"Can we eliminate the subjectivity in performance appraisals by automating the rating?" Article by Elan Synergita

Organizations have traditionally been conducting performance appraisals or performance reviews for their employees once in a year (or more). A performance appraisal program is important to employees’ professional development, and to contribute to the company’s or firm’s bottom line. No employer, whether small or big, a nonprofit organization, a government institution or a private or public company, should be exempt from having a formal performance appraisal program.

Common outcomes of an effective performance appraisal process are employees’ learning about themselves, employees’ knowledge about how they are doing, employees’ learning about ‘what management values’ (Beer, 1981). According to Stephan and Dorfman (1989) outcomes of effective performance appraisal are improvement in the accuracy of employee performance and establishing relationship between performance on tasks and a clear potential for reward. Dobbins, Cardy and Platz-Vieno (1990) told five outcomes i.e. use of evaluations asfeedback to improve performance, reduced employee turnover, increased motivation, existence of feelings of equity among employees, linkage between performance and rewards.

Benefits that could be derived from having a performance appraisal program include enhanced communications, an opportunity to effectively address performance problems, and improved employee morale. One of the main objectives of the performance appraisal is to ensure that employees perform well to achieve the organizations’ objectives. Effective performance reviews produce outcomes that benefit your staff and your business. Agreeing on outcomes, setting goals, and following up on staff feedback will show your staff you are committed to meeting their needs.

The following outcomes would enable an organization to benefit from the overall performance management exercise:

The rating distribution – this will help the management to reward good performers and recognize their efforts, whereas it serves as a warning to poor performers to improve their performance.

The final rating for employees is an outcome of the performance appraisal. This can help to detail out the compensation of the employees.

An employee’s competency gaps can be identified and areas of improvement in the performance can be suggested. Managers can take the necessary steps to help the employees improve on those areas. This will lead to growth of employees as well as organizational growth.

Identification of high potential employees. This can help in succession planning of an organization. High potential employees can be nurtured and can tuned towards leadership path.

The necessary training requirements of employees can be an outcome of the performance appraisals. This can be a very valuable input to the training department, who can plan their training calendar based on that.

A good performance review process is ongoing. Use your performance review processes to build stronger, more open relationships between your managers and team members. Emphasize the importance of ongoing appraisals, and ensure you and your team continue to identify development needs and measure theirsuccess.

To summarize, outcome from performance appraisals should help in Compensation management, Succession Planning and planning the training needs for an employee. Your investment in your staff can earn your business a lasting, loyal and expert team.

Flexible performance management software provides good support for the above. Its analytical capabilities help in succession planning and training needs.

For instance providing 9 quadrant reports which will help organizations to find out their star employees and high potential employees is one feature that we would like to mention here. Organizations can concentrate on them and nurture them as leaders.

I hope the purpose of the PMS is for the parameters cited by you and every disciplined organisations are following the right procedure in evaluating the skill sets and the performance of the employees in right perspective. What is your query?
Pon

Dear Pon,
Thanks for your message.
From organizations perspective (as you rightly mentioned) Performance management is nothing but evaluation of Skill set and Performance. But What is the OUTCOME that we are going to get by doing PM process, or plainly put what we 'gain' out of it is the main Query.
And in the article according to me, (from the ultimate summary) it will lead us to plans for Promotion, Salary hike and finally employee Development.
If there is some other thing that I can add up, kindly share with me.,.
Thanks Again
Regards,
Elan.

KPIs are for OUTPUT. when you set the KPIs against KRAs, it is tool to measure the output of the employee. According to outputs, the award, increment and promotion are considered. Those who lack in output are warned and given an opportunity to improve the performance.
Pon

Changes in technology, economy, trend and the business environment have resulted in operational change in the organization. The management is forced to implement the changes whether they like it or not. When we consider organizational change, it is often necessary to adapt a few positive changes to keep pace with the developments in the market and constantly evolving world.

So how do we define organizational change?

When an organization re-evaluates its method of operations in order to cater the changing demands of the market and to survive the competition is known as organizational change.

Unfortunately, not all employees express positive response to change in the organization. Employee resistance to organizational change is a natural behavior as it requires new ways of thinking and doing work. Organizational change tends to bring a sense of uncertainty and fear of not knowing how life will look like after the change is implemented. Given that we live in an evolving world, one would think that the employees will be aware of it and soon get accustomed to the change in the organization. But the truth is quite opposite to it.

The following 10 reasons best describe why employees resist change in the organization.

1. Mind set: Majority of the employees who take their work and work place only as source of income would want to have a simplified job format. When the organizations possess some change in the operation, what immediately comes to the employees mind is, "will the change simplify/complicate their work?"

