10 Signs A Performance Appraisal System Can Be Improved

Address these issues to drive enhanced employee development and performance.


Every credit union has goals they aspire to achieve, including a higher number of young members, impressive loan growth, or an increase in ROA.

Benchmarks are set by leadership, but employees of all types play a critical part in achieving those goals. Credit unions must ask themselves if each employee truly understands how their job and performance contributes toward the achievement of institutional goals.

Most credit unions utilize some type of employee performance evaluation process to provide critical supervisor/employee communication, collect important documentation, and support merit increases or staff advancement decisions. However, performance appraisals or related processes that are poorly designed and implemented can fall short in driving desired results.

Below are 10 signs that an evaluation program isn’t working or can be improved upon.

Signs of problems include:

  1. The program is not customized to the individual or applicable to credit union needs.

    Are the rating criteria and goals specific for each employee and aligned with broader credit union goals? Generic position descriptions or goals that aren’t tailored to a specific role aren’t particularly useful.

  2. All employees are evaluated on the same factors or competencies.

    Should a teller and branch manager really be appraised on the same criteria?

  3. Appraisal inflation occurs.

    If an overly rosy revue scenario exists, some employees may wonder why they should try to distinguish themselves. Mediocre performers will have little incentive to improve.

  4. The differences between poor, average, and outstanding performance aren’t defined.

    An employee and his or her appraiser should be able to objectively determine what constitutes great vs. mediocre performance

  5. Terminated employees have received good or even great ratings.

    Appraisals should support, not undercut, a credit union’s corrective action decisions.

  6. The best employees’ ratings aren’t much better than everyone else’s.

    Most organizations have a few incredible employees whose contributions exceed their numbers. For appraisals to be meaningful there should be space between their scores and the others.

  7. Employees who are identically situated are treated differently.

    Consistent treatment is key to avoiding discrimination claims and creating a climate of fairness and credibility.

  8. Appraisals only address historic performance.

    A good performance management system should not only evaluate past performance but be used to develop employees.

  9. Employees have no input.

    How can an employee be expected to buy into the appraisal system if he or she has no say? Using self appraisals can be especially useful to promote this communication.

  10. High performers receive the same pay increases as above average performers.

    If an appraisal system doesn’t effectively distinguish the desirable characteristics of top performers, then top pay may be viewed by all employees as more of an entitlement than a reward.

If a credit union recognizes any of these signs, it may be time to consider a new solution. Today, technology allows talent management solutions to provide much more than a performance review. Modern systems, such as Performance Pro by HRN Performance Solutions, are able to provide a customizable foundation upon which individual and institutional development goals can be documented, tracked, and measured.

An effective performance management system will allow a credit union to save time and administrative hassles, provide definitive and actionable information to attract and retain great employees, and drive a culture of success.

Click here for company information and to view a convenient online webinar of Performance Pro or contact HRN by phone at 800-940-7522.

HRN Performance Solutions (a division of CUSolutions Group) provides practical and effective human resources management solutions and consulting services designed to simplify and improve employee performance, compensation administration, and regulatory compliance. HRN consultants provide a wide range of HR services including compensation and incentive plan development, organizational development, employee opinion surveys, and affirmative action plan preparation.



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