In the current economic environment, companies are increasingly realizing that their only endurable source of competitive advantage is how well they can assess and develop their human capital. Pre-employment intelligence and personality testing are more common than ever, and leadership development and executive coaching programs are becoming standard in organizations large and small.

One of the basic elements of an effective human capital strategy is a robust performance appraisal system that effectively differentiates between superior, average and poor job performance, and which also provides developmental feedback to employees so that they can build on their professional strengths and remedy their weaknesses.

One thing that organizations often neglect to do is to assess the performance appraisal system itself, in addition to assessing employees using the system. In my experience, it is very helpful to periodically survey employees to ask questions like:

- Does the performance appraisal system provide you with useful feedback?

- What is working well (or not) in terms of the logistics, timing and user interface of the performance appraisal system?

- How effective is the performance appraisal system overall? 

- What would make the performance appraisal more efficient or effective?

Based on the feedback received from participants in the system, the organization may change aspects of the system, for example, whether feedback is anonymous or not, who provides feedback, what the criteria of evaluation are, whether the assessment is quantitative and/or qualitative, etc. The organization may also learn that reviewers need to be trained to give more useful feedback and that managers need to be trained about how to have more productive and constructive review meetings with their teams.    

In addition to the obvious advantage of improving the performance appraisal system over time based on user feedback, soliciting and acting on feedback about the system also sends a powerful cultural message that the organization itself is willing to develop and grow, in the same spirit that it is asking its employees to develop and grow.  

For more information about the elements of, and implicit or explicit choices in, a performance appraisal system, here is a presentation on that topic.

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