2. Change of routine: When employees are habituated in following a routine, they would not like any changes as it might ask them to step out of their comfort zone.

3. Lack of knowledge/expertise: Employees may resist change simply because they lack sufficient knowledge about the change taking place in the organization or lack of expertise. Not knowing much about the specifics of the change, they imagine it to be difficult to deal with and therefore, they resist giving the change a chance.

4. Workload: Change in organization would initially be hard for employees as it would take time for them to understand. Consequently, the processing of the change makes them feel loaded with work which is why they resist change.

5. Unwilling to learn: Some employees feel that their work does not need any advancement and therefore are unwilling to learn something new and are hesitant to change.

6. No change in compensation: Compensation is one of the main factors that make employees perform better. If they feel that the change in operations would not make any good difference on their pay-slip, then they abide the change in organization.

7. Fear: Fear could be of not knowing much about the imposed change, losing their position and if the change will bring improvement or not. At the hand of fear, they fail to realize that the change is needed for the organization to stay competitive. Thus, they resist change as they are satisfied with the present workflow.

8. Peer Pressure: Some employees blindly follow their colleagues/team mates without even knowing if the change would affect them or not.

9. Loss of freedom: Employees grooved to certain level of personal freedom at workplace would not want to let go of that.

10. Past experience: Few bad experiences from their ex organization would spring into action when there is a change in the organization and apparently they resist it.

Dealing with employee resistance to organizational change is tricky and challenging as the employee behavior cannot be anticipated. But once the initiated change gets rooted, the employee resistance to organizational change fades.

Let us take a look at the top 5 ways to handle employee resistance

1. Plan the change: Have a clear change plan in hand even before introducing it to the employees. Take help of a core team to design and implement the change. Predict the employee behavior and natural resistance that might occur. Have a well set strategy ready to confront it.

2. Take one step at a time: The organizational change could be huge, but never announce as it is to the employees. Big announcements of change alert the employees to resist. Therefore, it has to be opened quietly one after the other. This allows the employees to accept the change without resisting to it.

3. Let your plan come out as the employees' idea: When you know what changes are to be introduced, hold a meeting. Well, the meeting will not be to project the changes, but to discuss the scenario. Put forth the current state of the organization before the employees. Give them cues that will lead them to suggest ideas that exactly match your already planned changes. This is an easy way; however this strategy is unlikely to work always.

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4. Tap on the right switch: Employees would never resist without a reason, and the reasons could be plenty. Therefore, stabilize your relationship with these employees by listening to them with endurance. Know the exact reason of their resistance and tackle it respectively. If this includes any kind of assurances, then make sure you keep up your words.

5. Pick the hard way: If you think that your employees would never allow you take charge on the changes required to the organization, then the last option would be to take the hard curve. Have the changes introduced in terms of laws and regulations so that the employees have no option to resist but to accept it.

First step in implementing a performance management process in any organization is defining the process and implementing the process. Needless to say, most of the organizations will either adopt paper based forms where people fill in the forms and submit the printed ones (or) use Excel, fill it and send it to the HR / manager. It is definitely a right way to get started. You get to know the feedback on the forms design / what to capture / what not to capture / employee’s reaction to the form itself / whether you need one form for entire company (or) multiple feedback forms based on the level / etc.

However, following are the challenges as the organization grows:

1. Paper based form/Excel form eats more time for HR, Manager and the employee.

From the HR end, the distribution of forms to all the employees requires much effort. Especially in case of multiple forms for the different level/different designation employees, it takes much time for the distribution itself.

On the other hand, employees may not express their original feedback as they find it difficult or time consuming process to fill the form / excel.

The HR need to collect all the data. They should follow up with each employee to ensure that everyone has filled the necessary fields of the forms and submitted the same. This process requires more number of resources and lot of time.

2. Aggregation of data from paper based form/Excel.

Aggregation of data takes lot of time. Collecting all data and preparing reports from them will leave the HR in trouble. HR needs to spend a lot of time and needs to be much careful while integrating feedbacks from multiple employees.

If an organization wants the feedbacks submitted by the employees to be reviewed /approved by their managers, here comes the inconvenience for managers.

Maintaining all the forms throughout the appraisal process, getting the approval of corresponding managers, returning the forms to the employees when the feedback is rejected and recollecting the forms from the employees. This sequence requires many resources and also may lead to the extension of the appraisal period.

3. Confidentiality.

The performance management process should encourage the employees to strive for excellence by conveying their thoughts. But in this case, the employees may get a feel like their feedback may not be kept much confidential as there is a possibility of the paper forms to be read by others.

