A performance appraisal should be the opportunity for a leader in an organisation to set the development opportunities for their employees alight. It should be an invigorating, refreshing occasion.

Admittedly, sometimes it may be a tough experience as some home truths are formally shared about performance and leadership. But it should never, never be a surprise.

Many organizations fail the most rudimentary test of a good performance appraisal system. The system becomes routine. A tick the box exercise that has as much to do about developing people’s performance as macroeconomic theory has to do with customer service.

Performance appraisal systems which are routine and more about the system than the systemic and systematic development of people are a failure and should be stopped and overhauled for the good of the organisation.

A good performance appraisal system will have coaching at the heart of its structure and application. If an organisation has not set about teaching their leaders how to coach, it is not serious about having a performance appraisal system.

Not many people are naturally good coaches. They need to be trained. They need to be able to comprehend that the appraisal is not about them but is about the employee. The key to a successful appraisal is having the employee believe they have performance gaps and that rewards will come through closing the gaps. Belief is a powerful motivator.

Belief comes from your upbringing and experiences. However, when you are inexperienced it tends to come from people whose views you trust.

Less experienced people will believe they have a performance gap if they are told so by someone they trust. More experienced people will trust their own views most. They will be independent thinkers. A leader must have the ability to get the employee to believe through their own thoughts and not just tell them.

A leader must be able to avoid some common pitfalls of appraising performance, including biases, such as wanting people to be similar to me or positive or negative leniency; wanting to give everyone high or low scores.

Attribution; tending to see poor performance more within control of the individual and superior performance as more of an influence of external factors, is another common bias.

The forced bell curve; expecting in any group that there will be some poor employees and some great employees is another common bias.

A good performance system will also have structure that fits the nature of the business. A fast moving industry, such as telecommunications or advertising, may well have formal quarterly appraisal systems. A slower moving industry may have annual appraisal systems.

A common characteristic, however, in all industries is that appraisal must be continuous. Waiting until the annual or quarterly formal approach is not appropriate for the employee, the leader or the organisation.

Whether an employee’s performance is below where it needs to be or above where we expect it to be, a leader must give immediate feedback.

When it is below where it needs to be, how can we as leaders have a conversation that says last year’s performance was below par and never have told the employee? When that happens it is our performance we should be concerned most about. We have failed to lead and insist on performance until a year later!

When an employee’s performance is above what we expect we need to let them know as soon as possible to get a repeat performance. Even good performers are not necessarily aware of what constitutes good performance, even if we have attempted to make them understand.

A good appraisal system will also have clear standards of performance below which no one in a similar role will fall and targets of performance which individuals will strive for. If these are not clear then what are we appraising and how can an employee expect to ever meet those standards?

Harking back to earlier comments on coaching, the leader must know how to go about setting standards which if reached, will assist the organisation in reaching its goal.

Excellent appraisal systems should be three hundred and sixty degree in their nature. That is, they should be as much about the leader as they are about the employee and data should come from peers, subordinates and superiors.

A word of caution though; if the organisation’s appraisal system is not working well, a three sixty degree system is not a solution. They are difficult to make work well. Not only do the leaders need to be coaches they also need to be able to take criticism they have not heard before from people who are not expected to be coaches and deal with it.

Above all, good appraisal systems must be continuous. The quarterly or annual “appraisal” should be a formalisation of what has already been discussed, not a surprise.