Performance Appraisal is Critical to the Pay for Performance System

by on June 26, 2009 · 0 Comment POSTED IN: HR Info Center

Basics of a good performance management program that also maximizes your pay for performance system

The most important communication that you have with your employees about the pay for performance system is actually through the performance appraisal process. Now, everybody is searching for the holy grail of performance appraisal. And nobody has found it yet because no two companies use the same documents. Everyone is a little bit different. There are surveys out there, however, that show that those who do a good job of appraising and managing their pay for performance system actually performed better financially.

One of the things you should be aware of is that the primary objective of your performance appraisal process is to improve future performance and secondarily, to reward for a past performance. We have a tendency of focus on past performance in the appraisal process.

But again, the past is the past. A pay for performance system obviously rewards and talks about past performance but what you really want to do in this generally once a year kind of a meeting is focus on the future. These are some things that you actually can affect today and have a difference and actually improve performance in the future.

  • Regular feedback. You want to increase the amount of feedback that you do during the course of the year. All the research seems to indicate this. All the surveys will show that if you have more opportunities for feedback or communication between employees and line managers’ performance advices. So, regular feedback is really critical to having a performance appraisal that impacts your pay for performance system.
  • Writing the appraisal with examples is really important. You really have to tell employees why you rated them the way you did either in certain performance categories and overall. And the best way to do that is to use examples. And those are actual things that you saw, not necessarily personality traits, et cetera. I’m sure most of you probably realize that.
  • Delivering your results to the employee in a humane way is really critical. You really don’t want to hurt most of our employees in this process. There may be a couple that you actually do want to hurt. In fact, you may want a couple of employees to actually walk out the door tomorrow. But most of your employees, you really don’t want to hurt them in any way. And generally, you generally need to give like three positive comments before they’ll accept some sort of negative comment. And that may be different from employee to employee.
  • This is a team concept. You and I need to work together to improve things. And certain things you can do to help improve and certain things I as a supervisor might be able to improve.
  • Focus on the future. The past is the past but the future you can have some say in going forward. And that’s really what you want to do. You want all your employees, I think to get better.

Edited Remarks from “The Seven Deadly Sins of Employee Compensation Plans (and How to Fix Them)” by Rick Oliveri

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