Two team leads review the same kind of work. One rates nearly everyone as outstanding because she dislikes difficult conversations. The other rarely gives the top rating. At year end, the people in her team are paid differently for the same results. The cause is not the people. It is a missing policy on how ratings are judged and compared.
A performance appraisal policy creates one consistent way to measure and improve performance. It applies to confirmed employees, and the company decides how probationers, part-year joiners and people on long leave are treated. Probation itself is handled under the probation and confirmation policy.
Goals, KPIs and expectations
Appraisal starts with goals, not with the rating form. At the start of each cycle the manager and employee agree a short set of objectives. Some are measured with key performance indicators, such as delivery on time, defects found after release or tickets closed. Others are behavioural, such as collaboration or ownership. Role-specific expectations come from the job description.
- Individual or team: say which goals belong to a person and which to a team, and avoid counting the same result twice.
- KPI weights: decide how much each goal counts. Heavy weight on one measure can distort behaviour.
- Quality, delivery and productivity: define each measure, its source and who validates the data.
- Development goals: one or two skills the employee will build in the cycle, recorded alongside targets.
Settings to choose before the cycle opens
- Review cycle: annual, half-yearly or quarterly. More frequent cycles help feedback but cost manager time.
- Rating system: a three, four or five point scale, with a written meaning for every level. Fewer levels are simpler. More levels distinguish better but invite arguments over small differences.
- KPI weights: set by role family, published and changed only at the start of a cycle.
- Calibration process: who attends, what evidence is needed and who has the final say.
- Appeal mechanism: who hears it, within how many days and whether the outcome is final.
The cycle step by step
- 1
Set goals.
Manager and employee agree objectives and weights. The goal sheet is signed by both and filed by HR.
- 2
Hold interim check-ins.
The manager gives feedback and coaching during the cycle and records short notes.
- 3
Self-assessment.
The employee rates their own results against each goal, with examples.
- 4
Manager evaluation.
The manager rates results and behaviours, citing evidence.
- 5
Calibration.
Managers and HR compare ratings across teams, challenge outliers and agree the final ratings.
- 6
Feedback conversation.
The manager shares the rating and reasons, and agrees development goals.
- 7
Acknowledge or appeal.
The employee signs to confirm they have seen the result, or lodges an appeal in the stated window.
The self-assessment is not a formality. When it differs sharply from the manager's view, the conversation is where both sides learn something. Managers should be trained to write specific examples, not adjectives.
Calibration, fairness and improvement plans
Calibration is a meeting where managers bring ratings and evidence together. Its purpose is not to force a curve. It tests whether similar results got similar ratings. A good policy states who may attend, what documents they bring and that the discussion is confidential.
Team: [name] Manager: [name] Cycle: [dates].
Employee | Proposed rating | Evidence summary | Peer comparison | Calibrated rating.
[name] | [rating] | [two examples] | [note] | [rating].
Outliers discussed: [list] Reason for any change: [text].
Approved by: [role] Date: [date].When performance falls short, a performance improvement plan can be used. It names the gap, the support offered, the measures of improvement and a review date. It must be separate from misconduct, which is handled by the disciplinary route. Have the plan template checked by a qualified professional, since contract and law both bear on it.
Ratings can feed increments, incentives and promotions. Say exactly how. The incentive and bonus policy and the promotion and salary revision policy should refer to the same rating scale, so there is one language across all three.
Appeals, files and upkeep
An appeal route builds trust. Set out who hears it, what evidence they review and what the possible outcomes are. Appeal outcomes should be recorded in the employee file. Appraisal records are confidential: managers, HR and the employee see them, others do not.
Keep goal sheets, check-in notes, self and manager assessments, calibration sheets and appeal decisions for the period your adviser confirms. Staff sign for it at joining and after changes. After each cycle, note what changed and why.
For help designing rating scales and goal frameworks, see our performance management service. Drafting and review sit on the policy and governance page. The full list of 30 policies shows how appraisal connects to the rest.
Title and ID: Performance Appraisal Policy, HR-POL-008.
Purpose: to measure and improve performance consistently.
Scope: confirmed employees, [and others as decided].
Definitions: goal, KPI, rating, calibration, improvement plan, appeal.
Policy statements: cycle of [period]; [number] point scale; weights set at cycle start.
Procedures: goals, check-ins, self-assessment, evaluation, calibration, feedback, appeal.
Roles: employee, manager, HR, calibration panel, appeal reviewer.
Approval authority: final ratings approved by [role].
Exceptions: mid-cycle changes approved by [role] in writing.
Violations: rating manipulation is reviewed under the disciplinary policy.
Governing law: [reviewed by adviser].
Forms: goal sheet, assessment form, calibration worksheet, appeal form.
Document status: [date], issue [number].
Revisited when the cycle closes.
Employee and manager both sign: seen and agreed, cycle [period], form version [number].