Despite the criticism of the annual performance review ritual, employees still want to know, on the record, where they stand. This is especially true for any employee in a management or leadership position. As my friend Donna Morris describes the Check-In system in Adobe, there is a case to be made for keeping the appraisal process an ongoing narrative for line and staff employees, but not those in management. An accountability ‘contract’ needs to be maintained. On the record. (More on this in my next blog: Appraising the CEO/ED.)

But that said the appraisal must be done effectively or it is an empty exercise.

The principle of frequent evaluation and review is key but only one part of the full performance review cycle.

Despite the effort involved, an effective annual review must contain the following process steps:

1. The four baseline components (key indicators of ongoing responsibilities of the role; key performance competencies; (up to five) performance goals for the review period; and one or two personal development goals), are reviewed between the Manager and the Employee to determine if it is still comprehensive and relevant.
– at the beginning of the review period through a process of dialogue;
– typically the Employee produces a first draft of the plan she/he would like to follow and the Manager would provide input for additions deletions and clarification.

2. The next step in the process is data gathering.
– The Evaluator, having had frequent evaluation and review sessions with the employee throughout the year can consult with his/her notes. But in addition, the Manager should consult a number of stakeholders to come to his/her final conclusion.
– This can be done informally or formally.
– Informally the Manager can gather impressions throughout the year by engaging staff and other stakeholders in non-directive conversation, listening and probing for reports and narrative of how things are going in the organizational unit.
– Formally the Manager could engage the services of a third party to gather information from all relevant stakeholders in a structured survey. This 360o feedback review will be a consolidated report (aggregated and suitably paraphrased) of the views of the key stakeholders of the Employee’s overall performance against the unit’s results, the agreed performance goals, and the competency profile.

3. The next step in the process is evaluation.
– It should be an evaluation of four main components: the core responsibilities of the Employee, the competency profile for the Employee, up to five key strategic/operational goals agreed to at the beginning of the review period, and one or two personal development goals for the Employee.
– It should include narrative providing ‘evidence’ supporting the conclusion.
– A rating scale is not a requirement but is commonly adopted, either in evaluating each of the performance criteria or to come to an overall summary conclusion. I personally favour a rating scale, very carefully defined. This serves to bring to conclusion an overall rating. The human psyche tends to dwell on negative commentary far more than positive and a mechanism is needed to confirm an overall evaluation of the Employee.
– The Manager should consult with his/her own manager before communicating the final evaluation to the employee but the Manager is ultimately responsible for making and conveying the final evaluation. This is one of the most important jobs any manager has and he/she must not shirk his responsibility.

4. The final step is to convey the report to the Employee in an interview.
– adding personal oral narrative to the report as appropriate.
– The Employee is entitled to bring his or her own evidence of how she would like her performance to be evaluated in the previous period but,
– the appraisal interview is not a negotiation. Having followed a comprehensive process and having reached conclusions the Manager is entitled to hold to his or her view.
– The Employee is not obliged to agree with the findings of the report or the review but should sign off on the report acknowledging that the report was delivered.

5. One more final step: repeat Step 1 and begin the cycle again.

Sounds onerous. But really, isn’t this what management is all about? To create conditions under which an employee can be successful means the employee knows what is expected of him/her, and he has feedback as to how she did. Of course it’s hard work, takes time and requires discipline and consistency. But that is the job of a manager. And done right, pays huge dividends.