8 hot topics to include in your annual performance appraisal process

2020 was a year of evolution for office workers worldwide. But while every business, role and year are different, some themes will always be relevant.

With that in mind, here are 8 hot topics to make your next annual performance appraisal fair and balanced.

A word of warning

A great annual performance appraisal consists of an employee and their manager:

1. Reviewing 360 feedback received throughout the year
2. Discussing this feedback to improve self-awareness
3. Planning for next year's learning and career progression

Tying self reflections to pay decisions makes employees less open to discussing mistakes and failures.  With their family's disposable income on the line, fewer people volunteer their shortcomings.  

And, tying 360 feedback to pay decisions can create conflict.  If employees are competing over the same bonus pool, peers are likely to be more critical of each other.  This is especially true if there's a 1-5 rating scale and "bell-curving".

A simple way to make your appraisal a safe space to discuss performance is to call it a reflection.  I don't know anyone who likes to be appraised or reviewed.

Words matter!

OK let's dive in...

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1. Strengths

Psychologists suggest spending more time on an employee's strengths than their weaknesses.  

Why? Because it's more motivating and more exciting vs focusing on things that you're not that good at. And because it's proven to increases engagement and job satisfaction.

So before your appraisal, ensure each employee receives 360 feedback on these questions:

1. What do you see as my best attributes and strong suits as an employee in this business?
2. What types of people and/or situations do you see me having the easiest time working with?
3. Thinking about my role, my strengths, and the team's goals, what one thing do you think I should focus on most in the next few months?

Then discuss this feedback and make notes. This will form the basis for the rest of the discussion.

This is especially important in a year filled with uncertainty and disconnection.

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2. Communication

Unless you've hired people with telepathic abilities, you need solid communicators.

The work doesn't do the talking.  Our words, tone of voice and body language do the talking.

In fact, studies suggest that when it comes to communicating ambiguous information:

- 7% of the message comes from the words we use
- 38% from our tone of voice
- 55% from our body language

I learned this the hard way back in my days working at Gresham and Goldman Sachs.  Working hard late into the night, shying away from giving updates and talking things out.

Here are some communication-related questions to discuss during an annual performance appraisal:

1. Do you think I’m a good listener? Do I allow you to express your views without interruption and do I respond in an empathetic way?
2. Do you think I’m engaging and persuasive when speaking? Do I get my point across clearly and convincingly?
3. When has my [listening/ presenting/ writing] been great in your opinion?
4. When has my [listening/ presenting/ writing] been least effective in your opinion?

You could also gather 360-degree feedback on these questions before chatting one-to-one.

Here's a bonus team communication hack to help increase productivity in 2021.

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3. Teamwork

It's hard to think of a business that doesn't rely on teamwork. Small groups of people working together to achieve a common goal is the heart of any company.

Yet, so many performance appraisals focus only on the manager-employee dynamic.

This is why 360 feedback is key to a fair and balanced annual performance appraisal.

360 feedback gives rich and diverse opinions vs feedback from a manager only.

Consider these teamwork-based 360 feedback questions in your next performance appraisal:

1. What have I done in the past few months that helped you get results?
2. What have I done in the past few months that made it hard for you to do your best work?
3. During which projects did you see me contribute most to our team culture?
4. What one thing would you like to see me do more of or less of to help me be more effective in my role?

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4. Wellbeing

When physical or mental wellbeing declines, work performance suffers.

Employees aren't robots.  

Even the most brazen, rock-like executive battles with anxiety.  Especially when 12-months of work goes under the microscope during a performance appraisal.

Here are some great questions to identify how big a role wellbeing has played in an employee's work.

1. What have you noticed lately about my demeanour?
2. In what ways has my demeanour changed over the past 6-12 months?
3. When have you observed me at my best?  What were the conditions?
4. What one recommendation do you have to help me perform at my best at work without getting unbalanced?

Again, these could be the topic of a one-to-one or a 360 feedback form.

Re-read what I wrote above about losing honesty when you tie these discussions to pay.  This is particularly true when discussing wellbeing.

If you'd like advice on your company's wellbeing programme, check out Calmer.

