The Objective of Performance Appraisal Interviews
Today, most organisations practice Management by Objectives (MBO) in their strategy program, both on the individual and the organisational level.  According to Grete Fischer and Nils Sortland, performance appraisal interviews are central to MBO and achieving organisational objectives for each employee’s individual responsibilities.  If every employee does not understand how he or she can contribute to the organisation’s objectives, those objectives will remain nothing more than pretty words.

The object of a PAI is to help the employee do a better job, by addressing a series of relevant topics during the interview.  Aslaug Mikkelsen, suggests the following topics:  a) Feedback on, and evaluation of, results from the previous year; b) Clarification of expectations, responsibilities, and goals; c) Competence requirements, career and competence development; d) Collaboration and communication; e) Health, safety, and environment.

An open and constructive dialogue on these issues will have a positive influence on both the organisation and the employee.  The organisation profits by providing the employee with concrete responsibilities, generating predictability and thus motivation to perform.  The employee knows what he is striving for, and the manager is challenged by concrete conditions of employment.  Without this kind of reciprocal clarification, there is a risk of ambiguity and disparity between expectations and results.  A good performance appraisal interview represents a win-win situation for the organisation and the employees.  The interview must be well prepared, issues must be addressed systematically, and there must be a link between the organisation’s goals and the individual employee.

Even if the intention behind performance appraisal interviews is good, that doesn’t mean they will be unproblematic.  Middle managers are often responsible for conducting PAIs with their subordinates.  Those involved do not always fully understand the point.  Also, communicative competence can vary between managers.  Often, managers are competent specialists in their field, but just as uncertain in an interview situation.  In addition, intespecialty issues between the manager and the employee can present a further challenge.  Increased communicative competence will therefore help many managers conduct better performance appraisal interviews; not necessarily as an end in itself, but, among other things, to arrive at a common understanding of responsibilities and goals for the individual employee.  That’s why it is crucial to address the following question:  How can communication skills be used as a tool for improving individual employee performance?

Better Results in Participative Organisations
Why can consciousness of communication contribute to added value for an organisation?  It builds on the understanding that the employee is the most important resource in the organisation.  The knowledge-based organisation’s most important capital is employee competence.  By extension, a series of studies show that the quality of communication within an organisation directly influences employees, be it positively or negatively.
Rensis Likert’s studies of employee-centred managers showed that job-centred managers generate more inefficient departments and companies than employee-centred managers.  He developed a theoretical model with four management systems.  Several factors were considered for these management systems:  motivation, decision-making, productivity, absenteeism, and communication.  The four management systems are presented below in model 1.1.

Model 1.1 Likert's management systems (Miller 1998). 

Likert maintained that the participative organisation was the most productive of these four systems.  Employees who are motivated through participation and involvement, who are engaged in decision making, and who are used to communicating with everyone, will have high productivity scores and low levels of absenteeism.  The participative organisation demands close collaboration between management and the employees.  It is better suited to reorganisation processes than the other systems, and is also the most likely to unite organisational and individual objectives; in other words, a high level of communication, involvement, and decision making generate a good framework for constructive PAIs, which, in turn, improve employee performance.

Good Relationships Make for Good Interviews
In the field of psycho-pedagogical consulting, we talk about microskills.  These skills focus on the communication skills that provide the greatest effect in different situations.  In a research project cited by Ivey, D’Andrea, Ivey, and Simek-Morgan, interviewers switched from a theoretical, aloof approach to being an interested, participating conversation partner.  The effect was extremely positive.  Test subjects changed their behaviours, became more positive, responded better, talked for longer periods, and had a tendency to come back later.  Even if it was a different setting than traditional PAIs, the effect is likely transferrable to most performance appraisal interviews.  Mikkelsen also outlines several similar effects:  job-satisfaction, inclusion, lower absenteeism, increased learning, positive reciprocal influence, improved prioritising and expectations, security and constructive feedback.