4. Possibility for human mistakes.

As there is no system involved, all the efforts are from human. This leads to the thought of error rate probability.

The level based forms might have got distributed wrongly. The HR might have missed to collect the form from few employees. There are chances for the collected hard copies to be missed.

Use of effective performance management systems will reduce the likelihood of errors occurring.

5. No history maintenance.

When an organization implements the appraisal process using paper forms/Excel forms, the history of employee performance level from each quarter/year will not be maintained. It is very hard to refer the previous year ratings of the employees.

The history will help both employees and higher level authorities to fill the forms and to take the decisions on the employee appraisal.

The consistency of the employees will be mostly figured by the history, as the possibility of change in employee hierarchy is high in the organizations based on the business needs.

6. Increased workload.

This excel or hard copy process will work for a company with maximum of 25-30 people. But as the company grows, once it hits 100 people count, workload increases massively. It is impossible to rely on such excel/paper based stuff. On an average, if you use Excel based forms, HR spends atleast 60% of their effort in administering, collating the data.

Defeating the above drawbacks brings in the introduction of effective online performance management software such as Synergita. Using a good performance management software reduces the number of resources needed to administer the process and increases the productivity. This saves tons of time of both HR and employees. The software will have the provision of defining the workflows which eases the process of submission and approval. We will have an easier way to track the employees who are stuck in a particular step so that they can be notified about the dead line for the same or go and help them solve their challenges in providing feedback or whatever help they need.



This makes the whole process much easy & pleasing. History can be maintained for all the years which can be referred at any point of time. The appraisal process can be completed on time which will increase the reliability. Data can be kept more confidential and safe. There are several advantages of having an online performance management software such as Synergita.

Hi!
I agree with the insights you discussed above on the negative side of such a PMS. As I have always stated in this forum, the choice of PMS, the frequency of its administration and processing depends on many factors.
Indeed, PMS is a time consuming process if the tool has not been designed well, simplified, and pre-tested (or actually used successfully). The problem with some canned PMS software is: you can be perpetually tied up with its vendor!
I suggest you try our very simple one page PMS tool. All the horrors you mentioned do not exist in our PMS environment.
Best regards.
Ed Llarena, Jr.
Managing Partner
Emilla International Consulting Services
Manila, PHilippines
Tel: 006352-742-0315/
Email: <emillaconsulting@hotmail.com>

4 steps on how to build an effective performance management program:

An organization cannot just hire an employee and expect them to work without any flaws. Initially your employees would need guidance and supervision to understand what the organization expects from them, as they can perform better. Having an effective performance management program increases the productivity of the company; helps identify top performers and motivate them to work harder. Having a perfect Performance Management program can also ensure their objectives and goals coordinate with hiring and employee development plan.

Performance management is an ongoing event, and not just an annual task. Therefore, the companies need to realize this to reap the benefits of performance management program.

Below are the 4 steps to build an effective performance management program. Check it out.

1. To begin with, define your employees' competencies and behaviors according to the role that they will play in your organization. This gives them a clear picture of what is expected of them. Make sure that the job skills, responsibilities and qualities that define success for each employee is included in the competencies. Initiate the first step of performance management program as soon as the employee is hired, and re-visit them annually.



Companies will get immediate performance improvements by doing this as the employees know what their higher authorities expect of them.

2. Performance review is an essential part of an effective performance management program. Therefore, decide as to how often the managers will deliver performance reviews to their team/employees. Annual performance review is mostly practiced annually, but continuous or frequent reviews would give the managers an opportunity to address the employees' negative behavior or oversight before it affects their productivity. Well, frequent reviews is time consuming and difficult for the managers and the HR's which is why they agree to supplement the usual performance reviews with the online talent and performance appraisal management tools.

Along with this, communicating what an employee did well or not so well over a quick conversation or an email can have a lasting impact.

3. Hold your managers accountable for making the assessments once the schedule of how often the performance review has to be conducted is set up. Managers need to evaluate their team during the assessment. They can use any sort of rating system to assess employees for their KPI's.



Note: Managers need to be honest at the time of employee assessment. If employees are performing well, then they deserve to hear that. And if they are doing a bad job, then that should be pointed out and what they need to do to correct it should also be told. The manager should also be able to tell them the exact reason behind the rating they give to every employee.

4. During the employee review meeting, the employees should also be given a chance to acknowledge to the feedback he receives. The data generated at the time of performance review should be incorporated into the human resource planning. The HR should consider it while revising the employee compensation, in setting up employee training programs, while defining long term succession plans and to identify candidates who deserve a fast track career growth.



By following these steps, the organization can not only have an effective performance management program, but they can also have an opportunity to improve their business.

