Frequently Asked Questions

What do I do if my employee does not have a current job description?

If the review is coming up, use goals and other documentation that you have agreed to in the absence of a more formal job description. Either you or a human resource manager should then write a current job description to bring to the performance appraisal meeting, so that you can use that as a baseline from then on.

My employee has had some family problems recently and his performance has been suffering. How should I handle this?

While you can be sympathetic, you must discuss the issues with him honestly and openly. Explain that you understand he has been under a lot of pressure, but review job expectations. Discuss possible solutions together and help prioritize his work, so that performance expectations are very clear.

I'm the manager, yet I always get nervous before a formal performance appraisal. What should I do?

It is common to think of the performance appraisal as a confrontational or unpleasant event. Remember the purpose of the appraisal is to help support your employee and promote excellent performance. To help keep you focused, bring clear agenda notes and use the opening as a time to establish rapport with your employee.

Be aware of your biases

I'm going to tell you about a case on capital budgeting that I was teaching recently. The case had three projects that my students had to choose from. And there is a little calculation that goes before it and then they do the calculation and figure out which project they want to invest in. Forty-five minutes into the case discussion I took a vote, and one-third of the class wanted Project A, one-third wanted Project B, and one-third picked Project C. And we were like, let's step back and analyze the situation. How is it possible that they all read the same case, had the same data, same analysis, and came to three very different conclusions? And we talked a little bit about how each one of us made the choice.
What we realized that each of us in the classroom had done was we picked which project was our favorite, and then worked backwards on assumptions in our calculation so that that project finished in the top.
So I think that's very instructive on how we make our decisions as human beings. You might think we have a very elaborate objective system with numbers, quantitative data, and analysis, but at the end of the day, we all do it very subjectively. It's our likes and preferences that determine our actions, and the numbers might just be a tool that helps us.
Being aware of this cognitive bias—that even if you use numbers, it's subjective at the end of the day—is extremely important in performance evaluation. Because when we're evaluating people rather than projects, these personal biases that we have come even more to the fore. So that's the first thing that we have to recognize. It's all subjective even if you pretend it's objective.
The second thing to keep in mind about subjective performance evaluation is that we always have great inflation. People have a very difficult time giving negative feedback and therefore they like to say everyone is about average.
The solution to these problems it not to move toward something more objective, but in fact try to make subjective performance evaluation work, but try to educate all of us about our own cognitive biases. If we are aware that we do determine things subjectively and that end of the day we have to make a subjective performance evaluation work and not get too carried with great inflation, I think we'd have a much better performance-evaluation system.

Recognize your personal preferences when doing performance evaluations.

V.G. Narayanan
Professor, Harvard Business School
V.G. Narayanan is a professor at Harvard Business School, where he has taught Financial Reporting and Control, Measuring and Driving Corporate Performance, Management Control and Performance Measurement, and several executive education courses.
His current research is concerned with managerial accounting, including research on control issues in inter-organizational settings and the use of cost accounting and control systems in hospitals.
V.G. received his bachelor's in commerce from the University of Madras in 1988. He then received his MBA at IIM Ahmedabad in India. V.G. also has a Master of Science in statistics and Master of Arts in economics from Stanford University, as well as a Ph.D. in Business from Stanford's Graduate School of Business. V.G. is an Associate Member of the Institute of Chartered Accountants of India and a member of the American Accounting Association.

Evaluating the performance appraisal meeting

Consider your side of the meeting. Did you create an open climate? Did you listen carefully to what the employee said? Was your feedback clear and specific? What worked and what could be improved upon next time?

Compare your view with the feedback you collected at the end of your meeting. Determine what changes you can make for future meetings with that person and for future meetings in general.

How to follow up

After you have completed your performance appraisal, make sure both you and the employee have a copy of the development plan or a written record of next steps and commitments.

You should plan on following up after every appraisal meeting. High performers and satisfactory performers will likely need less follow-up. However, if you've given them new, more demanding goals, you'll want to monitor their progress and determine if they need additional training, coaching, or support.