There is reason to believe that being conscious of communication techniques leads to a positive effect on employee performance.  Various motivational theories point to the positive effect of support and feedback from management on motivation and self-confidence.  Albert Bandura’s studies of expectancy of mastering are particularly interesting.  He asserts that expectations of mastery are crucial for activity selection, effort, and endurance.  This is backed by other research, primarily from the school system, which indicates that individuals with high expectations for themselves learn better and solve more problems than those with low expectations.  They choose better learning strategies and are more self-regulating in learning situations.  Those with low expectations, on the other hand, give up sooner and blame themselves for the fiasco.  Studies of expectation of mastery are also relevant to PAIs.  A crucial task for management is to contribute to increasing employee confidence, which can be achieved by giving concrete feedback about what the employee is doing well, supplemented with management’s expectations.  Yet the effect will be limited if the employee does not develop expectations of his or her own mastery.

It is important to emphasise that the manager doesn’t need to be good friends with the employee for the PAI to have the best results.  Quite the contrary, it can actually be more challenging to conduct an effective performance appraisal interview when the manager and the employee are “buddies”.  In Clive Fletcher’s article about the most relevant PAI research projects, he points to a study that indicates just that.  The effect of an employee being well liked by the manager is:  a) lenient feedback, b) reduced accuracy, c) avoidance of discussing poor performance, d) glory effect (in other words, everything this person does is good), e) better relationships.  The point of the studies Fletcher refers to is not that one should try not to have good relationships with one’s employees.  On the contrary, it is important to remember that you can feel more uncomfortable giving criticism to employees you are friends with because you are afraid of what it might do to the friendship.  That’s why it is interesting when Fletcher refers to other studies that show that the tolerance for criticism is higher when there is a good relationship between the manager and the employee.  So we can assume that a good relationship between manager and employee is positive for working toward strengthening performance and goal realisation.

Good Dialogue
Even if we consider PAIs as relevant tools for helping employees do a better job, they can still be experienced as challenging.  Many highly competent managers still feel uncomfortable in interview situations.
Communication skills, like all skills, can be learned.  They are not some kind of hocus pocus, but rather a consciousness of which interview techniques generate a good dialogue.  That doesn’t mean that you need to be an expert to conduct a good performance appraisal interview.  The objective is twofold.  Firstly, the employee should experience that they are both seen and heard by their manager, which will lead to improved feelings of self-confidence and competence.  Secondly, the manager should experience being a better communicator.  Both parties will then get better at their job.

Communication skills are not just about words.  In fact, body language is even more important when you communicate.  In his 7-38-55 theory, Albert Mehrabian asserts that only 7% of communication is verbal, while 38% comes from tone of voice and 55% through body language.  Even though we can discuss the actual proportions, there is no doubt that non-verbal communication is important to keep in mind.

The other aspects of communication skills are listening skills and influencing skills.  It is certainly not a coincidence that we have only one mouth, but two ears.  Listening is one of the most important aspects of a conversation.  Even though you, as a manager, believe you have the answer to how your employee should fulfil their responsibilities, it may not be the best idea to just hand your employee an answer key from A to Z.  Many people don’t like being directed.  To generate increased motivation and belief in their own competence, you can consciously use listening and influencing skills to let your employees figure out how to fulfil their responsibilities themselves.  In the best case, your employees could have better ideas than you had considered.  So, it is not such a bad idea to take time to listen to suggestions.  The reason that PAIs are so important is that many people often have a hard time finding a good area for exchanging ideas in an otherwise hectic workday.

Below, you will find a guide to help you develop good communication skills, taken from the Ivey, D’Andrea, Ivey and Simek-Moran’s microskills theory (2001):

Non-Verbal Skills:
1. Eye Contact:  an important technique for making the other person feel welcome.  Keep constant eye contact when you’re listening, while you don’t have to maintain constant eye contact when you are talking.

2. Body Language:  important for signalising interest and engagement.  Lean forward to indicate you are interested, and use your hands to gesticulate when you talk.

3. Volume and Speed:  how you use your voice communicates.  Vary your volume and speed in accordance with what is interesting.  Your enthusiasm can be contagious!

4. Listen Attentively:  a skill that can be difficult for the other party to register, but becomes very obvious when you ask the wrong follow-up question.

