Assessment systems improve employee performance

Performance appraisal: what demotivates employees

The performance appraisal is intended to reward good work and motivate employees. In reality, however, it often has the opposite effect. Why is it that performance appraisal has degenerated into a mandatory exercise? In this article, you will learn which four mistakes could be responsible and how you can help your leaders conduct motivational appraisals.

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Common methods of employee appraisal are unsuccessful

As widespread as the performance appraisal of employees is, their effect fizzles out in everyday working life. This was confirmed by a 2016 Accenture survey of 2,100 executives and employees. 94 percent of executives surveyed agreed that "performance reviews will improve business results." But just under 40 percent were of the opinion that the current methods and processes are really suitable for this.

The picture is the same among the employees: two thirds find their performance not assessed objectively and almost 60 percent perceive the regular assessment as a negative experience. Nine out of ten believe that some other form of performance assessment would improve their work.

Nevertheless, nobody wants to do without this instrument in principle. Around 90 percent of managers and employees would like traditional evaluation systems to continue to play a role. Bonuses and premiums should also be paid on the basis of performance evaluations.

The four biggest mistakes in performance appraisal

Dr. Matthias Hofmuth, Director of HR at Flixbus, has developed a feedback process together with his team. According to Hofmuth, the most important thing is to actively involve employees in the development process.

The bottom line is: well thought out, badly done. What is wrong with the usual methods? What affects the motivational effect of the performance appraisal? Studies as well as the interview with Dr. Hofmuth show that it is mainly due to four mistakes:

  • Performance reviews take place too rarely.
  • Performance reviews are not transparent.
  • Performance reviews are not individual.
  • Managers are poorly prepared.

1st error: The performance appraisal only takes place once a year

Feedback - praise or criticism - only works if it is given promptly. Good executives often and specifically praise their employees, and whenever necessary, they always talk about potential for improvement in private. Since the event to which the feedback relates is still fresh in memory, it is easier to accept and internalize feedback.

Who would seriously come up with the idea of ​​thanking their child or partner once a year for their efforts and presenting them with all the mistakes that have been made up to that point? An annual employee appraisal is exactly that. It is likely that the employee can hardly remember the events on which his appraisal was based. Even if it does, praise expressed a month later does not sound very honest, and criticism made long afterwards sounds like a reckoning.

Some large companies such as Microsoft, Google or Accenture have therefore switched to abolishing the annual performance appraisal, including performance appraisals. The obvious alternative to this are half-yearly or quarterly discussions. In departments with project business, an assessment after the completion of each individual project can be useful. Some companies have even introduced weekly five-minute calls with each employee.

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2. Mistake: Assessments are not made transparently

Lack of transparency is one of the main reasons why employee performance reviews are perceived as unfair. A study found that “fair behavior” in employee appraisals has a significantly greater impact on employee satisfaction than the assessment itself or any bonus payments.

Every employee should be able to understand which factors have influenced their assessment. Which goals has he actually met and which not? Where did he perform above average, where did he make mistakes? If he does not understand this, he will ultimately perceive his assessment as a purely subjective opinion of the superior: "The boss just doesn't like me."

In the aforementioned survey, almost 70 percent of the employees questioned said that they would like transparent assessments. But less than 30 percent experienced such openness in reality.

More frequent, regular assessments are an essential step in the right direction. If the period of assessment is relatively short, it is easier to relate to specific situations. Ideally, managers keep taking notes on an employee's performance. In this way, they can clearly explain what a criticism refers to using examples. Or specifically praise for an excellent performance.

Transparency also means that goals are clearly defined and documented.

3. Mistake: Standardized evaluation systems for all employees

"As the workforce is becoming more diverse, organizations need to treat their employees as individually as their customers," says Rouven Fuchs from Accenture, one of those responsible for the study. Standardized evaluation sheets across all departments of a company no longer meet the various requirements of employees.

Does it make sense to evaluate the creativity of a call center employee who takes phone orders all day and enters them into the system? What are the benefits of judging the resilience of a top salesperson who is constantly on the move and works 50 to 60 hours a week? What do you think an employee thinks of general targets that he cannot fulfill in his area of ​​responsibility?

Individual target agreements and evaluations are one of the keys to employee motivation. This means that different evaluation systems, e.g. B. the 360-degree feedback for managers, must be developed, but at least different key figures. Managers must be given enough leeway to be able to tailor target agreements to their employees at their own discretion.

4. Mistake: Employee interviews are not properly prepared

As a rule, the work of executives accumulates towards the end of the year. Preparing appraisals for five, ten, twenty or more employees and having as many interviews is an additional burden. The consequences? Like employee appraisals and performance reviews that don't hurt anyone on an assembly line. The main thing is that the matter is off the table and that there is not too much unrest during the important year-end business.

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Without intensive preparation of each individual interview, the performance appraisal will not work as an instrument for motivation. Appreciation cannot be conveyed through a bureaucratic act. No matter how sophisticated the rating system is. How can this dilemma be resolved: more effective performance reviews with an acceptable amount of work at the same time?

You should definitely avoid these mistakes in employee appraisals.

HR software reduces the bureaucratic effort

Regular, transparent and individual performance reviews require a lot of administrative effort. Evaluation systems have to be worked out, key figures have to be defined, questionnaires have to be created, distributed and filled out, assessments written, achievement of goals documented and success-dependent payments calculated. To name just a few of the tasks. At the end of the day there is often little time for the people themselves, who are actually at stake.

This bureaucracy cannot be avoided, but it can be dealt with much more efficiently. A software for performance management helps. For example, you can define individual performance indicators for each employee, both qualitative and quantitative. In the digital personnel file of every employee, you can continuously collect performance records, record evaluations and create free comments.

Make sure you pay attention to data protection, because the data recorded is personal employee data that must be stored securely and with restricted access. In order to get fair and objective assessments, you can have each employee assessed by several executives. Success-dependent salary components are automatically calculated based on the goals achieved and included in the payroll.

All information relevant to the performance evaluation is stored in one place. Before an appraisal interview, the manager can get a meaningful overview, long and arduous preparation times are superfluous. The manager can concentrate on personally promoting and motivating each employee. The performance appraisal is transformed from an annual compulsory exercise into an integral part of daily HR work.

Performance appraisal should be a positive experience

Success can only be achieved if you set yourself goals and regularly check whether you have achieved them. The performance appraisal is therefore rightly a popular instrument in personnel management.

Avoid the four mentioned mistakes in performance appraisal and ensure that your employees are regularly, transparently, comprehensibly and individually assessed. The best way to do this is to use a structured performance management process. Why? A process helps you to give your managers and ultimately your employees a framework around the performance appraisal. In this way, you ensure that performance management is running correctly and that it is of the same importance for all parties involved.