For the proper Performance Appraisal (PA), you need to have proper Policy on Performance Appraisal. When employees join the company, during induction itself they should be told that when their appraisal will take place. The salient features of policy could be as below:
a) Appraisal may be done quarterly. Appraisal cycle of one year is too long. Nevertheless, salary hike may be done a son 1st April or 1st Oct.
b) Employees who join in between, when their first PA will take that can be decided in the policy.
c) % of salary hike should be linked to the score of PA.
The important point about PA is that it concentrates only on the individual performance. We need to go beyond and measure the business performance. For this you need to have well-designed policy on Performance Management System (PMS). PA is subset or part of PMS. Therefore, when you wish to launch this major OD initiative, you need to make it rather than doing a half job.
To establish PMS, you need to study systems and process of each department, find out direct and indirect costs associated with department and design the KPIs for each department. From these KPIs, you need to devise the KRAs for each department or individual. The other parameters on which KPIs are designed are quality, quantity, timeliness, accuracy, capacity utilisation and so on. But then this far easy to say than do. It requires immense expertise to do this and you need to hire some external consultant.
I have been giving my replies on this subject time and again. You may refer the following links to refer my past posts:
I request you to go through each of the above link. It will increase your understanding about PMS.
If you wish to hire my services on PMS consulting, I will help you in bringing the sea change. I will study systems and processes of each department deeply and design unique measures. Their could be few cost-based measures also. You may talk to your management about availing of my services. If you wish to know more about my consulting services then you may click here to check the presentation.
Last but not the least, do you have buy-in from your management for this major OD initiative? Is this your own initiative? If yes, then first convince your management about PMS. To convince, you need to measure the cost of poor performance and revenue leakage that took place because of not having culture of performance.
Dinesh V Divekar