consider what is a good outcome. We would argue that a good outcome for the advocates of performance related pay is

• Individuals motivated to achieve targets that will improve the organisation and meet the organisational strategy.
• The correct people getting the correct rewards
• An efficient performance review process that delivers the benefits without using those benefits up in administrative burden
• A robust process that stands scrutiny from external parties particularly on equality

When you consider the list above you are immediately struck by the need to get the start right. It is not so much the system of calculating rewards that matters – more it is a matter of ensuring that the measures are generated well. Better that our grading structure is simplistic than we skip past the step of generating fair targets.

So, first and foremost if you are looking to implement performance related pay and are using performance appraisals to support that implementation – spend a lot of time thinking about how to get the measure right. Continuing our humble theme of not knowing what is right for you, let us describe some options that we have seen work.

• Weighted objectives, agreed between manager and employee and cascaded from the organisational strategy and graded for achievement.
• Value statements derived from the company values and graded for compliance.
• KPI indicators developed in consultation with employees
• Monthly targets, adjusted each month against which employees are graded/scored each month
• Team/Organisation objectives against which whole team's are measured
• Survey based data – e.g. customer satisfaction scores, against which individuals and teams are reviewed

Before embarking on performance related pay we would advocate a thorough consideration of what you are looking to achieve.  If you decide that it is right for your organisation then I hope you find this note useful as a first step to delivering a robust process.


Brendan

The appraisal meeting strikes fear into many managers. They fear its time-consuming nature and they fear the meeting itself. The former issue is often cultural. The time spent on performance appraisals is a fantastic investment for managers if the process is run well. A  stitch in time saves nine.

The meeting itself is only feared by poorly trained managers who are uncertain of how to handle the meeting. Appraising an individual is an unnatural task for many managers but it can be trained.

The structure of our own training course for the performance appraisal meeting is as follows.

• Understanding the purpose of performance management and the annual cycle
• How to review performance in-year
• How to conduct the end-year performance appraisal meeting
• How to handle performance and behaviour problems
• Use of coaching within appraisals: the GROW model
• Core skills: listening, asking questions, giving feedback, confronting, supporting.

Contact us if you are interested in this training course, or if you would like the performance appraisal white paper that this blog post is an excerpt from.


Brendan

I was reading a book on long distance cycle training.  The author referred to SMARTER objectives.  The acronym was used differently, although the SMART was very similar to the HR useage.

Specific
Measurable
Agreed (he referred to sharing your goal with someone else)
Realistic
Time-phased
Exciting
Recorded

The two latter lines are the new ones to me.  Recorded is fine - it just makes sense, but exciting catches the eye.  An exciting objective in an performance appraisal sound far-fetched?  But why not?  And if exciting is too far - surely interesting is something we could look for?

Too often you see dry goals that are unlikely to drive someone to higher performance or gain personal reward from achieving the goal.

I've started training to complete a cycle ride from Land's End to John O'Groats in the UK (about 900 miles) in 9 days.  A wonderfully SMART objective - although I have dark moments where realistic is in doubt!  And I find the idea so exciting that I'm motivated for training, buying books to learn about how I can improve endurance, and putting my own milestones in place to make sure I'm on track.

Worth a thought - a SMARTER goal in an annual performance review form could lead to considerable improvement.

Brendan

This is an excerpt from our performance appraisal white paper.

The common advice is that at the annual appraisal nothing should come as a surprise. Through regular feedback the manager should ensure that an employee is always aware of how things are going, where they stand, where their greatest achievements lie and where they need to develop. We agree with all of this. There remains a question of how often the organisation and the people involved want to formalise this process.

The benefits of the formalisation is it ensures noone is slipping under the radar, allows the organisation to get some data back that it can direct training and other interventions towards, and it supports company practices such as pay reviews, and promotions.

Annual is too infrequent – too much changes in a year. But every other structure after that is down to individual organisations. Our view is that commonly an interim 6 month review is what is needed for formal appraisal. A monthly meeting should be scheduled in as good practice but keep that unbureaucratic.

Brendan

It may be worth pointing out at this stage that these excerpts from our performance appraisal white paper is a suggested order of working rather than a suggested order of importance. Done properly the personal development plan should  be the most important part of the performance appraisal.   Assuming that one of the main intentions of this process is to have people improve and so lead to improved organisational performance then a development plan is the key.

The reason for the order is that we find that a practical consideration is whether the  development plan is part of the same annual appraisal meeting and form completion process as the  objectives, values, and scoring. Often it is not. Indeed, practical constraints aside we would suggest that the development plan is kept separate from the appraisal form itself. It  requires a slightly different mindset and lives in a different way.

