Principles of Organizational Behavior

1. Performance appraisals should be embedded in broader management systems

A performance appraisal provides an assessment of the extent to which the employee completes the work that is agreed in a manner that is consistent with the organization's values and that motivates employee performance improvement and growth.

Holistic approach. Performance appraisals should not be isolated events, but rather integrated into broader performance management and organizational systems. This allows appraisals to align with company strategy, values, and goals. A comprehensive approach considers:

• Ongoing communication and feedback between managers and employees
• Clear links between individual performance and organizational objectives
• Integration with other HR processes like goal setting, development planning, and compensation

Beyond evaluation. While evaluation is important, the primary purpose should be motivating performance improvement and employee growth. This shifts the focus from a backwards-looking assessment to a forward-looking development tool.

2. Effective appraisals include objectives, behaviors, and development plans

All meetings should include a discussion between the leader and the employee about the employee's personal development (i.e. how the employee would like to professionally and personally grow and develop to realize their potential), where they see their career leading, and how they can make the greatest impact on this organization and/or on the world).

Three key components:

1. Individual Objectives Attainment - Evaluating achievement of agreed-upon performance goals
2. Behavior-Based Appraisal - Assessing alignment of behaviors with organizational values
3. Personal Development Plan - Discussing professional growth and career aspirations

Balanced assessment. This approach provides a well-rounded view of performance by looking at what was achieved (objectives), how it was achieved (behaviors), and future growth (development). It emphasizes both results and process.

Employee involvement. Having employees prepare self-assessments and development plans increases engagement and ownership in the process. The appraisal becomes a two-way dialogue rather than a top-down evaluation.

3. Goal setting focuses employee effort and enhances performance

Goal setting can be incorporated in the performance appraisal process (Locke and Latham, 1990) jointly with objectives setting when planning for the next performance cycle. Together they state what you are striving to achieve from which the actions that are needed to achieve them are established.

SMART goals. Effective goals are Specific, Measurable, Achievable, Relevant, and Time-bound. This provides clarity and focus for employees.

Key principles:

• Set challenging but attainable goals
• Allow employee participation in goal-setting
• Break large goals into smaller sub-goals
• Provide ongoing feedback on goal progress

Performance impact. Research consistently shows that setting specific, challenging goals leads to higher performance than vague "do your best" goals or no goals at all. Goals direct attention, mobilize effort, increase persistence, and motivate strategy development.

4. Leaders as coaches drive continuous improvement and growth

Coaching has long been recognized as a responsibility of leaders. A facet of transformational leadership espouses the importance of listening, advising, developing, and coaching (e.g. individualized consideration; Avolio and Bass, 1995) and has been found to predict subsequent employee performance (Bormann and Rowold, 2016).

Ongoing process. Effective leaders coach employees continuously, not just during formal reviews. This involves:

• Regular one-on-one meetings
• Providing timely feedback and guidance
• Helping employees overcome obstacles
• Supporting career development

Key coaching behaviors:

• Active listening
• Asking powerful questions
• Providing constructive feedback
• Offering encouragement and support

Positive outcomes. Research shows coaching by leaders is associated with improved employee performance, job satisfaction, and organizational commitment. It helps employees develop new skills, overcome challenges, and reach their full potential.

5. Multi-source feedback provides a more complete performance picture

Although leaders are an important source to appraise employees' performance, they are not the only ones who can provide input. Multisource feedback, commonly referred to as 360-degree feedback, is a process whereby input about an employee's performance is sought from individuals who work with the employee or have interacted with the employee during the completion of some part of their work.

Multiple perspectives. Gathering feedback from peers, direct reports, customers, and others provides a more comprehensive view of performance than relying solely on manager evaluations.

Benefits:

• Reduces bias and subjectivity
• Captures performance aspects the manager may not see
• Provides developmental insights
• Increases employee self-awareness

Implementation considerations:

• Ensure anonymity of feedback providers
• Use behaviorally-anchored rating scales
• Provide training on giving constructive feedback
• Focus on development rather than evaluation

6. Training is critical for effective implementation of appraisal systems

Training should play an important part in the implementation and maintenance of the performance appraisal process and the tools associated with improving individual and organization performance (Bachkirova et al., 2016; Church et al., 2019; Locke, 2019; McCarthy and Milner, 2013; Roch, Woehr, Mishra, and Kieszczynska, 2012).

Rater training. Managers need training on how to conduct effective appraisals, including:

• Understanding performance dimensions and rating scales
• Avoiding common rating errors (e.g., halo effect, recency bias)
• Providing constructive feedback
• Conducting productive appraisal discussions

Coaching skills. Leaders should be trained in coaching techniques to support ongoing employee development. This includes active listening, asking powerful questions, and providing effective feedback.

Employee training. Employees also benefit from training on:

• Understanding the appraisal process and its purpose
• Writing effective goals
• Preparing for appraisal meetings
• Receiving and acting on feedback

7. Communication and partnership are key throughout the performance cycle

There are three common denominators to all three of these tools. First, all three tools include discussion between the leader and the employee. Second, all three tools include decisions being logged to ensure that follow-up is never contingent on the memory of one or both parties. Finally, all three tools include accountability of the employee and of the leader.

Ongoing dialogue. Performance management should be a continuous process of communication between managers and employees, not just an annual event. This includes:

• Regular check-ins on goal progress
• Timely feedback on performance
• Discussions of career aspirations and development needs

Shared responsibility. Both managers and employees have important roles to play:

Manager responsibilities:

• Provide clear expectations and goals
• Offer ongoing feedback and coaching
• Remove obstacles to performance
• Support employee development

Employee responsibilities:

• Take ownership of performance and development
• Seek feedback and clarification
• Prepare for appraisal discussions
• Follow through on development plans

Documentation. Keeping records of discussions, goals, and action plans ensures accountability and follow-through from both parties. It also provides a basis for future performance discussions and decisions.

Last updated: August 7, 2024