Use appraisals to manage performance

Reward good performance

A good appraisal system could be enough to motivate your employees. Motivated staff are more likely to work harder and more effectively. You could also link your appraisal system to decisions about pay, bonuses and other incentives such as share schemes.

Appraisals and rewards systems are invariably very closely linked, but consider carrying them out as separate interviews. Otherwise, the question of money can cloud the issue of performance.

Choosing a method

How you structure your reward reviews needs to tie in with your appraisal system.

One-off bonus payments - based on a combination of a percentage of salary and how far the employee has achieved their objectives over the year.

A pay increase - based on overall performance rating - for example:

• below average performance - no pay increase
• average performance - 2 per cent pay increase
• above average performance - 3 per cent pay increase
• excellent performance - 5 per cent pay increase

Consider rewarding employees with shares in the company - the better their performance, the greater the quantity of shares. This means it is in their financial interest for the company to do well and the share price to rise.

Consistently good performance and a willingness to take on more responsibility might make you consider an employee for promotion.

Reward reviews can be an excellent way to motivate employees, but be careful. However, they can also backfire if care is not taken. There may be cause for dispute if employees discover some are given greater rewards than others. You need to monitor rewards programmes carefully to make sure they are having the impact you hoped for.

They must be fair, and all employees should be treated equally. Take particular care that the rewards do not discriminate against particular employees. See our guide on how to prevent discrimination and value diversity.

Some companies find that the use of job evaluations helps to give a clearer pay structure by ranking each job in a league table and setting salary brackets accordingly.

Subjects covered in this guide

• Introduction
• What performance targets and appraisals can achieve
• Set up a performance management and appraisal system
• Agree objectives
• Carry out the appraisal
• Rating performance
• Reward good performance
• Here's how staff appraisals help us monitor performance and motivate staff

 

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