Listening Skills:
5. Open Questions:  to get a good conversation going, it is important to ask questions that stimulate answers other than “yes” or “no”.  For example, “Can you tell me a little bit about your job situation today?”

6. Closed Questions:  are used to get more details; usually yes/no questions.  Can be used to avoid long answers (if the employee has a tendency to loquaciousness).  For example, “What year did you finish university?”

7. Encouragement:  is about repeating a few of the other person’s words, with a positive connotation.  It contributes to amplifying what you like about what the other person says.

8. Paraphrasing:  is about repeating the essence of what the other person says, using different words.  Creates a feeling of reciprocal understanding and helps you be sure you understand correctly.  This technique helps the other person feel understood.

9. Reflect Feelings:  direct your attention toward underlying feelings.  For example, when the employee tells about marital problems.  This contributes to the employee feeling listened to and understood.
10. Summarising:  a short repetition of what the employee has said when the employee has been talking for a long time.  Clarifies the essence of what the other person has said and contributes to the employee feeling listened to and understood.

Influencing Skills:
11. Restructuring:  suggest an alternative angle; look at the situation in a new way.

12. Directive:  tell the employee clearly what he or she must do.

13. Advice:  give the employee advice to consider.

14. Share Own Experience:  used to build trust, generate openness and reciprocity, as well as to use your own experiences as a learning resource for the employee.

15. Feedback:  give the employee feedback about how management or others see him or her.  Other people’s perspectives can lead to a more realistic self-understanding, as well as strengthen self-image, motivation, and belief in own skills.

16. Logical Consequences:  using the employee’s comments as a basis, derive the logical consequences of what they said.

17. Influencing Summary:  near the end of the PAI, you can ask the employee to summarise the most important issues discussed.  If something is left out that you think is important, you can supplement the employee’s summary with your own suggestions.

If you want to benefit from these guidelines, there is one thing you need to keep in mind:  you probably use may of these skills without even being aware of it, but when you try to use these skills consciously, there can be so much to keep track of that the interview can stall out.  It is almost like a millipede tripping over its feet because it suddenly starts thinking about how many legs it needs to move at the same time.  So, try to automate these skills gradually.  It takes training over time, but the long-term effect will be invaluable.  Employees, who feel that their manager hears and understands them, will have a totally different attitude toward their manager than toward managers who overlook and dictate to their employees.

Conclusion
If we take another look at the questions from the beginning of this article, we now have a basis for more nuanced answers:

Is there something wrong with the concept itself?
No.  A performance appraisal interview is an important arena for checking out the expectations we have of each other.  But our understanding of the concept can be incomplete, causing the concept not to function as it should.

Is it the implementation that is faulty? 
Yes.  There is a lot of evidence that indicates we haven’t mastered the interplay between personal and business relationships, causing misunderstandings.

Is there something wrong the participants?
No.  We don’t need to be communications experts to conduct a good PAI.  On the other hand, it can be a good idea to think through and practice your communications strategies to improve your interviewing skills.

Article by:

Arne Olav Røe
Master student, Consulting, NTNU
Consultant at Dossier Solutions
Written September 2007
 

SOURCES:
Fischer, G. & Sortland, N. (2001). Innføring i organisasjonspsykologi (3.utg.). Oslo: Universitetsforlaget.
Fletcher, C. (2001). Performance appraisal and management: The developing research agenda. Journal of Occupational and Organizational Psychology (2001), 74, pp. 473-487.
Ivey, A.E., D'Andrea, M., Ivey, M.B. & Simek-Morgan, L. (2001). Theories of counseling and psychoterapy, 5th ed, Boston: Allyn & Bacon.
Mikkelsen, A. (2002). Medarbeidersamtaler i det nye arbeidslivet. Oslo: Cappelen.
Miller, K. (1998). Organizational communication. Approaches and processes. USA: Wadsworth.
Skaalvik, E.M., Skaalvik, S. (1996). Selvoppfatning, motivasjon og læringsmiljø. Oslo: TANO.