Leon Gettler of Smart Company discusses the Perfect Performance Review.

Traditionally, performance appraisals have been regarded as critical for managing careers and keeping employees in line with business objectives. Now with the Government's unfair dismissal changes dismantling WorkChoices, the performance appraisal can also be a critical tool in protecting your business from unfair dismissal claims.

Under the new industrial relations laws, businesses with fewer than 15 employees can sack a worker within 12 months of hiring them without redress, as long as they follow a small business fair dismissal code. For businesses employing more than 15, it is six months.

Additionally, the legislation removes the previous exemption from unfair dismissal relating to "genuine operational reasons" and replaces it with a narrower and more prescriptive defence of "genuine redundancy".

The code will require an employer to provide one warning, either verbal or written. Employers will also have to provide an employee with a reasonable opportunity to respond and improve their behaviour or conduct prior to termination of employment.

Lawyers say that whether or not an employer gave a verbal warning to an employee is likely to be a contentious issue where they are trying to defend themselves by referring back to the code.

And that is where the performance appraisal can be important. While performance appraisals are not usually the time to give warnings, they could provide companies with the documentation that could prevent a big payout.

Matthew Robinson, a partner at FCB Workplace Lawyers, says performance appraisals will become critical for demonstrating poor performance and showing genuine redundancy. "It's going to be important for all businesses making redundancies to have performance appraisals to distinguish between employees,'' Robinson says.

"Giving frank and fearless feedback will be important for all businesses to avoid unfair dismissals."

Preparing for the review
The trouble is most organisations are bad at performance appraisals. According to an Australian Human Resources Institute survey of more than 1600 HR professionals last year, four out of five respondents said that performance management processes in their organisations were either ineffective or somewhat ineffective. Nearly four in five respondents rated the skill level of managers giving the appraisals as average or poor.

So what steps should companies take to make performance appraisals deliver results, both for the business and the employee?

What should a performance review cover?
The managing director of employee award programs specialists, Trésor, Karen Rowell, says performance appraisals need to link the employee's day to day performance with the organisation's wider goals. Ideally, they should highlight areas that need developing, recognise and reward them for their recent performance, address issues such as promotions, transfers and succession planning and identify problem areas that might need improving.

The performance appraisal, however, should not be used as a star chamber. "The performance management system should be used as a positive tool to assess performance at a set point in time, with the view to addressing any developmental needs such as growth opportunities or improvements that are needed in a non-threatening and collaborative manner," Rowell says. "It should not be used, or, rather misused, as an opportunity to intimidate."

"It's all about setting the right tone, ensuring that the system is used in a positive manner and not as a rap over the knuckles. Employees should not feel frightened or worried about their performance appraisal. They should see it as an opportunity to have an open, supportive and constructive discussion about their strengths and weaknesses, with the view to developing strategies for improvement and development.

"Also, make sure that employees can see the value in participating in performance appraisals by focussing on the positive outcomes. That is, opportunities for promotions or transfers, extra training and development opportunities, higher salary or benefits such as time off or flexible working arrangements"

The structure of a good review
To get the most out of a performance appraisal, companies need to structure it properly.
Work needs to be done before and after. In the period leading up to the interview, the parties have to agree on key performance indicators and how they are measured and relevant information from many sources needs to be collected.

During the review, key performance indicators need to be identified first, appropriate ways of measuring performance need to be established and relevant performance data needs to be collected.

After the appraisal, the company needs to follow through on what has been discussed. Whether the parties have agreed on further measures, such as training, a transfer or mentoring, the managers need to ensure it is implemented. They also need to keep collecting information on how things are tracking.

The aim is to prevent surprises.
"If managers are leaving that and expecting their employees to just get on with it, at the end of the 12 months, it's going to come at a shock and will be difficult to manage. The ideal situation a management team should get into is that at the 12 month review, it's just going over what they already know."

She says a lot of companies now save time by using online performance management systems that already have the KPIs and competencies in place. Using these systems, employers can put down their thoughts before the appraisal on how things are going. "You spend 10 or 15 minutes sitting in front of the computer and then an hour or half an hour with the employee developing a plan for the next 12 months,'' she says.

Read the full article.

Mindset can help your organisation with performance management. Accurate performance appraisal is easy and accurate using Mindset’s web-based (or server based) Performance Advantage. Performance Apprasial software solution. It forms the foundation for a complete Performance Management System, enabling managers to review performance and plan for future performance in one easy-to use application. For more information contact us.

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Leonardo Di Vinci once said "the biggest deception a man can suffer is from his own opinion”. Your own Mindset as the leaders of your organisations during these challenging times its critical. What you do and say has the greatest impact on the psyche of your organisation.

Adapting to rapid change may not be easy for you and it certainly isn’t for the great majority of your staff. Any change management guru will tell you that a “burning platform” or a “sense of urgency” is often a prerequisite for any large scale change. Whilst I think with the GFC there can be no doubt that for some, things will never be the same, knee jerk reactions will come back to bite many people when things turn around. In an interview with the US Financial Times, Jack Welch stated, "On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy ... your main constituencies are your employees, your customers and your products."

Far too many of companies, with good people and good motives, obsess about  pleasing share-market and taking actions that may well reduce their stock's value two to three years out. This quarterly reporting obsession is having a detrimental effect on the long term planning and competency building that builds sustainable results into a business. They have slashed budgets on many longer-term strategies, such as research and development, talent retention and development, even preventive maintenance on their equipment.

All of it with the noble aim of improving margins and getting a short-term increase in share value. And then something like the GFC comes along and share prices have plummeted drastically leaving many to think, “ what on earth we were thinking”. Instead of spending so much time worrying about the analysts, why not spend that time talking to your other key stakeholders, your employees and customers.

You might just find out that your cost-cutting measures have led to employee disengagement and a loss in brand equity. This is the main reason behind offering our staff engagement survey for Free. It has never been so important that leaders really understand what is going on with the Mindset of their people.

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