Best practices in employee performance appraisal

Focus on attempts of three corporates to link performance assessment to developmental needs.

Larsen & Toubro - Engineering major Larsen & Toubro has developed a competency matrix which lists 73 competencies-that vary across managerial levels-to measure performance and gauge developmental needs of its employees. Each listed competency has associated knowledge, skills, and attributes. The company appraises individual employees on the listed competencies, and zeroes in on the functional, managerial, and behavioural skill gaps. Subsequently, customised reinforcement is provided. Further, as the matrix is linked to business strategy on the one hand and training needs on the other, strategic needs drive the company's development policies, making the process of re-learning and re-skilling easier, and more focused.

National Panasonic - The Japanese white-goods major has developed a performance-assessment system driven by Key Result Areas (KRAs). KRAs describe performance goals-business, functional, and behavioural ones-with defined time-frames and are decided jointly by the employee and his manager at the beginning of the year. It is a structured exercise using a written format. These KRAs are then used to map the employee's progress and, based on the results; the company decides to plug performance gaps with the help of relevant training inputs. National Panasonic puts a great deal of emphasis on this process for re-skilling its employees as it believes in growing its own timber rather than opting for expensive mid-career hires.

Hughes Escorts - Hughes Escorts, the subsidiary of the US-headquartered telecom company, Hughes, uses a competency-based performance-enhancement model. Each position in the organisation is defined in terms of 23 key competencies, categorised into four groups: attitude-based, knowledge-driven, skill-centred, and value-based. The company uses these competencies to measure shortfalls and provide relevant training inputs. It is done to both maximise productivity and make employees aware of their professional standing.

Who Should Assess Performance
Performance evaluation is never easy. It is essential that the assessor has adequate opportunity to observe the assessee's performance over a period of one year to arrive at a credible conclusion, and, subsequently, use the data for staffing, salary, and training-related decisions.

It suggests the use of several categories of evaluators, from immediate superiors to customers, who can provide critical feedback on the employee's performance over a specified period, using technical, functional and behavioural parameters.

Here is a checklist of possible evaluators:

The immediate superior - An effective appraisal process must involve the inputs of the immediate superior. He is likely to be most familiar with the employee's performance and thus be able to observe and appraise, using skill and competency-linked standards. The only pitfall of relying too much on the immediate superior's recommendations could be the lack of objectivity and personal bias. It could be checked with the departmental head, who could ratify the findings.

The peer - Peers can offer excellent critiques of an employee's performance as they have the opportunity to observe it over a long period. However, as factors like friendship bias and inter-personal rivalry can somehow dilute the quality of the feedback, peer assessment is best treated as a component of the appraisal system.

The subordinate - Subordinates can also provide useful inputs in the appraisal of their seniors, particularly in identifying developmental needs. Usually, such inputs are used by companies, which have instituted 360-degree appraisals (involving superior, peer, and subordinate assessment) for their middle and senior-level managers.

Self-assessment - Self-assessment can be very effective as it provides employees with an opportunity to participate in the appraisal process, and set performance targets for themselves. But self-assessment also runs the risk of variability and leniency that may conflict with superiors' or peers' findings. It could be more useful when combined with other forms of appraisal.

The customer/vendor - Customers and vendors, whether internal or external, can be potential evaluators. This kind of appraisal would be more relevant for service organisations such as banks, where the inputs provided by external customers can be useful for staffing. But as the customers' objectives may not always correspond with the organisation's expectations, customer appraisal works best only as a part of appraisal process.

Remember, a performance-appraisal programme can never be perfect or ideal. It would depend as much on the evaluator as on the employee, to be effective and responsive in meeting changing organisational or employee needs.

Related reading:
Best practices in employee performance appraisal & Who Should Assess Performance, by Paroma Roy Chowdhury , Paroma Roy Chowdhury abd Jaya Basu

Regards,

Saumil Joshi, Founder