Performance Appraisals Examples

A performance appraisal is a periodic review of an employee’s job performance and by extension, their contribution to the organization.

Understanding performance appraisals

Performance appraisals are part of a suite of procedures that collectively form part of a performance management system. Instead of annual reviews that focus on the past and not on the future, these systems review and monitor performance consistently and systematically over the course of the whole year. 

Performance appraisals are conducted by either the employee, manager, or human resources representative. But the appraisal itself tends to be a one-on-one meeting where the following topics are discussed:

  • The reinforcement of acceptable standards of performance, behavior, and outcomes in line with business needs.
  • Reward for outstanding performance in the form of a promotion, pay rise, or simply some positive feedback. Similarly, areas where performance is sub-par should be addressed and a plan devised to improve it.
  • The scheduling of future meetings to follow up on performance or ensure the development program is progressing as intended.

Organizations can make the performance appraisal as formal or casual as they desire. But generally speaking, it is a good idea to conduct the meeting in a quiet environment where both parties can be understood without distraction.

Performance appraisal methods

The performance appraisal method chosen will depend on the role of the employee who is being appraised, the desired level of formality, and the extent to which work output or behavior is observable in isolation.

Irrespective of the method, however, it’s important to avoid a wholly top-down approach where a leader evaluates the performance of a subordinate with little or no input from the subject themselves. It is also vital to internalize employee performance results and avoid a situation where appraisals are characterised by nothing more than company buzzwords or jargon.

With that in mind, here are three methods that make performance appraisal rewarding and valuable for both the employee and the organization.

Management by objectives (MBO)

Management By Objectives
Management by objectives was popularised by notable management consultant Peter Drucker in his 1954 book The Practice of Management. Management by objectives (MBO) is a model used to improve organizational performance by defining objectives agreed upon by both management and employees.

Management by objectives involves managers and employees working together to identify, plan, organize, and communicate key focus objectives over a set period. Progress is reviewed either quarterly, half-yearly, or annually.

The overriding aim of MBO is to match organizational goals with an employee’s goals that are set using the SMART method. After each review period and depending on the results, the employee is either rewarded with a salary increase, transferred to another department, or required to undertake additional training.

MBO places more emphasis on tangible goals that can be measured, with relatively little room in the process for intangible aspects such as motivation, experience, and buy-in. This makes it better suited to evaluating the output of senior staff such as directors and executives.

360-degree feedback

360-degree-feedback
360-degree feedback is a comprehensive performance feedback strategy for employees. Traditionally, performance feedback was solely given by the employee’s direct superior. In 360 degree feedback, however, anonymous feedback is given by a range of individuals that the employee has a working relationship with. These include managers, colleagues, and in some cases, customers.

360-degree feedback was introduced into the business world at the Esso Research and Engineering Group (now Exxon) in the 1950s.

As the name suggests, 360-degree feedback is a comprehensive performance appraisal method. It is a multidimensional approach requiring feedback to be sought from an employee’s manager, direct report, customers, and colleagues. The employee is even encouraged to provide feedback on their own performance!

Although 360-degree feedback started in multinational corporations, its popularity has trickled down to smaller companies. In very general terms, there are five key components to this performance appraisal method:

  1. Self-appraisal – as we noted, the employee can analyze their past performance to determine any strengths or weaknesses. To avoid personal biases skewing results, however, there must be structure and formality to this process.
  2. Managerial review – a traditional and necessary part of any appraisal.
  3. Peer review – as many organizations shift away from hierarchical leadership, an employee’s colleagues are increasingly important sources of feedback. They can clarify whether the individual works well in a team, uses initiative when required, or embodies organizational values.
  4. Subordinate appraising manager (SAM) – also known as upward appraisal, the SAM process involves managers being appraised by their employees. This is a controversial practice for some, but for senior managers in particular, it is a vital source of performance feedback.
  5. Customer/client reviews – this may comprise internal customers such as product users or external customers such as suppliers. This component will not be relevant for every company that uses 360-degree feedback.