Employees with performance gaps who have committed to development plans should be more carefully monitored. In most cases, monitoring takes the form of a follow-up meeting every few weeks or months. Your goal in these meetings is to check up on your employee's progress against his or her development plan, and provide coaching if necessary.

Check the notes and make a plan

Examining the notes from an appraisal meeting can help you craft a development plan for your employee.

Diane, a manager, met with Carl recently to appraise his performance. The meeting went well, with plenty of positive discussion.
Diane took notes. She wrote about his high performance as a project leader, his habit of  giving a lot of credit to his team members, his belief that the company "takes care" of him" and "gives him motivation to go above and beyond," and that he'd like to change the ways new projects are managed.
Judging from Diane's notes, what subject did she neglect to cover in the appraisal meeting with Carl?

 Reasons for Carl's high performance

 Next steps for Carl's development that he and Diane agreed on

 Issues or points of disagreement

Correct choice. Carl is a high performer with an interest in improving the way things are done in the company. Diane might have spent some time during the appraisal meeting discussing steps Carl could take to make even more of a contribution. 

Diane asks you to help her work on Carl's development plan. Given the content of her notes, what would you recommend as the best next step for Carl's development?

 Have Carl focus on leading established projects, since he seems uncomfortable with the way new projects are managed

 Continue having Carl lead both established and new projects, but ask him to work within the new-project management methods already established in the group

 Suggest that Carl review the company's process for handling new projects and propose improvements

Correct choice. Carl expressed interest in seeing changes in the new-product management methods. Reviewing the existing methods and proposing improvements would help keep him engaged and challenged in his position. It could also lead to valuable new ideas and processes for the company. 

Tim, a manager, has recently met with Marla to appraise her performance.
He took notes during the meeting.  He wrote that she is doing well as a programmer, that she has handled simple projects with little trouble, that she believes she is ready to do more complex programming, and that she might likes the idea of working on Sheila's new interactive project.
Judging from Tim's notes, what subject did he neglect to cover in the meeting?

 Reasons for Marla's high performance

 Marla's short-term career goals

 Possible opportunities for Marla in the company

Correct choice. Although Tim knows that Marla is doing well, he did not discuss with her the factors that contribute to her high performance. By specifying these factors, Tim could have helped Marla repeat and even improve on her good performance. 

Given what's written in the notes, what is the best next step for Tim to take with Marla?

 Complete Marla's development plan

 Ask Sheila if she has room for Marla on her project team

 See if Marla would be interested in training new employees

Correct choice. Tim needs to make sure that his idea for Marla's development—assigning her to Sheila's new project team—will work out in practical terms. 

Creating a development plan

A development plan is an important tool for addressing the skills and/or behaviors that are to be worked on in the future. If you have prepared a draft of this document in advance of the meeting, and time permits, you can discuss it toward the end of an appraisal session. Often both parties need more time or additional information and prefer to reconvene to develop the plan together as a follow-up item after the meeting.
In either case, you and your employee need to work together to reach agreement on a development plan. You must then seek commitment from your employee to achieve the goals of the plan. A thorough development plan includes:

• Timeline
• Action steps
• Expected outcomes
• Training required, if applicable
• Specific goals
• Feedback required
• Practice required

The development plan then becomes part of the employee's record.
Before concluding the meeting, it's appropriate to conduct a brief review of what was useful in the meeting and what was not. Also ask for suggestions for ways to do things differently in the future.

A successful appraisal meeting doesn't add up to much unless it provides the direct report with a plan for growth. What steps do you need to lay out to ensure your employee's ongoing development?

Taking notes

If you take notes during the meeting, state this up front and identify the purpose of the notetaking, such as, "Is it okay with you if I take some notes to document what we're discussing, so we can both remember what we've agreed to and our next steps?" If notetaking makes you or the employee uncomfortable, it's probably better just to summarize the meeting afterwards. Include in your notes or summary:

• The date
• Attendees
• Key points and phrases the employee used (not necessarily verbatim), including his self-appraisal
• Key points and phrases you used
• Issues or points of disagreement, if any
• Overview of the development plan
• Agreed-upon next steps