Viewpoint: How to Redesign Your Performance Appraisal Template

Roger is the vice president of human resources in a midsize medical manufacturing organization and is contemplating reintroducing the annual performance review.

About three years ago he and his senior management team decided to eliminate the review altogether because of its time-consuming nature, potential for confrontation, and disagreement between leaders and their team members. They also wanted to make use of software that could provide feedback in real time throughout the year rather than only once per year.

Roger's executive leadership team ultimately realized, however, that it never had to be an "either/or" decision and should instead be a "both/and" consideration: Performance reviews are excellent accumulation tools to capture ongoing, year-round feedback that happens in real time.

After all, what gets measured gets managed, and without a formal cumulative scorecard reflecting an entire year's performance, it becomes difficult to justify exceptions in merit and bonus payouts. At Roger's organization, a small pocket of layoffs occurred the previous year, and it was more difficult to determine which individuals should be selected for layoff via a peer group analysis when no recent annual reviews were available. And in reality, leaders in Roger's organization shied away from providing ongoing (and potentially confrontational) feedback over time—even when they had apps and software programs at their disposal to help them share real-time feedback. Roger realized that the annual cumulative exercise kept front-line leaders disciplined and focused, especially when performance reviews were combined with goal-setting modules.

"The original thought in abolishing performance reviews was that annual feedback wasn't enough and became stale. Companies wanted their employees to receive current, real-time feedback, immediate recognition and constructive engagement discussions surrounding performance, and new technologies promised to deliver outstanding results, obviating the need for the annual performance review," said Winston Tan, compensation consultant and principal at InTandem LLC based in Spokane, Wash,, and co-author of The Performance Appraisal Tool Kit: Redesigning Your Performance Review Template to Drive Individual and Organizational Change (Amacom Books, 2013).

"What happened in reality, though, is that the organizations that abolished performance reviews got little in return. Even if software programs and apps are available to drive real-time feedback, they don't work if leaders aren't using them to deliver constructive, and sometimes potentially negative, feedback on an ongoing basis."

Reinventing the Traditional Performance Appraisal Grading Scale

Roger and his team were already believers: Current, real-time feedback and discussions regarding recognition and on-the-spot course correction aren't intended to replace the annual review, they're meant to complement it. But the old grading methodology where "meets expectations" equates to something like a "C" earned in school needed to be replaced. Company leadership wanted to avoid grade inflation as well as motivate staff members to equate a score of "3" (out of 5 grades) with a positive contribution for the year—the equivalent of playing par in golf. Therefore, Roger's team adapted a revised annual grading scale as follows:

5—Distinguished Performance and Role Model Status: Clearly and consistently demonstrates extraordinary and exceptional accomplishment in all major areas of responsibility. Performed above and beyond expectations under exceptional circumstances during the review period. Others rarely equal performance of this caliber in similar roles.

4—Superior/Highly Effective Performance: Performance is continually and consistently superior and regularly goes beyond what is expected. An exceptional contributor whose performance exceeds expectations on a consistent and sustainable basis.

3—Fully Successful/Effective Performance: Performance consistently meets the critical requirements of the position, continually achieves preset goals and performs with distinction. Incumbent performance is reliable and consistent in adding value to the work unit.

2—Partially Successful Performance/Needs Improvement: Performance does not consistently meet or occasionally falls below what is required of the position; improvement in specific areas is required.

1—Unsuccessful/Unacceptable Performance: Performance fails to meet minimum expectations for this role, and immediate and sustained improvement is required.

This description of the "3" score introduces an element of pride and accomplishment. It recognizes that an individual "performed with distinction" throughout the review period, which reflects the organization's appreciation of the person's hard work and efforts. As such, it allows leaders to provide more realistic feedback and saves the 4 and 5 scores for those who are generally recognized as standouts among their peers (or the top 5 percent), who performed under exceptional circumstances, or who are otherwise exceptional contributors.

