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This employment guide shows how you can manage and improve your employees’ performance by implementing an appraisal or performance management process.


If your business is going to grow and prosper it is important to have a process for setting the objectives that you require your staff to meet and a mechanism for assessing and monitoring individual performance.

An appraisal or performance monitoring process provides the opportunity for you to engage with your employees to discuss their performance against their defined goals and objectives, to identify any training and development needs and to address any performance issues.

Some businesses link performance monitoring to pay and reward incentive schemes but this is not essential – the two things can be (and often are) entirely separate.

Goals and objectives

Within an appraisal system an objective is "a statement of what an individual needs to do or achieve in the key areas of his or her job".

Well-written objectives can help to:

  • Clarify the individual requirements of each job.
  • Align the contributions of individual employees with your business plan.
  • Improve the individual contributions made.
  • Assess individual contributions, job requirements and values against pre-determined measures.
  • Ensure consistently high levels of focus and motivation for achieving success in key areas of the job.

SMART objectives

The key to an effective appraisal system is to have clear and measurable objectives against which you will measure the performance of staff. You should try to set ‘SMART’ objectives which are:


They detail exact levels of performance for each key area. There should be no ambiguity.


They should be measurable in either time, cost, quality or quantity.


Although you can set objectives that may be challenging and ‘push’ the employee, do you believe that he or she is capable of reaching these? You should believe there is at least a 50 per cent probability of success. Setting unachievable objectives will demotivate staff.


The objectives should relate to an appropriate area of work or personal development.


Set a timescale appropriate to the tasks. Always refer to a specific date for completion rather than, for example, “the end of 1st quarter”.

The appraisal process

The appraisal process starts with you sitting down, usually once each year, with each employee to discuss and agree objectives and goals. Once these have been agreed they should be fully documented. You should agree how frequently you will review progress against the performance management plan, eg every six months or quarterly.

There are three steps to carrying out a successful appraisal:

Step 1

Request feedback on how the employee feels he or she has performed against the agreed objectives and goals. This can be done via a pre-appraisal questionnaire.

Make sure you receive this in plenty of time to consider your employee’s response so you can prepare for the appraisal meeting.

Give advance notice of the appraisal meeting and make sure you have a private area to conduct the meeting.

Step 2

Make sure that you fully prepare for the appraisal meeting, that you have fully considered the employee’s feedback and considered all relevant performance related documentation.

Step 3

The appraisal meeting has two purposes - to look back at the previous year’s performance and to agree goals and objectives for the next 12 months.

You should recognise and congratulate employees when they have met or exceeded their goals and objectives.

Where an employee has failed to meet any objectives you need to encourage him or her to explain the reasons for not meeting these objectives. It could be in hindsight that the objectives were not achievable or that the failure has identified a training or development need which needs to be addressed.

You should then discuss and agree goals and objectives for the next 12 months.

Following the appraisal meeting, you should fully document the meeting, including setting out the goals and objectives for the next period. The document should be signed both by you and by your employee.

Annual review

The annual review should not produce any surprises if you have been carrying out your interim reviews.

Getting it right

You should have mechanisms in place to ensure that job roles are aligned to meet your business goals and that your staff are performing at the levels that you would expect. A performance management system provides for this and also ensures that, as your business develops, you staff continue to have the skills and competencies needed to support its growth.

HR:4UK can help you by providing the advice and support you need to get the best performance from your staff.

For further help and advice, speak to one of our advisors by calling 01455 444222 or complete our online enquiry click here and an advisor will contact you shortly.