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Steps to create a performance appraisal system from scratch

performance assessment

Performance assessment, where to start?

Performance evaluation is one of the most delicate and important areas in the talent department. It consists of a conversation between two or more people focused on analysing the objectives achieved, assessing the competencies developed and detecting the needs of each of the team members. Performing the performance is key to know where we are starting from, it helps to focus objectives and establish an action plan. In this article, we explain how to create a performance appraisal from scratch:

1. Project planning

Having the opportunity to create a performance appraisal system from scratch is a huge advantage for any team. It represents the opportunity to design a tailor-made evaluation model created by all business units. The fact that each area designs and participates in the model is a guarantee of success in the implementation of performance. In this phase, the objectives to be achieved are established and a calendar of actions is created to ensure that the project is carried out.

2. Communication strategy

One of the most important aspects when a company starts a new project is communicating it to the rest of the team. It is essential, first of all, to communicate to the managers or directors of each area the will to create a performance evaluation system and the importance of their involvement for its progress. Here, it is essential to explain the reasons why the company is initiating the process and the benefits it can bring to the organisation.

3. Identification of competencies

Capturing the essence of a brand and translating it into competencies is not an easy task, but it is a fundamental step to take into account when selecting people and developing them. Therefore, in order to carry out a good selection and development of talent, it is essential to identify transversal competencies, which are common to the entire organisation, and longitudinal competencies, which are specific to certain positions or areas of work. For example, a transversal competence could be teamwork. A longitudinal or area-specific competence could be leadership or sales skills.

4. Performance evaluation system

Performance appraisal can take several forms. There are the following:

  • 90 degree assessment.
    It is the team leader who assesses the worker.
  • 180 degree evaluation.
    The professional is evaluated by his manager, his peers and, eventually, by his clients.
  • 270 degree evaluation.
    The employee is assessed by his or her manager, carries out a self-assessment and is assessed by his or her peers.
  • 360-degree evaluation.
    The performance appraisal is carried out by a superior, a peer, a subordinate and customers. It is a comprehensive evaluation.

Regardless of the established formulas, the ideal is to create a tailored appraisal where development conversations are reciprocal and both parties, manager and employee, get feedback on their performance. According to an article on performance appraisal by Gallup, only 14% of employees strongly agree that their performance appraisals inspire them to improve. This is why training area managers in this task becomes a key part of the process.

5. Definition of objectives

Defining objectives jointly will help the team to be involved in achieving them. In performance , quantitative and qualitative targets are set, which can be individual or shared by a department. The achievement of these objectives may or may not be linked to a remuneration or bonus system.

6. Sample questions for conducting the performance assessment

The questions to be asked during the appraisal interview depend on the type of employee you are interviewing. However, there are a number of questions that can help guide the interview. Below, we share some of them:

  • How would you like to develop your career in the future?
  • What specific objectives would you like to achieve?
  • What do you need to achieve your goals?
  • How do you think the organisation can help you achieve these goals?
  • What can I do to support you in your development?

7. Action plan after the performance

Once the development needs have been identified, it is necessary to consider how the company will respond to these needs. In this phase it is essential to meet the expectations of the team. To this end, it is advisable to create training itineraries, mentoring programmes, leadership training and to rely on both external suppliers and the organisation's own talent to create a plan tailored to the team's needs.

8. Continuous feedback

The future of performance appraisal lies in creating regular development conversations. It is an opportunity to define and redefine objectives. It is a unique occasion to create an intimate space to grow and bring the expectations of each member of the organisation to the table.

9. Benefits of a performance appraisal system

Performance appraisal has multiple benefits for both the company and the individual employee. The most relevant aspects are listed below:

  • Personal and professional development
  • Establishment of a career plan
  • Identification of training needs
  • Motivation of the team
  • Improving communication

10. Digitisation of performance

Digitising this process helps both management and employees to centralise information and create an effective monitoring system for all members of the organisation. In addition, it enables a quick analysis of the results. The digitisation of performance facilitates the identification of the organisation's high potentials through the 9 box grid and the competence spider web. It also helps to create the company's training and development plan in an agile way.