Behaviourally anchored rating scale (BARS)

The BARS is a system that rates employees according to their performance in specific behavioral patterns. Each pattern is anchored to a numerical rating which serves as a benchmark for acceptable performance. This benchmark, of course, differs according to the employee’s role and level of prior experience.

To determine the benchmark, the behavioral patterns that constitute typical workplace behavior must first be clarified. From this list, the organization must work to edit them into a consistent, standardized format and remove redundancies.

Most organizations use a five, seven, or nine-point scale to measure behavior criteria. For a software engineer who is evaluated against a five-point scale for knowledge of Python, the following levels are representative examples:

  • Level 2Possesses reasonable working knowledge of Python and is able to complete projects under supervision.
  • Level 4Can complete projects in Python and related disciplines without supervision.

Performance appraisal example

Let’s now take a brief look at an example of a marketing employee and their superior who are both required to submit an assessment of the employee’s performance. For the sake of the example, the marketer’s name is John Smith.

The performance rating scale to be used in this example is as follows:

  • 1 (Unacceptable) – fails to meet standards.
  • 2 (Needs improvement) – routinely fails to meet standards.
  • 3 (Satisfactory) – meets standards some of the time.
  • 4 (Outstanding) – exceeds standards regularly.
  • 5 (Excellent) – exceeds standards consistently and reliably.

Now, we’ll conduct a mock performance appraisal across a key objective to increase qualified marketing leads. Note that more exhaustive appraisals will also include a section on professional development and general employee performance factors.

Objective 

To increase the number of qualified marketing leads by 10% over the previous year. 

Action items 

  1. Create buyer persona profiles with the team by March 1. 
  2. Create and execute 5 to 10 top-of-the-funnel (TOFU) marketing campaigns to generate brand awareness and acquire qualified prospects by December 31.
  3. Monitor marketing-qualified leads (MQLs) weekly and report on results quarterly to adjust each campaign where required.

Outcomes

  1. Five buyer personal profiles were completed in the last week of February.
  2. Ten marketing campaigns were launched via online advertising, trade shows, and a monthly podcast and webinar.
  3. MQLs were tracked and reported weekly, increasing by 12% over previous EOY results.

Employee rating: 4

The key objective was not only met but exceeded and all action items were completed ahead of time. Even with one team member away because of illness for most of the fourth quarter, we worked well collectively and put in the hours to make it work.

Manager rating: 5

John created an action plan that was not only effective but adaptable to our business needs. He also managed to manage his team’s workflow with a minimum of fuss after losing an important member in the fourth quarter. John’s efforts have not gone unnoticed and we look forward to building on this success next year.

Key takeaways:

  • A performance appraisal is a periodic review of an employee’s job performance and by extension, their contribution to the organization. Where traditional annual reviews focus on the past and not on the future, performance appraisals are systematically and consistently conducted over the course of the year.
  • The performance appraisal method chosen will depend on the role of the employee who is being appraised, the desired level of formality, and the extent to which work output or behavior is observable in isolation. 
  • Three performance appraisal methods include management by objectives (MBO), 360-degree feedback, and the behaviorally anchored rating scale (BARS). Most will include a section on professional development, key organizational objectives, and general performance factors.

Organizational Structure Case Studies

Airbnb Organizational Structure

airbnb-organizational-structure
Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.

eBay Organizational Structure

ebay-organizational-structure
eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.

IBM Organizational Structure

ibm-organizational-structure
IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.

Sony Organizational Structure

sony-organizational-structure
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.

Facebook Organizational Structure

facebook-organizational-structure
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams based on the main corporate functions (like HR, product management, investor relations, and so on).

Google Organizational Structure

google-organizational-structure
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.

Tesla Organizational Structure

tesla-organizational-structure
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.

McDonald’s Organizational Structure

mcdonald-organizational-structure
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.

Walmart Organizational Structure

walmart-organizational-structure
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.

Microsoft Organizational Structure

microsoft-organizational-structure
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.

Read Next: Organizational Structure

Read Also: Business Model

Read Next: MBO, 360 Degree Feedback, High-Performance Management, OKR, Balanced Scorecard.

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