Most employees dread appraisals. It is easy to understand why. There is a lot of tension associated with the process, and there is an apprehension that they won’t get a fair verdict. Most managers don’t look forward to the review cycle either. The process takes a lot of time and energy, and it is not easy to give critical feedback.

For appraisals to work best, organizations need good appraisal processes, the discipline to implement them, and the commitment to invest the time and attention to the process going forward. A few years ago, we took the time to build the foundations of TEOCO’s performance appraisal process. We wanted to provide a structure that enabled employees to highlight their key contributions and for managers to respond with concise feedback. We also wanted to automate the process by implementing a simple workflow with more visibility for employees, managers, and HR teams.

After a few years of iterations and improvements, we found that our quarterly rating process was a key element driving the program’s success. Quarterly ratings reduced employee angst because they provided four opportunities to look at performance instead of one. It also meant that we could share valuable feedback and acknowledge great work more quickly – rather than waiting for an annual review.

In addition, quarterly ratings also decoupled the process from the conversation about pay. Things can become very tense if there is only one review per year because it gets linked to salary discussions. We ensured that these sessions focused on providing feedback on performance and less on compensation by having them every quarter. We still had to discuss annual salary adjustments, but after three quarterly performance reviews, we had set expectations and essentially eliminated the element of surprise.

While many teams initially implemented quarterly ratings, they have since modified them to twice a year. I don’t believe this is as productive, but it’s still better than once a year.

Another valuable lesson I learned during the appraisal redesign process was how to properly measure employee productivity. We had an employee that consistently achieved our highest rating of “Significantly Exceeds Expectations.” I was puzzled.  This was a high-performing employee, and we had come to expect they would continue to achieve this level of performance every year. How was it possible to ‘significantly exceed expectations’ when we expected the moon? This is when I learned about a concept that has stayed with me.

Employees should not be judged against their own high achievements but based on reasonable expectations from a person with a similar role, seniority, and compensation. If an employee’s performance significantly exceeds these expectations, it is necessary to give them the highest rating. My mistake was to compare this person to their own stellar performance – instead of someone in a similar role. That was neither right nor fair! Fortunately, I avoided the trap of penalizing a high-performing employee for their excellence.

Analytical Vs. Intuitive

With special thanks to Srinivas Bhogle for his support and contribution to this project.