12.2 Performance Appraisals

As an Operations Manager, providing employees with continual feedback is an important part of the business. An argument can be made for annual performance appraisals versus semi-annual performance appraisals, but most agree they need to occur. Although most conversations will be positive, from time-to-time a leader must have a challenging talk with an employee. Let’s look at what it is like to have a difficult conversation with an employee.

A Tough Conversation

As you wake up this morning, you think about the performance evaluation or appraisal you will give later this morning to one of your employees, Sean. Sean has been with your company for two years, and over the last six months his performance has begun to decline. As their manager, it is your responsibility to talk with him about his performance, which you have done on several occasions. However, the performance evaluation will make his nonperformance more formalized. You know that Sean has had some personal troubles that can account for some of the performance issues, but despite this, you really need to get his performance up to par. Your goal in the performance evaluation interview today is to create a performance improvement plan (PIP) for Sean while documenting his non-performance.

When you arrive at work, you look over the essay rating part of Sean’s evaluation. It details two client project deadlines that were missed and the over-budget amounts of the two client projects. It was Sean’s responsibility to oversee both aspects of this project. When Sean arrives at your office, you greet him, ask him to take a seat, and begin to discuss the evaluation with him.

“Sean, while you have always been a high performer, these last few months have been lacklustre. On two of your projects, you were over budget and late. The client commented on both of these aspects when they filled out the client evaluation. As a result, you can see this is documented in your performance evaluation.”

Using defensive nonverbal language, Sean says, “Missing the project deadlines and budget was not my fault. Emily said everything was under control, and I trusted her. She is the one who should have a bad performance review.”

You respond, “Ultimately, as the account director, you are responsible, as outlined in your job description. As you know, it is important to manage the accountability within your team, and in this case, you did not perform. In fact, in your 360 reviews, several of your colleagues suggested you were not putting in enough time on the projects and seemed distracted.”

“I really dislike those 360 reviews. It really is just a popularity contest, anyway,” Sean says. “So, am I fired for these two mistakes?” You have worked with people who exhibited this type of defensive behaviour before, and you know it is natural for people to feel like they need to defend themselves when having this type of conversation. You decide to move the conversation ahead and focus on future behaviour rather than past behaviour.

You say, “Sean, you normally add a lot of value to the organization. Although these issues will be documented in your performance evaluation, I believe you can produce high-quality work. As a result, let’s work together to develop an improvement plan so you can continue to add value to the organization. The improvement plan addresses project deadlines and budgets, and I think you will find it helpful for your career development.”

Sean agrees begrudgingly and you begin to show him the improvement plan document the company uses, so you can fill it out together.

When you head home after work, you think about the day’s events and Sean. As you had suspected, he was defensive at first but seemed enthusiastic to work on the improvement plan after you showed him the document. You feel confident that this performance evaluation was a step in the right direction to ensure Sean continues to be a high producer in the company, despite these mistakes.

Performance Management Systems

A performance management system is an integrated set of processes aimed at helping employees contribute to organizational effectiveness.  At their core, these systems involve the assessment of individual performance. To ‘manage performance,’ the first thing you need to do is find out who does what and how well they do it. After this information is collected, managers can feed the data in various systems to help the employee and improve the organization in general. Some of these processes include compensation, employee development, and employee records. Performance management is an important HR process because it goes to the essence of employee performance and relates to every other organizational processes. For example, to understand whether or not the design of a job is efficient you use the performance of employees as data. If you want to see whether your new interview protocol is suitable you look at whether candidates who score well on it also become superior employees. For training, you can base your needs analysis on performance appraisal data to target who requires training.

Some researchers suggest that the performance appraisal system is perhaps one of the most important parts of the organization,^[1] while others suggest that performance appraisal systems are doomed and should be abolished,^[2] making them worthless. One of the most interesting (and thorny) facets of performance management systems is that, while very important, they are also very much disliked by employees and managers. The reality is that no one likes to be evaluated and ‘judged’. As a result, managers are often not comfortable evaluating (and judging) their employees because it can strain relationships. This makes performance management difficult to manage: it is very important, and the organization needs the information, but people dislike it. This is not to say that successful performance management is not possible, just that it requires careful consideration, design and implementation.

Why Performance Management?

Performance Management and Compensation

How will salaries and bonuses be determined if not by employee performance? You shouldn’t reward non performance? How do you define performance for the employee/job, i.e. quantity, quality, sales volume, team work, client satisfaction, team objectives, company objectives? The answer to these questions might seem obvious but managers have to consider it carefully when developing a performance evaluation process. There is research that shows employees have a greater acceptance of performance reviews if the review is linked to rewards.^[3]

Performance Management and Employee Development

Performance management is important for employee development. In order for this development to occur, employees need to know what is expected of them and where they stand: what aspect of their work they need to work on (weaknesses) and what aspects they can capitalize on (strengths). Performance management provides the feedback essential for this awareness and change to take place. However, for most people, receiving feedback is not an easy thing. One often becomes defensive and finds ways to discredit the feedback, especially if it is negative. Conversely, giving feedback is also difficult. Managers tend to shy away from these difficult conversations by either avoiding them or by simply ‘sugar coating’ the message. Operations Managers need to work closely with the HR team to ensure both the employees and managers are equipped and supported when they have these conversations.

Performance Management and Employee Records

A third and final use for performance management is to document management decisions and actions – maintaining a full employee history. Basically, this data provides a record of performance ratings and  discussions that took place over the years and the actions agreed upon by employees and supervisors. These records are important in the case of employee discipline and termination, or further development and advancement. It is important to note that employee records, and ‘paper trails’, are a legal requirement when taking legal action against an employee for non-performance and termination.

 “Performance Management” and “Performance Management Systems” in Human Resources Management – 2nd Ontario Edition by Elizabeth Cameron is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.