Components of an Effective Performance Appraisal Program

Communication and training are the basic elements of nearly all human resources activities; however, they are especially important for an appraisal program to be deemed effective. Key components of an effective performance appraisal program include setting job expectations and performance standards, training leadership and employees and developing performance-based rewards. An effective performance appraisal program can impact job satisfaction, productivity and employee morale. Therefore, implementing a program that meets employer and employee needs affects overall business success.

Performance management begins long before an employee's first annual performance appraisal. An employee's first day on the job is the first chance to establish job expectations. Job descriptions contain a list of tasks and responsibilities; however, job expectations include duties, responsibilities and the manner in which an employee should perform her job. Employers routinely provide a job description, yet fail to discuss with new employees the purpose of the job and how it relates to overall for the company and the employee. Discussions about job expectations reveal what underlies the day-to-day tasks in the employee's job description. Clarifying job expectations is one step to creating an effective performance appraisal program. Absent a mutual understanding about job expectations, employee efforts could be wasted or unrecognized.

Establishing performance standards is another key component of effective performance appraisal programs. Performance standards are benchmarks supervisors and managers use to rate employee performance. They are especially helpful in quantifying performance for more precise ratings. Examples of performance standards for real estate agents are "conduct four open house showings per month" or "communicate buyer and seller offers within 24 hours." Agents who conduct six open house showings in a one-month period are ranked as exceeding expectations, while agents who wait two days to exchange real estate offers fail to meet expectations.

Training supervisors and managers how to conduct appraisal meetings is just one part of developing an effective performance appraisal program. Granted, conducting the meeting is a conversation supervisors, manager and employees would probably rather skip; however, leadership training can improve the way employees perceive performance appraisals and ratings. Learning objectives for supervisor and manager training on performance appraisal programs include understanding the employer's coaching philosophy. Whether your company's coaching philosophy uses progressive discipline to improve performance or positive reinforcement for improving performance, leadership training helps supervisors and managers understand fundamental practices, policies and techniques for providing employees with constructive feedback.

If there is anything to look forward to when performance appraisal time comes around, it's anticipating a salary increase or year-end bonus. Constructing an effective performance appraisal program requires collaborative work with compensation and benefits specialists to determine allocations for salary increases, incentives and other monetary rewards. Communication with employees is also essential -- anticipating a raise but not understanding how salaries and wages are computed in relationship to performance can be confusing. In addition, employers should make it clear that year-end and discretionary bonuses are not part of guaranteed wages. This is where communication is extremely important in developing an effective program.