It’s that time of year where I need to appraise all my staff and present recommendations to the board on any adjustments to their job roles and salaries.  I thought I’d use this post to collect my thoughts on how I do this and as a trigger to improve it in the future.

So, first let me outline the process we currently use.  Once a year (about now) I meet with each member of my team and we discuss the following items:

1. What have you enjoyed the most this year and why?
2. What have you enjoyed the least this year and why?
3. Have your skills changed or improved this year and in what way?
4. Has your role or level of contribution to company performance changed over the year, i.e. do you have a greater level of responsibility?
5. How would you compare yourself to others performing the same role as you?
6. How could the company help support you?
7. What objectives / targets are you setting yourself for next year?
8. Any other items to discuss?

I allocate about 45 minutes to 1 hour for each person and make notes as we go through each area.  I try to spend more time on the areas that are relevant to that person rather than trying to force the conversation into areas that we have nothing much to talk about.

I try to answer those questions myself for each person before they arrive, so that I also have my own agenda on what we should be talking about.  I don’t let that override what my team member wants to talk about, but it does help me keep the conversation moving and can be a topic of discussion in itself.  Any time my own thoughts don’t match the thoughts of the person I’m appraising, I need to consider why?

I generally need to look at one of these reasons why:

• I’ve not noticed the changes in my staff and have carried over old ideas of them.
  I quickly need to re-adjust my views and stop previous thoughts about that person clouding my view of them now.

• I haven’t been providing enough feedback throughout the year.
  One of the main criticisms of staff appraisals is that they too often provide surprises.  There shouldn’t be any surprises in an appraisal so if someone doesn’t already know my thoughts on their performance I have been lacking during the year.

• We simply disagree on that person’s performance
  This can be the biggest challenge, and again is one of the main criticisms of staff appraisals – even the worst staff think they have done well and don’t take being told otherwise very well.

I pay particular attention to questions 3, 4 and 5 as they are the ones I use to recommend any adjustments in salary or changes in job title.

The other questions are great at providing feedback on what I need to do as their manager.  If they are not enjoying the tasks I am asking them to do, I need to find other projects to challenge them or explain why they are being asked to do these tasks and offer a time scale to change.  If they have good suggestions for improving the company I need to do my best to implement them or push for those changes on their behalf.  If they have targets they want to achieve I need to help remove any obstacles that might prevent them from doing so.

I also like to include a chance to take the conversation away from the agreed agenda.  This  can throw up some interesting discussions, and again can be useful in providing feedback on how I should manage that person moving forward.

So, does it work?

To be honest I’m not sure.  On one hand, I think it is very important to reflect on past performance and think about what you’d like to do in the future.  It’s also important for a business to assess the value for money their employees are providing and to make sure that the right people are rewarded.  On the other, I agree with the idea that a performance appraisal is a terrible tool for increasing employee performance (see Joel’s post Incentive Pay Considered Harmful or this article on About.com).

Hopefully we avoid some of the pitfalls by not directly focussing too much on performance in the review and instead focussing on what we can achieve together.  However, we are still linking salaries to the reviews and that is certainly an area I am less comfortable with and would most like to address in the future.