In brief - Performance appraisals are a necessary part of the work life of employed staff

The key criteria for effectiveness in both performance management and performance appraisal are objectivity, transparency and fairness. Desired outcomes should be achievable, measurable and documented.

This article is the first in a three-part series examining performance reviews (appraisals), performance management and the associated legal considerations which you should bear in mind.

Why are performance reviews necessary and important?

A regular phenomenon around the middle of the year in the workplace is the performance review of staff. It is a fundamental and critical part of a human resources manager's raison d'etre. Colloquially the period is often referred to as "review season".

Whilst it is seldom a popular and stress free exercise, it is nevertheless an important and necessary part of the work life of employed staff.

Monitoring of performance is important for a variety of reasons, including:

  • to record the progression and development of staff
  • as a statement of future intention and future objectives
  • to flush out frustrations in the workplace
  • to record legal reasons justifying disciplinary action taken with respect to unsatisfactory performance

What is the difference between performance appraisals (reviews) and performance management?

There is a distinct difference between performance management and performance appraisal.

Performance appraisal is the process of review between an employer and an employee where issues are considered and analysed, with problems (if any) extrapolated for future consideration.

Performance management, on the other hand, is the process of working out issues and areas of performance for an employee who has already been the subject of a performance appraisal with a view to improvement. Such an employee will already have had areas of concern identified for improvement.

The purpose of the entire review process is essentially to put in place a mechanism so that improvement can be effected. Improvement may be required over a range of areas over a period of time, or even over all areas of the performance of an employee.

Performance management may be formal (in which case criteria are identified and measures worked out so that progress can be tracked) or informal (as a conversation between the parties, rather than in writing).

Criteria for effective performance appraisal

Performance appraisals should always be carried out objectively. In my experience, however, it is often done subjectively. It stands to reason, given that the reviewer often has a vested interest, that subjectivity tends to creep into the process. The more dissatisfied a direct supervisor is with the employee's performance in the first place, the less likely it is that the review process will be objective.

If, as a reviewer, you think that you may be subjective and have preconceived ideas about the employee, then you should really consider referring the review to a more dispassionate and disinterested person.

In any event, the performance appraisal should:

  • relate to the job performance and the objectives of the workplace
  • relate to matters that are within the ambit of the work capable of being done by the employee, e.g. there is no point in criticising and employee for poorly performing a task outside their own experience
  • carefully and precisely distinguish between excellent, satisfactory and unsatisfactory performance
  • be related to outcomes that are achievable and can be documented, if appropriate 
  • have both quantitative and qualitative measures
  • be capable of being put into a form that can be communicated back to an employee

Criteria for effective performance management

Alignment between performance management and the organisation's objectives


There first must be a considered alignment between an organisation's objectives, directions and strategy and the performance management being undertaken.

This is not a trite observation, but one that should be considered strategically. Employers should ask what the aim and mission of the workplace are and bear in mind the overall strategy of the business in any performance issues relating to an employee. For example, does the employee even fit within the culture and ambitions of the business?

Importance of transparency in measurement of performance


The next issue to be borne in mind is a need to ensure that all steps taken are transparent, particularly in relation to the measurement of performance. This essentially means that:

  • each work level should ideally have documented performance criteria, e.g. a junior employee's performance criteria are likely to be fundamentally different to a senior employee (in other words, the criteria will be different, but not the standard)
  • there should be a genuine commitment to reward excellence and discipline unsatisfactory or substandard work
  • the appraisal process should be unemotional and based on objective criteria

Fairness in the performance management process


Furthermore, there should at least be a perception of fairness being applied. This should be felt not only by the employee who is the subject of the performance appraisal or performance management process, but is understood across the workplace.

This perception will be assisted by the introduction of a performance management policy which should be accessible to all. Such a policy should be part of any standard employee manual in the workplace.

This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2024.

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