Redesigning the Template's Content

Traditionally, annual reviews focus on reaching minimal job performance thresholds and then grading upwards if someone has gone beyond the norm. "That paradigm should shift to describe outstanding performance and then grade downward if employees aren't reaching their full potential," said Larry Comp, principal of LTC Performance Strategies in Valencia, Calif. "Set the bar on truly effective performance, with those being rated above this level demonstrating exemplary performance."  For example, a traditional performance review descriptor for a customer service representative might sound like this:

Provides prompt, courteous and professional customer communication. Provides timely and well-informed advice to customers. Demonstrates sufficient knowledge of company products and cross-selling skills to ensure a high level of customer satisfaction. Prioritizes workload based on customers' needs. Regularly adheres to scripts and selling tips. Skillfully overcomes customer objections. Consistently gains necessary authorizations and approvals for one-off exceptions to policy.

Ho-hum … With such a low level of performance expectation, it becomes easy for managers to award scores of 4 and 5. "Likewise," Comp pointed out, "workers can become resentful for receiving a score of 3—'meets expectations,' which they equate as 'average'—when the bar is set so low." 

Now look at it another way:

Demonstrates total commitment to outstanding customer service. Provides knock-your-socks-off service that consistently exceeds client expectations. Consistently exhibits creativity and flexibility in resolving customer issues.

Remains customer-oriented, flexible and responsive to last-minute changes in plans. Regularly puts the human relationship above the transaction. Looks always to surprise customers with unanticipated benefits, including lower costs and shortened delivery time frames.

Effectively exceeds customer expectations by providing timely feedback and follow-up in an empathetic and caring way. Tactfully informs customers when their requests cannot be met and escalates matters for further review and approval as appropriate. Takes pride in building relationships with even the most challenging clients. Enjoys identifying "out-of-the-box" solutions for clients with special needs. Goes beyond customer satisfaction by driving customer loyalty, as evidenced by a high rate of repeat business.

These enhanced descriptors drive higher performance expectations, set the bar at a new level and reflect performance relative to a much higher standard. If employees can honestly meet these heightened expectations, then they deserve a higher score of 4 or 5. Many will realize, however, that a score of 3 is more suitable relative to the heightened expectations outlined above.

Introducing Dynamic Templates

"If you're not upgrading your template every few years, you're missing the point of the exercise," Tan said. "Performance review templates should be dynamic, not static, to reflect your organization's changing priorities." For example, a startup company might focus on the key core competencies of creativity and innovation, strategic and critical thinking skills, and culture and values, while a mature organization might emphasize its top three competencies as policy compliance, communication and leadership, and process improvement.

Tan even recommends enhancing focus by attaching an "annual report-like cover letter" to each individual's performance appraisal to identify the organization's key accomplishments and focus areas in addition to its key employee development initiatives or the availability of training programs. "Help employees see the significance of this annual report, give this performance scorecard the dignity it deserves and create a stronger achievement mentality by raising the bar to a new standard," he said.

When done right and in its highest form, the annual performance review becomes a strategic organization-wide initiative, a human capital balance sheet and an enterprise-wide assessment of the organization's human capital muscle—the asset that drives all operations and productivity.

Whether you're reintroducing performance reviews after a hiatus, continuing them but want a "pop" or creative boost to make them more relevant and appealing, or introducing them for the very first time, use your creative eye to not only reflect the past year's performance but to drive future change by setting your organization's strategic goals. Performance management, it turns out—far from being a burden and an onus on managers and staffers alike—is one of the "low-hanging fruits" that can catapult your career as an effective leader and marshal your company's human capital assets to new heights.

Paul Falcone (www.PaulFalconeHR.com) is an HR trainer, speaker and executive coach and has held senior HR roles with Paramount Pictures, Nickelodeon and Time Warner. His newest book, 75 Ways for Managers to Hire, Develop, and Keep Great Employees (Amacom, 2016), focuses on aligning front-line leadership teams and on key employee retention. A longtime contributor to HR Magazine, he's also the author of a number of SHRM best-sellers, including 96 Great Interview Questions to Ask Before You Hire, 101 Tough Conversations to Have with Employees, 101 Sample Write-Ups for Documenting Employee Performance Problems and 2600 Phrases for Effective Performance Reviews.

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