How to Have the Most Impactful Year-End Performance Appraisal

Hello everyone! You may have seen my announcement that I am doing a newsletter series in December called "Gifts of Leadership", an extension of my regular leadership newsletter, which is a collaboration with my close coaching colleagues on key leadership topics that we are helping our clients with, and identified as important leadership skills for 2023.

TODAY is the first release in my Gifts of Leadership series, an important and timely topic that I have pulled together from my resource library on performance management, and the work I am currently doing with my clients.

It’s that time of year where most organizations are preparing for the?year-end performance appraisal?process. For many leaders and team members, they feel it is a stressful and arduous process. Well, it doesn’t have to be that way, and in fact, it can be one of the most important conversations that you have with your team members.

Whether your organization’s process is structured or informal, the most effective performance appraisal is one that motivates and inspires high performance by having a meaningful conversation with our team members. This includes their performance, accomplishments, goal achievements, as well as how you can support them towards growth-oriented and constructive development.

No different than any other important task, taking the time to fully prepare for the year-end performance conversation is critical to the effectiveness of the conversation(s), and you will be seen as the leader who cares and puts in the effort. Our team members truly want to know how they are doing, and look to us for direction and support through this process. Besides the standard process, I want to share things to be mindful of that create opportunities and challenges.

The following are ways that you can prepare for the year-end conversation:

1) Plan for a?future-focused?conversation. Be proactive by capturing key measures of how well they performed throughout the year and how their performance will align to next year’s expectations and goals. Those key measures will be points on their performance against the role expectations and competencies, the manner in how they achieved their goals, their commitment towards their development and progress towards areas of improvement that were identified throughout the year. Do you need to establish clearer performance and results expectations?

2) Apply?clarity, transparency, and fairness?against rating criteria. If your performance management system requires you to apply a performance rating, it is common that trying to articulate your rationale for the rating that you give your team members can cause frustration and disappointment. Sometimes there is a disconnect between the effort that your employees feel they have put into their work and the results that you are evaluating their performance against. Be prepared to describe your rating criteria. You may benefit by testing your approach to that of your peers and other leaders to ensure there are consistent rating standards across the organization.

3) Acknowledge possible?biases.?We may not realize it, but sometimes our biases creep into our evaluation process when determining our team member’s overall performance. A couple of examples would be, 1) a team member has made a big mistake recently and you evaluate their yearly performance based on this one indiscretion, 2) your team member may be an under-performer and you want to apply a good performance rating so they do not lose motivation or quit. (Additional resource provided below).

4) Consider?self-assessments. There is belief that a self-assessment is not always a useful exercise as individuals use this forum to over-state their performance results and overlook important learning.?If you do incorporate a self-assessment, a way to ensure it will be a meaningful process is to create a safe environment where your team members can honestly reflect how they feel they performed to expectations, share their accomplishments, learnings, and challenges (positive and negative), and what they wish to focus on for the following year. This may help you to understand how your team members value and evaluate their own performance.

5) Seek?broader performance feedback. Where possible, seek performance feedback on your team members from others who they work with closely.?In addition to your evaluation, or your team member’s self-evaluation, receiving broader feedback will raise your team member’s awareness of their strengths, accomplishments, and offer impactful learning and growth opportunities.

When in the conversation….

1)?Communicate your feedback (positive and constructive) succinctly. Naturally you want to be able to acknowledge the great work and provide positive feedback on your team member’s accomplishments and results.?As well, it is equally important to provide constructive feedback and identify areas of improvement where needed. In reality, everyone has areas where they can improve, and that’s a good thing! Be careful of the “feedback sandwich” by discussing the good performance, then discuss their areas of improvement/constructive feedback, and switch back to acknowledge the positive performance.?Refrain from this so not to diminish the importance and recognition of the development/constructive areas.?

2) Be?mindful of the reaction?from the conversation, for both of you. Be aware of your own discomfort when providing constructive feedback and being challenged by your team members. It is our role as leaders to give our team members the feedback they need to maintain or improve their performance. How will your team member react to your feedback? As you know how they react to feedback or recognition, how might you deliver the feedback that is motivating for them?

3) Seek?alignment and acceptance?of the performance rating and development areas. Ideally, both you and your team member need to be aligned with the performance rating and next steps. This is what drives the motivation.?If you feel this needs some exploration, you may ask a couple of questions; “Do you feel we have captured your performance, results, and opportunities accurately?”, “What might be missing that is pertinent that will help you move forward?”.

4) Establish an?environment of open feedback?if you haven’t yet. Statistics continue to show that most employees do not feel that they get sufficient feedback that meets their needs. The most important conversations that you could be having each week are those with your team members. The year-end performance review can be the timely conversation where both you and your team member can discuss how you both may communicate more effectively and create more meaningful 1:1’s.?You may also take this one step further to seek feedback how your leadership style is supporting your team member to be their best, and what they may be need from you differently.??

5)?Capture and commit to actionable steps?from the conversation. Consider the appraisal as a conversation starter. There should be important take-away's, commitments, and actionable items for both you and your team member.?Ensure that these are documented with a commitment to act or follow through.

6)?Separate the performance conversation from the compensation conversation.?Where possible we should discuss our employees’ performance separate from discussions about their compensation, ie. raises/bonus, etc. While many organizations have pay for performance systems, if employees enter the year end review discussion with money on their mind, their performance can become a bias for the raise, overshadowing the intent of the performance discussion, and they miss out on learning opportunities that lay the foundation for future development and high performance. You may consider planning a few weeks, for example, between the performance appraisal conversation and the conversation about compensation. (Additional resource provided below).

In summary, I always say that a measure of success is when the content of the performance appraisal is not a surprise and, instead, is the formality that captures the key performance highlights where we have motivated, inspired, and co-created a future-focused plan with our team members that supports high performance.?

Lastly, remember, you are an employee too!?How might some of these tips help you to have a meaningful year-end performance conversation with your Manager??

Additional resources:

10 Performance Review Biases and How to Avoid Them: https://www.cultureamp.com/blog/performance-review-bias

?Performance reviews and compensation: Taking money off the table:?https://www.small-improvements.com/blog/performance-reviews-compensation/

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