How Can I Create a Fair and Transparent Performance Appraisal System for My Team?

Dear Seniors,

I am working as an HR executive in an IT company consisting of a staff of 21 people. My company has a semi-annual performance appraisal system. Recently, my Managing Director has asked me to design a new process for performance appraisals that should be transparent to our employees to eliminate any disparities in their appraisal percentages. As I am new to this field, I would like to understand how to calculate a specific percentage of appraisal, based on what criteria.

Please help me understand the process to follow, why it is important, and how to do it. I also need some forms and formats for the same.

Your assistance will be greatly appreciated, and I will be very thankful to you all.

Thanks,
Swati

Hi Swathi,

To start with the appraisal process to be transparent, does your appraisal system include mid-year appraisal and annual appraisal (for salary review)? And if so, do you do it as per the date of joining? [Due Dates of Appraisal]

Then what you will have to do is prepare clear cut-off dates of appraisals from the date of joining of employees, maybe 15 days or 30 days from the due date, considering the process periods of approvals, etc.

I would like to know what parameters you are considering for appraising your employees. [Do you have KPIs/KRAs System] If not, don't worry. Identify the parameters to be evaluated and then, based on the parameters, identify the most important ones from the same list that would directly influence job performance.

Define the Scaling Methodology, maybe 1-5 or 1-10, whatever makes your appraisal evaluations more efficient.

Once the Rating Scale has been done - Who will do the Rating: is it only the reporting manager who is directly observing the work, or both? Provide detailed comments and justifications for both of them (Appraiser and Appraisee).

Arrive at Arithmetic Averages for the ratings, and then you can divide 100% into the most important parameters that would directly influence the job as per your needs to calculate the weighted average to avoid any bias in the appraisal system.

I am suggesting these few points only for evaluating parameters, not in detail on the subject of the Appraisal System - MBO/360 Degrees/Self Appraisal System.

My suggestion would be simple as your organization is growing; start with a simple appraisal system and process so that you have full control from day one rather than getting into too many complicated systems, which may not mean much to you.

Relax and start sharing your work with anybody; we will help you design your appraisal as per your organization's needs, not copying what's happening in the markets. Appraisal, for me, is a most religious job, so the simpler and transparent, the better for you and all employees to be satisfied rather than getting confused and confusing others.

Let me know; I would be happy to help you draft from scratch. I always like you to work independently and get the best out of your work.

Good Luck

Hi RK,

Thank you so much for showing interest in my issue.

Currently, the months of January and July are when reviews take place. The process we are following is as follows:
1. Employees are asked six self-assessment questions, each with a different percentage associated with it.
2. The project manager then provides individual rankings for the employees.
3. One-on-one meetings with the Managing Director.
4. Finally, as the ultimate approving authority, the Managing Director determines the appraisal percentage.

We are also looking to incorporate peer-to-peer rankings into this process. Additionally, we aim for everyone to understand that the percentages they receive are fair based on their duties and behavior.

Please suggest how we can modify this process to make it more satisfactory and transparent.

Thank you,
Swati

What ever you do, to keep all employees on the same page but for sure we cannot make everybody satisfied in an organization as their needs/wants and expectations are different. But all said, if you prepare a system wherein everybody accepts your proposal, then you have won the battle.

As far as salaries are concerned, I believe there should be some rationalization that you need to do before you propose. The rationalization of salaries should be a fair practice. I am sure once you do the same, then you will have the right justification for your appraisal percentage, and also people will accept the same.

How do you rationalize salaries - Peer to Peer. Please create some fair bandwidth for your salary ranges and dollar hikes. One option could be for all positions to conduct salary surveys within, as per the positions and level of experience, and then arrive at industry averages.

Once you arrive at industry averages, your bandwidth should explain the reasoning for the percentage hike. If an employee's performance meets expectations of job responsibilities, then Industry Average; if it's more than a certain percentage or if performance falls below, then a negative percentage hike. If you do it this way and explain things to your employees the reasoning behind the rationalization of salaries, I am sure everybody will agree to your idea, and you can keep them happy.

Think along those lines, and I am sure you will get more ideas of making a better impact on percentages and transparency. Please let me know the updates of your progress; I am excited to know how you do your job.

Let me know if you have any more questions.

Regards,
RK

Hi Rkandadai,

I was just going through the site and came upon this topic. I too need to design a performance appraisal for my organization for about 500 employees who are in different locations. What I would like to know is if I want to go beyond the scope of just appraisals for increments to training, etc. I would like to know how I can link the same. As this is the first time we will be conducting a PA, I would like a little insight into the process as well as any documents, questions, etc., that you would have that would help us to understand the process better.

Your brief on the performance review was quite good. However, I found some of the formats to be confusing. Do you have a simple format available for both seniors and juniors?

Recently, my MD has asked me to design a new process for performance appraisal, which should be transparent to our employees in order to remove any discrepancies between them regarding their appraisal percentages. First of all, I appreciate your MD for taking such a bold step to move away from the conventional appraisal methods.

Suggestions for a Transparent Performance Appraisal Process

Here are my suggestions:

1. Please do not stick to specific formats and avoid excessive data inputs just for the sake of appraisal.

2. Consider using Trello boards for day-to-day task allocation and tracking. It is a free tool available at https://trello.com/.

3. You may be familiar with Yammer, another free tool available at https://about.yammer.com/. Yammer can serve as a transparent organization-wide platform to share appreciations, concerns, targets, etc.

4. Since both Trello and Yammer are free tools, investing in them for experimentation will only require your time.

5. Embracing transparent systems like these will help foster an open culture, leading team members to become more self-disciplined and organized, ultimately motivating them to contribute their best and achieve more.

6. As an HR professional, your role would be that of a curator.

Regards.