In principle the development plan should describe the skills, knowledge, and behavioural  changes that the individual is looking to develop over the coming time period. It generally  follows that most of the development plan should flow out of the review of prior year  objectives / values and consideration of goals for the coming year. This is important and  needs guidance to those completing the form. That an individual does not know Spanish and  would like to learn the language is only relevant if 1) they need to know it for work or  2) the organisation has a value of broadening peoples abilities.

The performance appraisal form is commonly a general HR domain. The development plan must be produced in concert with the learning and development/training team. Much completing of  Excel spreadsheets can be eliminated by a well designed, online development plan.

This is an excerpt from our performance appraisal white paper.

Brendan

Your annual performance grade is something that sticks with you. It can overwhelm the whole process. But it is not the most important part of the process and indeed performance appraisal can work perfectly well without one.

If you are not looking to use the appraisal as a link to pay then consider long and hard whether you need this one line/number summary of the year.  We find it distracts the appraisal meeting and distracts the appraisal project itself – heavily influencing how objectives, values and 360s are designed and completed.

If you do need the grade (and most of our clients do) then let's consider our options.

Commonly we see two sorts of grade; a numeric grade (e.g. 1, 2, 3, 4) or a narrative grade (e.g. Strong performer, Competent, Development required). What we see less commonality  on is how this grade is determined.

End of the form grade

Still the most common, there is a simple drop down box of options that the manager selects  from.

Calculated average

Seemingly growing in popularity, we see grades calculated from other ratings on the annual  performance review form, or built from grades in interim reviews across the year. The most common is to grade how objectives have been completed.

Suggested calculated average with override

A late entrant, but increasingly a request, is to calculate an average within the system and  then give an option for the manager to override the calculation - normally with a forced  narrative option to explain the discrepancy.

Forced distribution

All of the above options can be subject to a forced distribution (e.g. 20% of people will be an  A, 40% will be a B, etc.). Some form of scoring drives this distribution which can be  across the whole organisation or across departments.

360 degree feedback influenced

From scoring on 360 feedback, the annual performance review grade or evaluation is  influenced or calculated.  Take great care with this option.

I have to say our view is not set in stone here. In an ideal world I suspect we would avoid  the annual grade - it can be distracting and it can be more controversial than it is useful. But, if you are going to run performance related pay (a debate in itself) then a grade is likely to form an element of the review process. I believe then that having followed a sensible  process, managerial discretion is required on the grading. Whether that is assisted -  through averaging - isn't actually that important.

With such an important topic area, training is the key to ensuring the managers are able to  apply the chosen process in a fair manner and in a way that achieves the performance  appraisal process objectives. Managers will need training and role playing that ensures that  the gradings being presented are even across the organisation. This training can of course  be included in training on how to handle the appraisal meeting.

The above is an excerpt from our performance appraisal white paper.


Brendan

After a slow start to the year due to the weather, the pace at Bowland has picked right back up to where we left off in 2009.  The last 3 months have been very busy for us as we picked up a range of both performance appraisal and 360 degree feedback clients.  I'm not complaining of course and we're always interested in working with people who are looking at 360 or their annual review.

The point of this post was to acknowledge how difficult it is to work on the people side when tasks are rushing in at us.  Taking the time out to talk with team members, give feedback, listen to their requirements is counterintuitive when times are busy.  My recommendation is "put it in the diary".  Make it another part of the day, make it part of the important list of items you absolutely have to get to and don't, just don't, miss that appointment.  Over any period of time, the time invested in meeting with, talking to, and listening to the team brings its rewards.

Am I good at this?  Not great - but getting better.  

Brendan

I wrote a few weeks ago about a comment that had been written on my wife's blog.  The comment was highly encouraging and supportive.  Continuing an odd theme of my family's internet activities, I have an uncle with a photography website.  In talking with him at the weekend I was struck again how reliant we are on positive feedback.  The best feedback he gets is when someone purchases a photograph of his but more generally some comment or even taking the time to comment makes a massive difference.  We have a picture of his on the office wall and a recent visitor commented upon it and I passed this compliment on.

Positive feedback can sometimes be harder to give - or harder to remember to give.  Most of us focus on what can be improved and are never quite satisfied.  Note to self though - positive feedback whether as part of 360 degree feedback or as part of general performance reviews is highly powerful.

Brendan

Following on from Part 2, this is a look into the process of moving a customer's existing paper-based performance appraisal form into an electronic format, and the benefits that are associated with doing so.


Please state your objective...

