Question

what will happen if proper appraisal is not given to employees and how to diminish negative impact of of wrong and unfair evaluation?

Answer 1

A performance appraisal is a regular review of an employee's job performance and overall contribution to a company. Also known as an annual review, performance review or evaluation, or employee appraisal, a performance appraisal evaluates an employee’s skills, achievements, and growth--or lack thereof. Companies use performance appraisals to give employees big-picture feedback on their work and to justify pay increases and bonuses, as well as termination decisions. They can be conducted at any given time but tend to be annual, semi-annual, or quarterly.

Performance appraisals also help employees and their managers create a plan for employee development through additional training and increased responsibilities, as well as to identify shortcomings the employee could work to resolve.

They are done with a few key objectives in mind:
1.   To maintain records for compensation packages, wage structure, salaries, pay raises, or restructuring.
2.   To identify the strengths and weaknesses of employees.
3.   To assess and maintain the potential each person has for further growth and development.
4.   To provide feedback to employees regarding their performance.
5.   To serve as a basis for improving working habits of employees.
6.   To review and retain promotional and other training programmes.

Limitations of performance appraisal:

Creates Negative Experience: If not done right, the performance appraisal can create a negative experience for both the employee as well as the manager. Proper training on processes and techniques can help with this.

Time Consuming: Performance appraisals are very time consuming and can be overwhelming to managers with many employees. I’ve known managers who were responsible for doing an annual PA on hundreds of employees.

Natural Biases: Human assessment are subject to natural biases that result in rater errors. Managers need to understand these biases to eliminate them from the process.

Waste of Time: The entire process can be a waste of time if not done appropriately. Think about the time investment when the end result is negative. It is time wasted on all fronts.

Stressful Workplace: Performance appraisals can create stressful work environments for both employees and managers. Proper training can help to reduce the stress involved in the process.

To reduce bias in reviews and drive better performance for everyone at your business, you need a consistent structure and clear objectives. Here are four simple ways to do that.

1. Write down goals and expectations

A study from MIT shows that the best performing teams usually have clear and ambitious goals. This is hardly a mind-blowing insight, so the real surprise is that 50 percent of employees don’t know what’s expected of them.

Setting clear targets is an obvious way of evaluating performance and developmental needs. It also reduces bias. Referring to goals before completing evaluations gives managers a more objective perspective than open-ended questions like, “how did this person perform?”.

Reviewing performance against goals more often allows you to track progress more effectively while reducing the impact of recency bias. Managers are much more likely to recall how an individual performed over the past month or quarter than for an entire 12 months.

2. Align individual and business goals

Companies with a purpose outperform the market by 42 percent. Not only does a mission guide the direction of your business, it motivates employees by connecting their day-to-day tasks and goals to broader business outcomes. Yet one study found that less than one-quarter of middle managers knew their company’s strategic priorities.

When business goals are clear and transparent, employees can directly connect their goals to specific company targets. The ability to see real business impact will reduce bias in reviews. When priorities change, individual goals should be updated as well, so that you’re not unfairly judging people against outdated targets.

Aligning individual and business goals also helps to reduce gender bias. Women are less likely to receive feedback that’s specifically tied to business outcomes than men, which may explain why they only occupy 24 percent of senior roles. The more women are evaluated on their broader business value, the more they will feel like and look like the future leaders of your company.

3. Avoid the open box

Much of the unconscious bias in performance reviews stems from the “open box”. Many review processes lack structure and simply provide managers with a few open-ended questions and a large blank space to fill. With so little guidance and so much leeway, it’s no surprise that certain biases find their way into evaluations.

The open box is a symbol for how little guidance managers get in general. Just 39 percent of new managers received training for their role and nowhere is this more apparent in the performance management process. In a McKinsey survey, less than 30 percent of employees said that their managers are good coaches.

To help managers improve, train them to collaborate with their team on setting and aligning goals and on providing constructive feedback that’s development-focused. Encourage more frequent conversations to reduce recency bias and provide technology that prompts them to check in with their team and what to discuss. The more guidance and structure you provide, the less likely you’ll see their open-box biases.

4. Use analytics to spot potential bias

HR professionals are often uncomfortable using data to inform decision-making. But when it comes to the very human problem of bias, analytics is useful, especially as an accusation of prejudice can itself be accused of bias if you don’t have evidence to back it up.

It can be easy to spot potential bias from the data, like when an employee receives a negative evaluation but you can see that they hit all their targets and directly contributed to the broader business goals. Or if the data shows that a manager didn’t have regular performance-related check-ins with an individual, be on the lookout for recency bias in the review.