Do you know who your best worker is? In many small and mid-sized companies performance is gauged by what the boss thinks based on little instances of communication. There are many problems with this. Often in companies good workers get annoyed when they see the people who pretend to be the best are often promoted over those who are the best. Going on your gut can cost you great employees, and cost you money when bad decisions are made. This article will focus on how to construct a performance appraisal that is fair, and also provides a true basis for making decisions on promotions and raises.
Performance appraisals come in three basic forms: qualitative, quantitative and blended. Qualitative appraisals are commonly seen in performance reviews that involve comparing the employer's expectations with the employee's expectations in regards to the job. For example a secretary might rate his typing as above average, while the manager might say it is below average. These types of appraisals lead to a letter grade in the end, with a discussion on what needs to be improved, and what is going well. There are a lot of problems with this type of appraisal process, so I do not recommend it.
Quantitative appraisals are based on real numbers and provide a strong foundation that unlike a strictly qualitative appraisal will protect you from litigation. An example of this would be the same secretary looking at typing, but instead of letter grades from ambiguous thoughts, one might use the words per minute the secretary could type in a test, and gauge that versus the average in the company. Also the explicit expectations could be used instead of a group average. The downfall of this type of appraisal is that not all abilities can be quantified.
The answer to the short comings in both the qualitative and quantitative methods is the blended performance appraisal. A blended performance appraisal combines both the quantitative and qualitative aspects of a job. The most popular appraisal today is the 360 degree performance appraisal. I am a big fan of this method, and for the remainder of this article I will talk about how to construct this type of appraisal.
Constructing a 360 performance appraisal starts with identifying the knowledge, skills and abilities required to perform the job. Once these are concrete the generation of at 360 appraisal process can begin. First you must break down the knowledge, skills, and abilities of a job into two categories: Quantitative and Qualitative. This breakdown lets you know "how" you will gauge each part.
Next comes the exploration of the job from another angle: who and what is involved with the person you are evaluating. The concept "360" comes from the idea of creating a circle around the job. Looking at not just the person, but also the superiors, peers, output, and input that goes into the job. A full circle of vision is created from this philosophy. With our secretary example, let's say that he is a secretary in an office where there are four secretaries. A 360 appraisal could be a comparison of typing abilities across all secretaries (quantitative), a rating of how other secretaries view his ability as a secretary (qualitative), a rating of how helpful and friendly he is on the phone by people that call in (qualitative), the average amount of time it takes for him to assist someone on the phone (quantitative), and how helpful the secretary is in the eyes of the boss (qualitative). Of course there would be more to the evaluation than this, but this is a simple model to show how we would attempt to circle the job position.
Once the appraisal is created, it must have some type of effect. The appraisal must be attached to things such as: Improvement methods, raises, promotions, etc. Also the appraisal should be tested against what all people in the company make in the same job category. If you find that the lowest paid employee is the best worker according to your appraisal, then you are in effect punishing the best worker and you should remedy this immediately!
Another advantage to this appraisal is of course being litigation repellent. If all are held to the same standard, it's pretty hard to support the claim that one person received many promotions due to favoritism.
Perhaps the most important value is that you can reward the employees that truly deserve it, and promote the employees that can be the most beneficial to your company in the end. After all, isn't the success of the company due to having the best people in the right positions?