Setting and reviewing objectives is a key phase of any performance review. Many customers find it useful to have some continuity on long-term objectives, revisiting those that were set in the previous appraisal.
In a paper-based workflow this would literally be a case of keeping the old form with the new one, and cross-referencing the relevant areas, or worse still, copying the objectives out onto the new form. Either approach is not user-friendly and saps time from the actual 'meat' of the process, reviewing and discussing the objectives themselves.
Electronically we can overcome these failings in several ways. Forms can be set up with the option of carrying over objectives of a particular type into the next annual appraisal form, or alternatively only incomplete objectives can be brought forward.
Either way, objectives can automatically be brought into a new performance review without any intervention by the appraisee or their manager, along with any accompanying notes or timescale information, allowing them to get on with the process itself.
Another option to encourage objectives from the appraisee is to set a minimum required number of objectives in each form. On paper, an instruction is possble, but online we can check and alert the appraisee if the mimum count is not met.

More to come soon.

Peter

I've heard it said so many times that nature is the best designer, there's something to be said for survival of the fittest. Natures designs that surround us are only there having fought off many other designs to be the best, granted there has been some evolution along the way.

I'm looking into the usability of our 360 degree appraisal and performance review tools and considering where our products need to evolve in order to meet the growing needs of our users, however, I'm now keeping in mind that some of our features have been around in some form or another since the beginning and have stood the test of time. So, maybe those features deserve to remain, albeit after some evolution of their own.

What are your thoughts? Are there features you just can't live without, features that are great, if only they had a little bit extra? Let us know!

David

Hearing somebody speak passionately about a subject can be so inspiring, regardless of the subject. Sometimes, however the subject is of importance and can have rather impressive side effects.

Bowland Solutions believes (passionately) in the value of quality feedback and it is this passion that has inspired the development of our performance review and 360 degree appraisal tools to capture this feedback and deliver it out in the best way possible.

Now, those of us of a geeky disposition are passionate about the software we produce, but we feed off this passion to both produce annual performance review tools that we are proud of and create the best environment possible for delivering quality feedback.

Our passion doesn't stop there though! People who believe in what they are doing inspire others, just as I have been inspired and hopefully, those administering the process are inspired by the tools they are using to deliver it into the organisation. People feed off this and, when driven with vigour, we see greater completion rates and I would hazard a guess that the quality of the feedback is improved also!

I guess I'm going to spend some time thinking about how we can make our tools more inspirational...not a small task I would think!

David

With three separate performance review projects I have been reminded of one of the great benefits of reviewing performance.  Often, performance appraisal projects focus on objective setting and development plans.  But, one of the key reasons that employee's want performance reviews is to give them the opportunity to discuss the past year and what they've done well.

There is a real tendency to skip over this - both in the performance appraisal meeting and in the documentation that supports the meeting.  But, is it too much to ask of a manager that they take a bit of time to review what has gone well and give praise where it is due?

In a recent exercise on working out the employee objectives for a performance appraisal process there was a passionate argument from those contributing to ensure that the opportunity to talk about what went well in the day-to-day job in the past year was recorded and valued.  To my own discredit it took a number of people saying this for the message to get home properly.

Brendan

Our performance appraisal white paper is now available. 

The white paper offers our thoughts on the options that are open to you as you look to implement performance appraisals within your organisation.  Rather than a prescriptive or opinionated view of what you should do the paper accepts that each organisation has different needs of the performance review process and simply looks to give our experience of what works well and the options you should consider.

You can access your copy of the paper by visiting this link.

Brendan

I have recently been investigating the functionality of our online 360 degree appraisal and performance review tools. We're looking into ways in which we can improve the overall process. This led me to question "What are we trying to do?".

At Bowland Solutions, we live and breathe annual performance reviews and 360 degree feedback, all day, every day. It would be wrong to think that most of our users do the same, though it can be all too easy to forget this. For the average user,  the quality is not in the system, but in the feedback they receive. So, to answer my own question, the goal of our online feedback tools is to get out of the way and allow the users to leave quality feedback unhindered and deliver this feedback to the recipient in a clear, concise manner.

With that in mind, maybe the question itself is wrong? Maybe it should be "What are we trying not to do?".

I'll keep you posted on my research in this area, but if you have any ideas or feature requests for either our 360 feedback or performance appraisal tools then feel free to drop us an email, we really do value the feedback!

David

Performance related pay is an emotive topic.  It is sometimes argued that if you want to make performance appraisals really difficult then you should link them to pay.  But many people feel that linking pay to performance is just plain fair.  We often contribute to our client's discussion on these topics but we have to be very pragmatic here and work with our clients on their goals.