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5. Leadership

The moment someone has a direct report is the moment you need to work on their leadership.

Leadership left to chance is usually a disaster.  Especially if someone became a manager right before a forced remote-work move.

Leadership is a learned skill and core part of an annual performance appraisal.  Sure, some people appear to be "born leaders", but even they benefit from coaching.

These questions identify what's working and what's not in someone's leadership.  They build on the previous discussion around strengths, communication and teamwork:

1. What is it about the way I work and communicate that makes me a good leader?
2. What one thing about the way I work and communicate could I change to make me a better leader?
3. During which past project or workstream do you think my leadership was at its best?

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6. Culture

It's not all about doing great work. Adherence to culture makes sure work happens in a respectable and sustainable way.

A focus on culture over and above the work helps manage the "No D**kheads Rule".

But what is "culture".  It's not "the air you breathe".  That's just air.

Culture is how people work together. It's nothing more than a simple set of communication rules.

Here's Howamigoing's culture deck.  We have 7 core values and behaviours that guide our daily interactions with each other.

In your next annual performance review you can consider these questions:

1. Which of the company's values and behaviours do you see me embodying the most?
2. Which of the company's values and behaviours do you see me embodying the least?
3. Which of our values and behaviours do you think are redundant and need modernising?

#3 is important because while culture isn't the air you breathe, it is not a constant thing. It evolves with each new hire and each departing executive. And that's a good thing. Whatever doesn't evolve dies.

Like other topics, often it's more robust to get multiple opinions as part of a 360 feedback process.  Managers don't and can't see every interaction.

Two of my most enjoyable and most helpful books on culture are The Culture Code and Do Purpose.

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7. Blind spots

Too much focus on someone's weaknesses can demotivate and decrease engagement.  But it's helpful to touch on blind spots during a performance appraisal.

Blind spots help people to know which types of people or situations bring them unstuck.

Awareness of an employee's blind spots helps a manager to know:

A) How best to assign tasks, and
B) How to best structure each project teams,

so long as the manager is aware of their own blind spots!

Keep the discussion brief.  Here are two questions that work well:

1. What types of people or situations do you think pose the greatest challenge to my effectiveness?
2. Thinking about my career ahead and my working with others, what do you see as a quality or two that I should attempt to strengthen?

To create a safe space to give this feedback, a manager should split their words into FACT and FEELING.

FACT = Something the employee said or did that may evidence a blind spot.  This is an objective past action.

FEELING = Why the manager believes this could have been done better.  This is a subjective opinion in the present.

Note:
An appraisal isn't the time to correct all the mistakes an employee made during the year.  A manager or senior team member should have done that when it happened. Keep the year-end blind spots discussion focused on just one big-picture item.

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8. Career path

Spending the entire annual appraisal looking back is a wasted opportunity.  The past is over.  You can only improve future performance.

No matter what industry, product or services, a business is just a collection of people.  The best way to improve a business's performance is to help each employee be a better person.

There should be time within a performance appraisal dedicated to learning and development.‍

Here are some first-class questions a manager can ask regarding career progression:

1. What is it about your current role that fulfils you personally?
2. What don't you get from your current role that you'd like to have in 12 months' time?
3. What skills would be most exciting for you to develop?
4. What other mentors could I put you in touch with to help broaden your perspective?
5. What other sectors or roles could you see being a great fit for your strengths, skills and values?

"What if we spend money training people and they leave?" - Manager 1

"What if we don't train them and they stay?" - Manager 2

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A final thought about performance appraisals

It might have made sense a couple of decades ago to concentrate performance management efforts on one month each year.

But work happens every day and so performance is an everyday thing.

Performance is also hard to define and very subjective in knowledge businesses.

And human memories are not that great. It's hard to remember what we had for lunch last week let alone what each of our direct reports did 7 months ago.  That's why recency bias can skew performance appraisals in a big way.

Instead, create a culture where managers are reflecting with employees every month.  Because employee personal growth happens at sporadic moments throughout the year.

Create a culture where 360 feedback happens each quarter.  This makes sure everyone always knows where they stand.

It also makes for a much more effective and efficient year-end performance appraisal.