CHECKLIST: IMPLEMENTING A PERFORMANCE APPRAISAL SYSTEM

What does an employer do if it wants to implement a performance appraisal system or audit an existing
system? The following outlines fourteen sequential steps for employers to follow:

Step one --define purpose, objectives and strategy. Clearly state the purpose of the system, in
writing and have review throughout the organization. Get support and consensus for the project.

Consider establishing a task force of managers and supervisors to initially design the system; however,
include line employees at an early point in the process. Other planning strategies include:

Benchmark competitors and industry leaders.

Determine whether or not a consultant should be employed. If yes, design a project budget and
controls before interviewing candidates.

Whether or not a consultant is used, a project manager should be appointed and time lines
created.

Accountability should be clearly established.

Step two --conduct job analysis. Information on jobs needed to establish an evaluation system is
collected. The type of information needed will vary from employer to employer depending upon the
business, the jobs and the objectives of the system; however, most performance appraisal systems
include:

Work quality parameters, such as errors, scrap, waste and complaint data

Measurement units

Production standards

Existing reporting systems

Coordinate the line information with job criteria and hiring specifications. Create measurable and
objective standards for each job.

Step three --employee input and feedback. Review the job standards with employee groups. Seek
input and revision. What does not make sense? What standards really do not exist or are ignored? For
each challenge, review with line management. The purpose is to discuss the criteria before the system
begins to avoid errors and mistakes and to develop a system that everyone has an ownership in.

Step four --review standards for objectivity. Every system incorporates some subjective
judgments. Where possible, measurable standards should be used. Every measurement must be job
related.

Step five --design a standardized method of appraisal. This step involves the creation of the
method or system of appraisal. Without standardization, there is no system. However, the system may be
as complex as BARS or as simple as a three-level rating scale --"needs improvement," "good" and "best."
More sophisticated methods will require validation by established statistical tests.

Example For a job that attendance, specifically punctuality, is important, the company could determine
that the average time that a person is late, when late, is 2.5 minutes. That can then become the standard
for acceptable behavior. Greater time equates to unacceptable behavior and much less (or no tardiness)
equates to superior performance. Without these types of standards and uniformity in ranking, supervisors
and managers will use standards of their own that may, or may not be, valid.
 Step six --develop a scorecard. As a general rule, if something is not measured, it is not important.
One of the major reasons performance appraisal systems fail is that the score keeping methods are
faulty. Documentation must be kept and supervisors who fail to do so should be penalized. Much as job
criteria is established for line employees, one of a supervisor's job criteria is to maintain as directed
current, complete information for appraisal purposes.

Documentation should be:

Accurate

Factual and verifiable

Based on direct observation

Recorded in a timely manner

Specific, clear language

Consistent for each member of the work unit and for each incident

Once the measurement methods are determined, the appraisal form itself and the specific mechanics
of the process can be outlined, discussed and finalized.

Step seven --initial training. Initial training is a key implementation step. Train the managers and
supervisors first. Training should focus on the definitions, standards, methods and forms. Additionally,
trainees will benefit from reviewing communication methods and role-plays even though these situations
are generally independent of the specific performance appraisal system and apply to various types of
situations in the workplace.

Include in training, information to assist raters with difficult situations. For example, fear of conflict is a
reason why many supervisors do not enforce performance appraisal systems.

Step eight --train employees. A successful performance appraisal systems requires "buy-in" by
most employees. Although this step can be ignored, it is crucial is generating credibility. Employees
should be advised of:

Purposes of the system and how it was designed

How the system will function including the forms, procedures and timing

Training methods and content

How information will be handled and protected

How long information will be retained

How performance appraisal ratings or scores will impact compensation, career paths, training
opportunities, promotions, retention and tenure.

For a system to have credibility, employees must agree that the standards used to measure
performance are known, fair and the supervisor uses the system in a manner that evaluates strengths
and weaknesses for future performance.

Step nine --check performance independently. Performance checking should include systems
that are independent of line managers.
Example Computerized attendance systems can monitor punctuality, unscheduled absences and
personal leave notice and use.These systems can be designed to submit exception reports for specific
behaviors or levels of behavior. Perfect attendance can be recognized and supervisors with high
absentee rates can be advised and provided support. Further, these types of systems can be used in lieu
of time-consuming supervisor-maintained systems.

Productivity, accidents, work quality and error rates can be monitored independently depending upon
the nature of the work. These types of data collection and reporting are valuable for many reasons
including:

ease supervisor's work,

are more accurate than manual records,

save space and cost,

are easily updated, and

there is a wider application for these reports to aid management decision-making beyond
performance appraisals.

Step ten --communicate results. Every method of performance appraisal stresses the importance
of feedback. The more an employer can "empower" an employee to control his or her job, the more the
employee can have an ownership position. It is much easier to understand the relationship between
performance and profits when an employee knows exactly what is expected and has tools to affect
behavior.

Step eleven --provide resources as needed. No system, including a performance appraisal

system, is totally self-contained. Successful performance appraisal systems devote resources to the
dynamics of the actual performance appraisal meeting. Further, provide appraisers with training to
develop good communication skills for conflict situations, appeals programs, counseling resources
including employee assistance programs (EAPs), orientation programs including explanations of the
evaluation program, articles in company newsletters and explanations in employee handbooks are
examples of the types of additional resources that can be used to support the performance appraisal
system.

Step twelve --take action. The basic purpose of any appraisal system is to provide a method for
performance to be improved --for supervisors to have tools to impact performance. Programs that are
used to provide support for supervisors include training programs, pay-for-performance systems,
bonuses, disciplinary actions, recognition programs, awards programs and counseling. It is not enough to
identify a good or bad situation, the supervisor must have the ability to act and must be encouraged to do
so.

Performance appraisals should be reviewed by line management and human resources staff to
ensure that the form is completed properly and timely, to address problems if any, and to make sure there
are actions in place and being used where appropriate.

Step thirteen --audit, evaluate and report periodically. This is a critical responsibility of
management. Compare results of the performance appraisal system with its purposes. There should be
tangible evidence linking the purpose of the system with its results.

Are error rates lower?

Is turnover reduced?
 Have customer complaints diminished?

If the system is not achieving its purposes, address the issues and begin the process (whole or in part)
over. Report achievement periodically to senior management. Be sure to audit the system for disparate
treatment, disparate impact and other common biases and stereotypical behavior. Coordinate the review
with affirmative action planning and monitoring where applicable. Be proactive.

Step fourteen --continue benchmarking and study. As with any area of applied psychology and
sociology, there are new methods and strategies as a result of research. Stay current with the literature
and with new trends in performance appraisal. Technology has given a great boost to recordkeeping
abilities in the workplace. Flexible work schedules and telecommuting make performance management
more important in managing the work flow and ensuring communications.

(CCH; 12/08)