Performance appraisals are usually one of the most complex pieces of HR processes. It has rarely seen the expected results as organizations rely on a complicated and time-consuming process once a year. An effective performance appraisal process requires specific methodology, follow-ups, analysis, etc. When performance appraisals are not done right, they tend to demotivate and demoralize the workforce and defeat the purpose of an assessment.

Fortunately, newer approaches have surfaced, and a systematic process has evolved with performance management solutions. They cover all areas of employee performance, including reviews. Before choosing to invest in the right performance appraisal system, let’s understand a few common mistakes and errors in performance appraisals to circumvent and ensure that our workforce feels valued.

Mistakes in Performance Appraisal 

The following are some of the common mistakes in performance appraisal: 

Unclear Expectations

Without a clear baseline, it is next to impossible to evaluate an employee’s performance. An employee must be assessed on the job description, assigned role, and expected goals during the appraisal process. Evaluations must be made based on their roles and not in comparison with others.

Also Read: Performance Appraisal Appeals

Too Much Importance Given to Attitude

While a good attitude is healthy in a workplace, some employees may get along better than others. Managers must not lose sight of the fact that there are equally good employees just because they are not showing their enthusiasm. A lack of social skills must be addressed but not at the cost of their competence.

Halo-effect Bias

Halo-effect bias can show skewed results in favor of the employee. When the employee shows one promising performance area, you can’t allow that to color your judgment on their other tasks. They may not be good at all of their responsibilities and need to be assessed on the whole.

Focus on Single Deficiency

The other side of the halo-effect is when you focus on one area of weakness and overlook the strengths. Performance appraisal is when areas of improvement or a deficiency are noticed. Overlooking the strong suit of the employee because of one or two areas that need improvement is unfair to the employee.

Overlooking the Timeline

When performance appraisals occur once a year, it is easy to make a recency error. The employee may have performed well throughout the year. Unfortunately, the same employee may have made a mistake just before the appraisal. The manager will be making a serious recency error if the feedback is based only on the period just before and not on all the other work done through the year.

Error of Attribution

If the manager makes an assumption and attributes motives to the employee’s actions, it would be subjective. Making assumptions based on a single response precludes objectivity and affects the review because it influences the entire process.

Using Old Rating Scales

Performance appraisal systems usually have ‘meets expectations,’ ‘exceeds expectations,’ and ‘needs improvement’ to rate the employee. Unfortunately, these scales are more judgmental than motivating. It is also less objective as most managers would rather be friendly than accurate.

Continuing with an Annual Review Process

This is the most common mistake HR tends to make. Having a meaningful and measurable review process is the difference between engaged employees and enhanced output and a workforce that just goes through the motions of annual reviews. Annual reviews have become a formality to decide on the next level of compensation or responsibility.

Unclear Pay and Performance Information

Regardless of the compensation model you have in place, employees must know how the performance review will impact their bottom line. Managers must be clear about the parameters and processes, so the employees know what to expect.

No Follow-through

Even if you have a perfect method of appraisal and a clear set of goals, follow-through is vital to the process. Managers tend to forget about the review and feedback until the following appraisal process comes around. Following up on the progress and development plans cannot be overlooked, or the appraisal process would become meaningless.

Open-ended Appraisal Process

The review must be completed with a new set of measurable goals. It is not enough to give employees a rating and an appraisal letter. After each review, employees must be given a set of realistic goals and suggestions on how to achieve those goals.

Errors in Performance Appraisal 

The following are the most common errors committed in a performance appraisal: 

1. Halo Effect: The halo effect occurs when a single positive trait or behavior of an employee influences the overall perception of their performance. For instance, if an employee excels in one area, their performance in other areas might be inadvertently overestimated. This bias can prevent a comprehensive evaluation and lead to inflated ratings. 

2. Distribution Error: Distribution error involves consistently assigning employees to certain performance categories, like high, medium, or low performers, regardless of their actual performance. This error can result from personal biases or an attempt to conform to a predetermined distribution. 

3. First Impression Error: Forming a lasting impression of an employee based on initial interactions can lead to inaccuracies in appraisals. If an employee starts strong but falters later, their initial performance might disproportionately influence the final evaluation. 