So, I started to draw up 4 outcomes that we could judge a performance related pay (PRP) implementation against.  That way, when we are working on a performance review implementation with a client - we at least have some objective measure.  This is what we came up with

• The PRP should lead to individuals motivated to achieve targets that will improve the organisation and meet the organisation strategy (it should deliver)
• The correct people should get the correct rewards (it should be fair)
• The PRP process should be efficient and deliver the benefits without using up those benefits in increased administrative burdern (it should be cost effective)
• The process should be robust and stand scrutiny from external parties particularly on equality (it should be legally sound)

I believe this is a great checklist for anyone looking at PRP.  It has become part of soon-to-be-published performance appraisal white paper.  If you want to receive a copy of that white paper please contact us via the blog our our website and simply subscribe to the newsletter.

Brendan

I've been working on analysing how our various marketing channels work for us.  It was a great reminder of the need to measure everything!  Its all very well having a feel for it, but a bit (or a lot) of data is very very useful.  The next trick of course is to have that data in an organised, simple, to-hand format that you can readily review and make decisions from.

Not hard to see the parallels with 360 degree feedback or performance review.  If I would like to discuss performance or development of an individual, some data (not necessarily numerical) is a great starting point.  Gut feel only gets you so far.

The work coincided with handing over a draft competency framework to a client.  We're putting a lot of effort in to asking the right questions of the client's managers.  They'll be using the framework specifically for a 360 degree appraisal process and it will be more than helpful if we get the measurement framework right first.

Brendan

Probably the most common section on a performance appraisal form is an objectives section.  Normally in two parts - review of past year, and setting of new objectives - and designed to get targets set against which the next appraisal can be assessed, I would say 90% of forms we see have this section.  But why?  A previous post on goal setting gives the background to how this section came to pass but we find a number of roles for which objective setting doesn't work that well.

There are two main categories of role that don't fit to the objectives structure.  First, are constant repetitive jobs.  Call centres, manual workers, programmers.  Most of these roles have their objectives built into the day-to-day role.  The objective is to do the day-to-day job correctly.  These jobs are better assessed by competence (can I do it) and key indicators (did I do it).  Objectives are useful for people who have a wider role within the organisation or have project work as part of their remit - which could of course include some of the examples I have given.

The second category is fast moving industry roles.  I once ran a call centre operation.  While I had an objective to answer 95% of calls within 15 seconds, frankly that was an hourly task not something I could achieve over a year - it was my job, not an annual objective.

I would rather see regular competency and indicator based assessments than force in an objectives section where it doesn't fit.  The key aim is to use the performance appraisal process to help people understand how they are performing, give guidance on improvement, and generate development plans that can be supported and implemented.

Brendan

One of my professors on my MBA was very concerned by managerialsm.  He had an ingrained suspicion of managers dictating what people should do.  He was scathing  on the topic of managers driving people's behaviours.  I always suspected that he saw much of what happened in business as a necessary evil.

One interesting area is the assessment of values during a perfomance appraisal - is the individual exhibiting the desired behaviours of the organisation?  The managerialistic concern is that the organisation is trying to impose its behaviours on its people.  Some indentikit indivual is turned out with individualism frowned upon and positively discouraged.

In theory I share the concern.  Diversity is beneficial both as a public good and to an organisation.  Identikit thinking leads to mediocrity.  That said, most organisations espouse a set of values that most people can sign up to.  So, as part of the performance appraisal session it strikes me as a reasonable topic of conversation.  Indeed, should a manger feel that an employee is actiing in a manner that is outside of the values or is causing problems for others due to their behaviour then it is incumbent on them to raise the issue.  The trick is to ensure the values are not a straight jacket.

At an organisation level it is useful to know where the values are less embedded than elsewhere.  Training courses around values when done properly can ensure that the appropriate culture for that industry and this organisation are developed.

So, while I shared some of my former professor's concerns, my practical experience with performance reviews is that including a values section is useful for all concerned.

Brendan

Just before leaving corporate life I had implemented a new performance appraisal process and a new pay structure.  It was ok - nothing more and I was frustrated by its impact.  Not long after, as part of my MBA, I read Herzberg's work (that he wrote it over 30 years before I was making my mistakes was just a tad frustrating!) on motivation.

I know some readers will be familiar with his findings but they are worth being reminded of anyway.  Herzberg found that hygiene factos such as money, work conditions, company policy etc. would make people unhappy if they were wrong but were not motivational.  Once you had satisfied someone's pay demands they would not be motivated by more.

Instead, motivators come from factors intrinsic to the job:achievement, recognition, personal growth, responsibility.

Performance related pay offers an opportunity to create a fairer pay system - with a number of caveats.  But, it should not be seen as a motivational tool.  Rather if you introduce a fair performance related pay scheme then you are likely to not demotivate.

The flipside of this discussion is that when designing the performance appraisal process and performance review forms you have an opportunity to cover achievement, recognition, personal growth, etc.  So a well designed and implemented performance appraisal process can play a part in motivation and support managers in building a motivated team.

Brendan