Performance appraisals are a powerful and engaging process to build and develop staff, if done effectively. By Melissa Wilkinson

If an organisation's people are its only true source of long-term competitive advantage, it suggests that leaders should make the management of their people a top priority. Done properly, the results should be higher performance from every employee. Unfortunately, beneath the rhetoric, too many managers still regard - and manage - employees as cost centres.

One of the people-development tools that, if used correctly, can deliver enormous benefit for the individual and the organisation, is the performance appraisal process. However, like any tool, it is only as good as the people using it. So managers must be clear about their objectives before putting the appraisal process into action.

An appraisal is designed to review an employee's performance over the past six or 12 months and identify areas for future development. Employees should leave an appraisal more engaged in their work, excited about how they can contribute to their organisation's objectives and have a clear understanding about what is expected.

Ineffective appraisals are those that leave an employee feeling that they've simply been part of a compulsory tick-a-box exercise pushed down the management chain by an overworked HR executive.

Intertwined process

Nicola Brazil is Head of Development at PricewaterhouseCoopers and believes that the performance, feedback and development processes are all intertwined.

"Performance reviews and goal setting should be part of a year-round co-creation process, rather than just an activity carried out at a single point in time," she says. "It's definitely a living process throughout the year between the manager or coach and the individual.

"The single biggest issue that managers need to remember for successful appraisals is that there should never be any surprises. Things go wrong during an appraisal when issues are raised that totally blindside an unsuspecting employee."

Brazil says that the appraisal session should always be a two-way process. "The manager's role is to help the employee articulate their development and career goals. They need to show that they understand each individual's career aspirations, which requires sincerity and authenticity.

"An appraisal session should never be used to discipline an employee. Specific feedback should be given at the time of the behaviour in question when it is most helpful and respectful to the employee, not weeks or months later.

When things go bad

Experts suggest that performance appraisals go awry when managers are reluctant to face the fact that their team members have been underperforming as a direct result of their management style. This can lead to sugar-coated, non-specific feedback that does not address the core issue or barriers that are preventing the employee from achieving his or her objectives.

A manager also needs to be aware of the risk of 'role creep', where employees end up being responsible for projects outside of the scope of their original job functions. With the ever-changing needs of clients and organisations, this is not an uncommon phenomena, but what it does highlight is that managers need to ensure they maintain an ongoing and two-sided dialogue with their team members.

When stretch goals are set for an employee for the coming period, a manager must ensure that enough is done to support the employee in achieving them.
According to Kirsty Stewart, former brand manager at Rabobank and now head of start-up sun fashion business Ikarus, getting employees to take performance appraisals seriously can be difficult if they've had a poor experience in the past.

"If employees don't understand the role of the performance appraisal process or have very low morale to start with, then a manager needs to invest time in creating a healthy culture."

Tips for effective appraisals

There should be no surprises or new feedback for an employee or a manager during a performance appraisal. Some basic areas to cover include:

• the employee's performance relative to the goals agreed in the last review
• what worked and didn't work
• which barriers prevented the employee from meeting the set goals
• a discussion about the organisation's current vision and mission
• the employee's role in helping the organisation achieve these
• how the organisation can help the employee to achieve the agreed objectives
• agreed next steps
• not using the appraisal process to discipline an employee
• investing time in gathering feedback on an employee's performance throughout the year, not in the week before an employee's review.