Perfecting Performance Appraisals

Denise Rondini

September 20, 2012

Annual employee reviews often strike fear in the hearts of employees and managers alike. Putting a process in place can make them less painful for all concerned.

By Denise L. Rondini, Executive Editor

Performance appraisals often are viewed as necessary evils in many truck dealerships. However, according to Taking The Pain Out Of Performance Appraisals, a white paper from KPA, “Done right, as part of a comprehensive process known as performance management, employee appraisals can be a powerful tool for building and improving your bottom line.”

However, KPA is quick to add that a good performance management system does not just happen. It needs to be planned and executed on an ongoing basis.

When used properly, performance evaluations can motivate employees, recognize and compensate top performers, reduce employee turnover and attrition, and help you protect yourself legally, according to The Secrets To Effective No-Hassle Performance Reviews, a white paper from SuccessFactors.

The basis for the system is the job description that is used to establish the benchmarks for your employee evaluations. According to KPA, it should outline the position’s responsibilities, the necessary competencies and explain how tasks are going to be completed.

 A mistake many dealers make is to meet with employees only once a year to review their performance. Meetings should be held at least quarterly, according to KPA. “These meetings give managers the opportunity to discuss what is working, what needs to be improved and what needs to be changed,” the white paper says. Feedback needs to be specific and include examples and concrete suggestions for improvement.

To help ensures that all performance reviews are done in a consistent manner, you should develop a standard form. Make sure the form is tailored to the needs of your business. KPA suggests using a form with two sections — one for performance goals and one for competencies. “Then further subdivide competencies into a handful of general attributes applied companywide (communication skills, work habits, etc.) and those specific to [each] job.”

 Keep the forms simple and make sure the goals and competencies are specific, measurable, attainable, realistic and timely.

 You can do something as simple as using a three- to five-point rating system and then allowing room for comments and details on the form.

You also may want to consider asking employees to complete a self-evaluation that they then submit to their manager a few days prior to the review. “This reinforces the process as collaborative, including employee investment,” KPA says in the white paper.

Additionally, you may ask the employee’s peers, other mangers or subordinates to evaluate the employee as part of the annual review process. “Known as a 360-degree evaluation, it will provide additional insight into how the person interacts and is perceived by others,” KPA says.

You should set aside somewhere between one hour and one and a half hours for the meeting and make sure there are no interruptions. Begin the evaluation by allowing the employee to tell you how he thinks things are going, how he feels he is performing, and then ask him to set some goals for the upcoming year.

 When it is your turn to speak, be objective and begin by talking about the positive things the employee is doing, but do not overlook the areas that need improvement. Close the meeting by setting goals and expectations for the coming year and make sure the employee understands what they are.

Performance Appraisal No-Nos

In its white paper, Taking The Pain Out Of Performance Appraisals, KPA provided a glossary of things that should be avoided during the appraisal process:

  • Contrast effect — Comparing one employee with another, rather than against performance benchmarks
  • Halo effect — Allowing performance in one or two areas to color the overall review unfairly either positively or negatively
  • Similar-to-me effect — Being more generous to those with similar backgrounds or beliefs as you hold
  • Central tendency — Giving everyone an average score, regardless of their performance
  • Leniency/desire to please — Granting a better review than warranted in order to avoid confrontation
  • Recency effect — Giving excessive weight to the most recent part of the evaluation period
  • First-impression bias — Allowing your initial judgments to color all subsequent information
  • Rater bias — Allowing personal biases to infect the evaluation.

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