Performance Appraisal or Personal Development Plan – which is best?

Do you call it a ‘personal development plan’?

What are performance evaluations called at your place? I’ve lost count of the terms out there: ‘Performance Management’ ‘Performance Review’, ‘Performance Appraisal’, ‘Performance Review’, ‘Personal Development Plan’ and even ‘Annual Reviews’. What’s more, that’s before we even get into the three-letter acronyms – PMP; PDR etc!

When it comes to managing employee contributions, organisations often debate between performance appraisal process and development plans. But which is best?

Start with the purpose of your evaluation process

In many ways it depends on your purpose, is this about measuring individual performance, establishing behavioural or performance standards or is it about allocating performance based pay in line with organisational success? If this is the case then it is more commonly called performance evaluation or performance appraisal as the emphasis is about looking at the employee’s job performance and potentially applying performance ratings by looking back on the past performance of the individual, typically over the last year. Performance appraisals in these circumstances tend to be conducted annually to enable pay increases to be budgeted for or allocated at a specific time of year.

However, an annual and backward looking approach to employee appraisal, rarely contributes positively to employee satisfaction and many organisations are unable to apply a rating scale or similar to measure the work performance of individual employees and then link it to remuneration. In these cases line managers should focus on other aspects of the performance management process such as personal development and future goals, to identify areas of skill gap or extra role behaviours that could enable career advancement in a specific job function.

At Actus, we believe that to truly get the best out of your people, you need to focus on both performance and development.

Performance Reviews or Performance Appraisals – Which Should Your Organisation Prioritise?

Well, we would recommend that to get the best out of your people, you should focus on both employee performance and their development. However, it is essential that managers and staff understand the relationship between objectives and development within the appraisal process. Both should be part of an ongoing process rather than an activity within a given period. This is why we often use the term performance management rather than performance appraisal to emphasise an ongoing management approach.

What makes an effective appraisal process?

An effective appraisal process starts with goal setting to agree clear expectations that align an employees performance with organisational goals showing them how they contribute to organisational success. This ongoing approach should encourage employee participation and the line manager should provide feedback to ensure that both parties are on the same page regarding performance levels. The process should be overseen by the HR Department rather than owned by them. The quality of the conversations between managers and and employees that take place are a key indicator of a company’s culture, so it is important that appraisals are not treated as time consuming tick box exercises.

Alignment of performance objectives and development plans or actions

The key point to recognise is the fact that performance objectives and development actions should be aligned. We know of one business where development planning used to take place at the end of the year, during the performance appraisal meeting. At best people ended up going on courses or training programs as a reward for high or outstanding performance and to motivate employees. At worst they waited all year to get the development that they needed to succeed in the first place! They were actually delivering development 18 months too late, failing the individual and the business.

At Actus we recommend the following year-round approach to performance:

1.  Set objectives clearly at the start of the year.
2. Review the objectives at the end of Q1 and provide constructive feedback about the employee’s contributions to date. identify any areas of needed improvement and provide support through a development plan enable or accelerate the achievement of these objectives
3. Document these development needs (ideally in a performance appraisal system like Actus) giving feedback to allow L&D to address them in the shortest possible time
4. At the half-year point – provide objective feedback on employee’s job performance, check whether goals are on track to be met and identify any areas for training or support. if you use performance ratings, discuss progress against these to ensure there are no surprises at year end.
5. At the end of Q3, again assess as to whether all is on track and ideally invest the time talking about career development or goals or the longer-term plan. This can also be a good opportunity to for peer assessment from other employees or 360 degree feedback that can identify areas that could support career progression
6. In Q4 complete the cycle, the individual should be encouraged to carry out a self assessment first. The line manager should offer more constructive feedback and both parties discuss performance. Finally agree the rating scale if necessary, and finally discuss organisational goals for next year and agree personal objectives to align and focus again.

Find out more:

You can discover more about this approach by reading this blog on year-round performance appraisals.

So perhaps the ‘performance development process’ is the best term to use or in fact ‘performance management’ which is the exact process we describe above. Unfortunately, this term has too many connotations due to historic poor management practice – but that’s a subject for another blog!

One point to also remember is that when we are talking about developing people, the style and attitude of the performance evaluation meeting is also important. Open questions and a coaching style are the names of the game. You can read more on this by reading our Managers Guide, 7 Simple Steps to People Development (see below). For other interesting HR resources, visit our library of content via this link. 

7 Simple Steps to People Development

Benefits of a Combined Approach to Performance Management

To summarise, a combined approach to performance management can deliver the following

• Holistic Development: Ensures employees receive continuous feedback and support for both their performance and career development.
• Alignment with Goals: Helps align individual objectives or goal setting with the organisation’s strategic goals.
• Enhanced Communication: Promotes ongoing dialogue between managers and employees. Providing constructive feedback addressed early and fostering a culture of transparency and trust.
• Motivation and Engagement: Regular feedback and development opportunities can boost employee motivation and engagement.

At Actus, our Performance Management Software is designed to support this integrated approach to performance evaluations. It helps you set clear objectives, provide continuous feedback, and create personalised development plans. This way, you can ensure that your employees are always aligned with your organisational goals and are continuously improving.

Why Choose Actus?

Comprehensive Solutions: Our software offers a complete suite of tools to manage both performance appraisals and personal development plans seamlessly.

User-Friendly Interface: Designed with the user in mind. Our platform is intuitive and easy to navigate, ensuring a smooth experience for both managers and employees.

Customisable Features: Tailor the software to meet your unique organisational needs, ensuring that it aligns perfectly with your existing processes.

Expert Support: Our team of organisational development consultants are always on hand to provide guidance and support. Helping you implement effective performance management strategies.

Continuous Improvement: With Actus, you can foster a culture of continuous improvement. Where employees are motivated to develop their skills and achieve their career goals.

Discover how Actus can help you create a balanced and effective performance management process that drives both performance and development. Contact us today to learn more!

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More useful resources

Subscribe to the Actus YouTube channel for educational HR videos, including a 40 second explainer video about ‘How Actus Performance Management Software reporting works?’.

Read more blogs by Lucinda Carney see here.

Download our free Managers Guide ‘7 Simple Steps to Appraisals’ – this breaks down 7 simple but essential steps for Managers to achieve a smooth, effective appraisal process.

Listen to ‘The HR Uprising Podcast’ hosted by Lucinda Carney, which has a variety of informative topics in business and HR. Visit the HR Uprising website or download wherever you get your podcasts from (YouTube, Spotify, Apple etc). Listen to episode 206 ‘Rethinking Appraisals’

HR Uprising Podcast episodes on Performance Management

For monthly updates on all things Actus Software and the HR Uprising Podcast… Follow our monthly newsletter ‘Actus Uprising’ on LinkedIn.