Assessing the effectiveness and value of a performance appraisal program is necessary for every business. Performance appraisals and an evaluation of the program is required by the U.S. government. Ideally, the creators of the appraisal program in a company also create an evaluation system from the start. Evaluating the program requires a clear criteria of what makes a program successful or not. Companies should start conducting evaluations after the first appraisal period, and then perform ongoing program evaluations both to comply with regulations and help improve the appraisal system.
Divide the evaluation system into to two categories of questions. The first question is "Are we doing things right?" and the second question is "Are we doing the right things?" The first question is basically asking if the company is following the correct rules and procedures of doing a performance appraisal. The second question is asking about the effectiveness of the appraisal system within the company.
Check compliance. Expand on the first question to determine if the organization is in compliance with system, regulatory and program requirements. Create a list of questions such as, "Were the appraisals done on time?," "Did everyone who was supposed to receive an appraisal get one?" and "Were progress reviews conducted?" The compliance information is important to collect first, because you can't measure the effectiveness of the program if the company isn't executing the program correctly in the first place.
Determine if the appraisal program is meeting objectives. If there are no written objectives, determine if the program is meeting the unwritten expectations of the users. Some objectives or expectations can include improving organizational performance, encouraging teamwork or improving communication between supervisors and employees. When there are no stated goals, you can determine expectations through surveys, interviews and focus groups. Base the evaluation questions on those expectations.
Determine if the employees and managers are satisfied with the accuracy of the appraisal system. The perceptions of the employees and managers are important to the success of the appraisal system. Employees generally like to feel they get enough feedback about their performance and that the criteria is current and fair. Even if an appraisal program seems to have all the right elements in place, it is the receptivity of the employees and managers that determines the effectiveness and success of the program.
Ask yourself if the benefits of the program outweigh the cost. The costs of the program can include the time it takes raters and reviewers to evaluate and the costs of developing and using an automated appraisal process. Measure this against increased employee productivity, increased retention rate, clearer communication and a healthier, more pleasant work environment.