The way that your company monitors performance has just as much to do with its overall output as the physical work that each employee accomplishes. In order to ensure that your attrition level is not hight and you are getting the most out of your performance appraisals, make sure that you are following the four step process below. Components of Good Performance Appraisal First, you must understand what actually makes for a good performance appraisal. The Corporate Executive Board found that 95% of companies were unhappy with their own appraisals. This is because the numbers that supposedly track and quantify performance never really describe accurately what that employee has actually accomplished. A good appraisal is much more personal and includes social and self appraisal. It considers what the employee has contributed based upon his or her unique skill set and offers specific training to improve in weak areas. Finally, an accurate appraisal ends with feedback and a commitment that solidifies the goals of the new evaluation period. Google is a company that does this incredibly well, and this is why their employees consistently rank in the top 3 for all companies in productivity. Alignment to Organizational Goals A proper appraisal is aligned to organizational goals as well. What good is an employee with extremely high productivity who is disconnected from the metrics that define company success? That employee is likely to feel cheated or shortchanged at his or her appraisals, because no one gave out the bigger picture. Make sure that all of your employees understand how their duties are connected to the key performance metrics that drive the company forward. Have management available to answer questions when vision becomes cloudy about this connection so that employees always know how to modify their day to day behavior on the fly. Frequent Review and Feedback Feedback should be given on a schedule as well as spontaneously, as should rewards. Employees deserve a structure that they can work towards, but Intermittent evaluations and reward structures are shown to keep people on their toes. If people do not know when to expect their next evaluation, they cannot coast to the next monthly scheduled evaluation, procrastinating until the end of the period and working the system to showcase the right performance metrics. Steve Jobs was legendary for his spontaneous reviews. One reason Apple was so efficient during his tenure was that no one knew when he would come in and demand an update. Surprisingly, everyone respected him more for it, not less. Avoiding Ranking Forget about those pesky numbers right now, both the numbers that evaluate an employee against a metric and those that evaluate employees against each other. Believe it or not, numbers are easier to manipulate than people, especially when the idea that those numbers represent is static and does not change with the needs of the company. Employees of different levels of talent should also not fear being ranked against one another – it is unfair to pit your Master’s level mid tier employees against your brand new upstarts. Personalize your employee evaluations for best results. You will also achieve the unintended effect of closing the gap between performance reviews and employee development – a task that far too few companies actually take seriously.