How to prepare and conduct a performance appraisal

Why and how businesses should implement a performance appraisal process. Plus what a performance appraisal meeting should look like.

A performance appraisal, or performance review, is the process an employer can use to assess an employee’s performance so that personal and organisational goals can be achieved. It is also a great opportunity to recognise an employee’s performance and reward success, or, alternatively, develop plans to improve underperformance.

This article will discuss how a business can implement a performance appraisal process, what a performance appraisal meeting looks like, and the benefits of doing so.

  • Performance appraisals should occur regularly – at the very least on an annual basis.

    To prepare for the appraisal meeting, the performance appraiser should develop the criteria that the appraisal will be based on. The best way to do this is by reviewing the employee’s job description. Their job description should clearly outline the duties they are engaged to perform, and this allows the appraiser to assess the competency levels required to perform the role.

    Moving through their duties, the appraiser can assess at what level the employee is currently performing. If there have been previous performance reviews, their current performance should also be measured against any previous agreed on goals.

    Objective measures of performance such as key performance indicators (KPIs) should be used where possible. This minimises bias, or accusations of bias, so that its clear the appraiser has formed their assessment based on objective facts rather than their own opinion.

    Where possible, make note of specific instances of high or low performance that can be referred to in the appraisal.

    The employee also needs to prepare for the meeting. Specifically, they should be ready to compare their current performance against previous development goals, as well as provide insight into training needs and development or career goals. Some performance appraisals may also involve the employee completing a self-evaluation form prior to the meeting.

  • If this is the first appraisal, both parties should review the employee’s performance against their job description and other competency measures. If previous performance appraisals have taken place, both parties can also evaluate whether previous goals have been met.

    Where an employee has met or exceeded performance standards, the appraiser should recognise this. Exceptional performance should be celebrated, and the appraiser should ideally note specific examples. A performance appraisal should be used to commend and reward an employee as much as it should be used to highlight deficiencies in performance.

    Nevertheless, an appraiser must be willing to provide honest criticism. If an appraiser is not willing to be honest, they risk being unable to properly salvage performance issues before they become much more serious.

    An appraisal should also consider other aspects of an employee’s performance. This includes examining the employee’s current motivation and attitude when working, as well as their fit within the team’s culture. While these are more subjective measures of performance, they can often have significant influence on the employee’s performance and the organisation as a whole.

    After this the employee and the appraiser should collaborate on performance and development goals moving forward, settling on a development and improvement plan. These goals should be discretely measurable, reasonably achievable within the time frame, and they will form the basis of future performance appraisals.

    Additional training or assistance the employee might require should also be discussed.

    At the end of the meeting, the employee and appraiser should sign off on the appraisal. This can also serve as documentation the employee was made aware of any performance issues, as well as steps that were taken to address them.

    Finally, the two parties should agree on the date of the next performance appraisal.

  • It is important to critically evaluate the effectiveness of performance appraisal meetings. As such, it could be appropriate to schedule a follow up meeting after the appraisal to monitor the employee’s progress and make any necessary adjustments.

  • Benefits of performance appraisals include:

    • Strengthening the employer/employee relationship;
    • Feedback from the employee can improve job design, the working environment, career planning, etc.;
    • Identification of training needs, and encouraging employees to take the initiative with steps to improving job performance;
    • Allowing grievances to be raised and resolved before they deteriorate further;
    • Regular documentation of high performance or underperformance.
  • Performance appraisals are an important part of managing employees, and they shouldn’t be left until the employee is unperforming. Implementing regular performance reviews improves communication with employees and helps maintain strong performance across your team.

  • The material contained in this article is general comment and is not intended as advice on any particular matter.  No reader should act or fail to act on the basis of any material contained herein.  The material contained in this publication should not be relied on as a substitute for legal or professional advice on any particular matter.  Wentworth Advantage Pty Ltd, expressly disclaims all and any liability to any persons whatsoever in respect of anything done or omitted to be done by any such person in reliance whether in whole or in part upon any of the contents of this publication.  Without limiting the generality of this disclaimer, no author or editor shall have any responsibility for any other author or editor. For further information please contact Wentworth Advantage Pty Ltd. ©Wentworth Advantage Pty Ltd 2022