4. Central Tendency Error: The central tendency error involves assigning average ratings to all employees, avoiding extreme evaluations. This can obscure actual performance differences and hinder accurate assessments of high and low performers. 

5. Recency Error: Recency error in performance appraisal is all about giving disproportionate weight to an employee’s most recent performance rather than considering their overall performance over a specific period. This bias can lead to overlooking long-term achievements or progress. 

6. Proximity Error: A proximity error refers to assessing an employee’s performance based on their most recent achievements or failures, ignoring their performance throughout the appraisal period. This can distort the evaluation by focusing on isolated incidents. 

7. Similarity Error: Evaluators might unconsciously favor employees who are like them in terms of background, personality, or interests. This bias can lead to disparities in evaluations and hinder diversity and fairness. 

8. Compare/Contrast Error: Comparing employees to one another rather than using objective criteria can lead to skewed evaluations. Employees might appear better or worse relative to their peers rather than based on their actual performance. 

9. Unclear Expectations: Without a clear baseline, it is next to impossible to evaluate an employee’s performance. An employee must be assessed on the job description, assigned role, and expected goals during the appraisal process. Evaluations must be made based on their roles and not in comparison with others. 

10. Too Much Importance Given to Attitude: While a good attitude is healthy in a workplace, some employees may get along better than others. Managers must not lose sight of the fact that there are equally good employees just because they are not showing their enthusiasm. A lack of social skills must be addressed but not at the cost of their competence. 

11. Focus on Single Deficiency: The other side of the halo-effect is when you focus on one area of weakness and overlook the strengths. Performance appraisal is when areas of improvement or a deficiency are noticed. Overlooking the strong suit of the employee because of one or two areas that need improvement is unfair to the employee. 

12. Overlooking the Timeline: When performance appraisals occur once a year, it is easy to make a recency error. The employee may have performed well throughout the year. Unfortunately, the same employee may have made a mistake just before the appraisal. The manager will be making a serious recency error if the feedback is based only on the period just before and not on all the other work done throughout the year. 

13. Error of Attribution: If the manager assumes and attributes motives to the employee’s actions, it would be subjective. Making assumptions based on a single response precludes objectivity and affects the review because it influences the entire process. 

14. Using Old Rating Scales: Performance appraisal systems usually have ‘meets expectations,’ ‘exceeds expectations,’ and ‘needs improvement’ to rate the employee. Unfortunately, these scales are more judgmental than motivating. It is also less objective as most managers would rather be friendly than accurate. 

15. Continuing with an Annual Review Process: This is the most common mistake HR tends to make. Having a meaningful and measurable review process is the difference between engaged employees and enhanced output and a workforce that just goes through the motions of annual reviews. Annual reviews have become a formality to decide on the next level of compensation or responsibility. 

16. Unclear Pay and Performance Information: Regardless of the compensation model you have in place, employees must know how the performance review will impact their bottom line. Managers must be clear about the parameters and processes, so the employees know what to expect. 

17. No Follow-through: Even if you have a perfect method of appraisal and a clear set of goals, follow-through is vital to the process. Managers tend to forget about the review and feedback until the following appraisal process comes around. Following up on the progress and development plans cannot be overlooked, or the appraisal process would become meaningless. 

18. Open-ended Appraisal Process: The review must be completed with a new set of measurable goals. It is not enough to give employees a rating and an appraisal letter. After each review, employees must be given a set of realistic goals and suggestions on how to achieve those goals. 

In conclusion

It is safe to say that if you are not getting measurable results after a performance review process, you are probably committing some mistakes or errors in performance appraisal. In that case, you may need to rethink your approach. It could be that you are using a method that doesn’t fit in with your business model, or you are using a software platform that is not aligned with your goals. Fortunately, some solutions can ensure that you have a strong workforce, motivated and loyal, and who can help you achieve your goals. All you need is to invest in a software solution that offers AI-powered sentiment analysis and easy ways to set SMART goals that can help measure progress-a performance appraisal solution that enhances employee engagement. Such a solution ensures that your chances of committing mistakes or errors in performance appraisal are less and helps enhance the process.

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Also Read:Performance Appraisal Methods That Boost Employee Performance