What is the role of performance management software in an organization?

The above mentioned task is not at all easy for HRs. It’s tough to evaluate the performance of all the employees on the manual basis. HR is also a human being and hence creates mistakes as it is almost impossible to remember the yearly data. So here is the solution to the problem of HRs. A Performance Management Software can troubleshoot all such problems in an organization. It plays a very important role in evaluating and giving exact result which also satisfies the employee.

Like finance, human resource, sales and marketing, supply chain management and other departments and systems, performance management system has a key role to play in improving the overall value of an organization. Having a performance management software might sound expensive or like a huge investment, but they are not so. Therefore, when you have had a thought of implementing performance management software in your organization, it is very important to know what its key roles are.

Functions and Features of Performance Management Software:

To begin with its functions, performance management software is designed to initiate interaction and feedback between the employees and management. It helps the employees get a clear picture of what is expected of them to reach the organizational goals and objectives. Performance management software also ensures that the employees understand their importance of their contributions to the organization.

The features of performance management software are well structured to manage communication between various levels of an organization. The employee management feature of performance management software allows you to manage complete employee profiles and track their career history. You can also capture their skill sets, education and experience. The continuous feedback and social recognition feature helps provide continuous feedback to the team members, peers and managers. It also helps pass on the appreciations and critical inputs without having to wait for the appraisal process. With the help of performance management software, managers can set clear, achievable yet challenging goals for their team.

Well, an organization that does not properly implement performance management software may not experience the possible benefits of increased and continuous communication and workforce development. So why not consider an efficient, customizable and easy to use performance management software/tool to manage your people to maximize profits?

Hi Elan,
This is an excellent article! Performance Management is a hard and complex process and requires absolute attention.Effective performance management is helpful for both employees and for the organizations. Every business needs productivity and which can be done through effective management system.
Thank you for sharing the information

The motivations for employees to work hard are:

To get manager's appreciation for a good job done,

Get timely feedback on areas of improvement,

To get rewarded financially for the contributions made and to have a good career growth.

This is a reasonable expectation from an employee as:

1) The need for human beings to get appreciated by others is innate in their nature as social beings.

2) The aspiration to grow financially is there for everyone.

3) Beyond the basic needs that can be met financially, employees also look for higher level needs such as challenges, more responsibilities and a sense of contributing to something that is bigger than themselves.

Traditional performance reviews:

Performance reviews are usually done at the end of the year in organizations to assess how employees have performed through-out the year and to give them an increment and promotion based on that. But often times, the performance review activity turns a nightmare for employees, managers and HR. The following are some of the problems faced by each of the affected stakeholders:

Manager

1) It is difficult to remember the contributions made by the employee through-out the year, and so the manager instead focuses on the past few months or few weeks of performance which is fresh in the memory.

2) Instead of doing an objective review, managers consider these reviews as an annual ritual and try to complete it without giving enough attention.

Employee

1) Employee feels his manager is too judgmental. No proper evidence is given to validate a rating.

2) Manager might overlook all the positive contributions and instead the focus might get more on negatives.

3) In today's organizations, there is a lot of collaboration and lateral dependencies on people and their performance. So, even a 360 Degree feedback done once a year is not adequate.

These practices of ineffective Performance management effect the growth and efficiency of the employee as well as the Organization.

The new Solution to achieve effective performance management: Periodic Reviews and Continuous Feedback

The above mentioned difficulties can be over taken by introducing a system of bottom-up and periodic review plans (Structured but initiated by Managers and Employees), continuous / any time feedback and social rewards and recognition programs.

Continuous feedback allows employees to get feedback year long not just from managers but also from their teams, skip level managers, internal customers, external customers and other relevant people whom they work with.

Advantages of having Effective Performance Management:

1) Feedback given then and there helps employees to understand how they are performing. While positive feedback gives them a sense of accomplishment, they can still look at negative feedback with a clear mind when the evidence is fresh in their mind so that they can take corrective actions.

2) Since multiple people share their feedback, it is more validated and moderated, benefiting both managers and employees.

3) The year end reviews would be easy on everyone, as the expectations and feedback have been communicated in both directions round the year and there will be no surprises!

4) The organization can also experiment with rewards and recognition programs that are peer reviewed and link these to financial rewards at the end of the year.

Gartner recommends that organizations should balance their top-down traditional performance reviews and pay-for-performance programs with bottom-up, social recognition and rewards. So the right mix of continuous feedback and rewards, employee specific reviews and the formal annual reviews will make performance management more effective, resulting in better engagement, motivation and development of employees.

About the Author: Kavitha Kalyanasundaram is the Implementation Manager at Synergita.