Designing A Strategic Performance Appraisal System

Traditionally, performance evaluations have been effective tools to assist organizations in making pay decisions and to support various employment actions. Today, an increasing number of companies use appraisals strategically to support company goals and values, better focus employee efforts, and align employee performance with the company mission. The following discussion outlines a few key ideas to consider as you review your performance appraisal system.

Step 1 - Begin at the Corporate Level

Example:

Determine Corporate Goals



Organization-Wide Corporate Goals

• To be renown for our customer service.
• To have the reputation as being the most professional, reliable financial service provider in the community.
• To be a "learning organization" where employee growth and development are key.



Determine Corporate Values (Remember, they must support established goals)

• Customers are our #1 priority.
• The drive for excellence never ends.
• Employee knowledge and skills are key to our success.
• Teamwork is critical.



Identify Employee Behaviors that Support Goals and Values

• Open communication (top-down, bottom-up & sideways) is critical.
• Employees must take initiative and problem solve.
• Performance standards are high and ever changing.
• Professionalism and integrity are expected in all internal and external interactions.



Determine Organization-Wide Factors and Goals
Based on the company goals, values, and desired behaviors determine the Factors and/or Goals that should appear on everyone's appraisal organization-wide.

Step 2 - Move to the Departmental Level

Managers should identify the critical departmental performance results and behaviors that are necessary to support corporate goals and values.

Example: (for a Customer Service Department)

Determine Desired Departmental Results

• Customer support reps are able to resolve 98% of customer questions at the first point of contact.
• All customer issues are resolved within 24 hours.
• Customers perceive the company as friendly, knowledgeable, available, and professional.
• Cross-sell opportunities are used whenever possible.



Determine Desired Departmental Behaviors

• Reps continually upgrade their product knowledge as products change.
• An effective team environment is maintained by sharing information with others, providing suggestions for departmental improvements, and assisting others with workload or problems.
• Employees "step up" to solve problems or gather information as is required, with minimal management direction.



Determine Common Department Factors and Goals
Based on the desired departmental results and behaviors, determine the common Factors and Goals that may be assigned and evaluated on every employee's appraisal within this department.

Step 3 - Move to the Position Level

Identify the critical success Factors for each position in the department. Ensure that they support the desired departmental results and behaviors discussed above. Most observers believe that no more than 5-7 Factors should be assigned to a position.

Example:

Customer Service Rep I
Each organization would define its Factors differently, but common Factors assigned to a Customer Service Rep I position might include: Communication, Cross-Selling, Problem-Solving, Customer Orientation, Attendance/Punctuality, and Job Knowledge.

Step 4 - Consider the Individual Employee

Consider the individual employee in each position and his/her particular strengths and weaknesses. Determine goals in conjunction with the employee. Remember, the assigned goals may differ from employee to employee but they should be supportive of organizational, departmental, and position goals. To ensure that employees are able to focus on priorities, we suggest that only 3-5 goals be assigned.

Example:

Customer Service Supervisor Goals

• Develop a Help Desk resource file in conjunction with Customer Support Reps to assist in the support of the new Turbo Financial Management product, which is targeted for release on 10/2. Design and deliver a training session to all Reps to inform them of the new resource. Design follow-up to ensure effective implementation.
• Design and deliver 3-hour quarterly training sessions to Reps to include such topics as: "Handling Unhappy Customers," "Professionalism in Customer Communication," "Effectively Utilizing Help Software," and "Effective Cross-Selling."
• Implement a reinforcement and reward program for supervised employees that provides employee focus on corporate, departmental, and individual goals. Design quarterly programs. Program outline to be completed by 1/30.

Final Step - The Appraisal Result

The result is an appraisal that incorporates:

and that:

Interested in reprinting the above information?

As a service to the human resource community, we are pleased to allow our performance appraisal resources, tips, and training materials to be reprinted. However, when reprinting an article, you must maintain the accuracy and intent of the content, and you must include a final credit paragraph which includes our name, HRN Management Group, and a link to our site at www.hrnonline.com. Need text version? Let us know. Please take a few moments to complete our contact form to help us better understand your organization's needs. We look forward to speaking with you!

Note, we cannot give legal advice or provide assistance to individuals with personal human resource problems. Please consult legal counsel or the appropriate government agency should you need such help.