What are the best ways to conduct performance appraisals that reduce operational risk?

Performance appraisals are an essential part of performance management, but they can also pose operational risks if not done properly. Operational risks are the potential losses or damages that result from inadequate or failed processes, systems, people, or external events. In this article, you will learn some of the best ways to conduct performance appraisals that reduce operational risk and improve employee performance.

1 Define clear and SMART goals

One of the first steps to conduct effective performance appraisals is to define clear and SMART goals for each employee. SMART stands for Specific, Measurable, Achievable, Relevant, and Time-bound. These criteria help you to set realistic and meaningful expectations, monitor progress, and evaluate outcomes. By defining SMART goals, you can reduce the risk of ambiguity, confusion, or misalignment that can affect performance and quality.

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Tony Gordon

Empowering Managers with clarity and direction enabling them to become confident decision-makers in just 90 days, allowing them to focus on the things that are most important to them.
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Train your managers on delivering constructive feedback and having the right conversations to address underperformance promptly. Setting SMARTER goals rather than SMART goals, Specific, Measurable, Achievable, relevant, and Time-Bound is great but adding Evaluating progress regularly and when the goal is achieved Reflect on what went well and what could have been done differently, encourages the person to take more ownership. Ensure that appraisals are linked to promotion, bonuses, pay rises, and development opportunities this is more likely to engage them more. Providing regular feedback when positive breeds encouragement and when negative helps them to take the learnings as opportunities to keep directing towards their SMARTER goals.

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2 Use multiple sources of feedback

Another way to conduct performance appraisals that reduce operational risk is to use multiple sources of feedback. This means collecting and analyzing data from different perspectives, such as self-assessment, peer review, customer feedback, or supervisor evaluation. Using multiple sources of feedback can help you to gain a more comprehensive and balanced view of performance, identify strengths and weaknesses, and address any gaps or inconsistencies. By using multiple sources of feedback, you can reduce the risk of bias, error, or distortion that can affect accuracy and fairness.

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3 Provide regular and constructive feedback

A third way to conduct performance appraisals that reduce operational risk is to provide regular and constructive feedback. This means giving timely and specific information about performance, highlighting achievements and areas for improvement, and offering guidance and support. Providing regular and constructive feedback can help you to motivate and engage employees, recognize and reward performance, and facilitate learning and development. By providing regular and constructive feedback, you can reduce the risk of dissatisfaction, demotivation, or turnover that can affect retention and productivity.

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4 Align performance appraisal with organizational goals and values

A fourth way to conduct performance appraisals that reduce operational risk is to align performance appraisal with organizational goals and values. This means ensuring that the performance appraisal process and criteria are consistent with the organization's vision, mission, strategy, and culture. Aligning performance appraisal with organizational goals and values can help you to communicate and reinforce expectations, align individual and team performance, and foster a culture of excellence and accountability. By aligning performance appraisal with organizational goals and values, you can reduce the risk of misalignment, conflict, or resistance that can affect compliance and performance.

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5 Follow up and monitor performance improvement

A fifth way to conduct performance appraisals that reduce operational risk is to follow up and monitor performance improvement. This means establishing and implementing action plans, setting milestones and deadlines, and tracking and measuring results. Following up and monitoring performance improvement can help you to ensure that the performance appraisal process leads to positive and sustainable changes, address any issues or challenges, and provide ongoing feedback and support. By following up and monitoring performance improvement, you can reduce the risk of stagnation, regression, or deviation that can affect quality and performance.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Abdinasir Sulub

Non-Executive Director | HR Strategist | Leadership Development | Organizational Growth | Governance & Compliance
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To conduct performance appraisals that minimize operational risks, it's important to develop clear and objective performance metrics aligned with organizational goals. Additionally, fostering open communication and providing regular feedback throughout the appraisal process can help identify and address any performance issues promptly, reducing the likelihood of operational risks stemming from underperformance or misalignment with organizational objectives.

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Swetha B

Vice President - Human Resources
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A few best practices that can be incorporated in a performance management system to mitigate operational risks include: - providing the option/ability to manager and team to re-look at, and modify SMART goals set at the beginning of the appraisal year as per changing external/internal business dynamics - having at least one checkpoint/performance discussion to provide feedback to the team prior to the yearly appraisal discussions - have performance guidelines that ensure managers provide mentoring & have career coaching/discussions with team either as part of appraisal or separately - having an official mechanism for employees to acknowledge and provide feedback on the quality of appraisal discussions that were conducted by the manager

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What are the best ways to conduct performance appraisals that reduce operational risk?

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1 Define clear and SMART goals

2 Use multiple sources of feedback

3 Provide regular and constructive feedback

4 Align performance appraisal with organizational goals and values

5 Follow up and monitor performance improvement

6 Here’s what else to consider

Performance Management

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What are the best ways to conduct performance appraisals that reduce operational risk?

1

2

3

4

5

6

1 Define clear and SMART goals

2 Use multiple sources of feedback

3 Provide regular and constructive feedback

4 Align performance appraisal with organizational goals and values

5 Follow up and monitor performance improvement

6 Here’s what else to consider

Performance Management

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