Management Appraisal
Definition and importance of management appraisals
The terms“Management Appraisal” and “management audit” are often used synonymously, the former more frequently in the Anglo-American language area, the latter in German-speaking countries. A management appraisal is a process that is usually initiated by the Management Board or Supervisory Board in order to identify management potential.
Various psychodiagnostic procedures are used; an interview with the candidates is almost always an integral part of the process. Psychological tests (personality tests) and questionnaires are also used, and simulative procedures (role play, case study, presentation) are used less frequently.
Appraisals are usually individual procedures, i.e. one candidate is assessed by the assessors/advisors alone.
Selection and development of top management
How top management is selected is described here (→ Executive Assessment). The development of top management is a difficult topic for various reasons:
Supervisors(management board or supervisory board) expect top management executives to be “ready”. Unlike junior or middle managers, top managers are expected to deliver results and the company no longer needs to support them in improving their leadership and management skills.
Top managers receive little objective feedback: colleagues (peers) and employees are not free of subjective interests in their assessments, and the superiors of top managers judge the quality of top managers predominantly on the basis of the results they deliver.
Last but not least, top managers usually have little time for self-reflection in order to recognize their own strengths, weaknesses and areas for development.
For these reasons, companies often carry out a management appraisal to give their managers the opportunity to assess their individual situation and identify areas of development for themselves.
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Reasons for a management appraisal
Change of Management Board
After a change of board member, the new board member often wants to quickly gain an overview of the potential in management.
Mergers / M&A
When companies are acquired or merged(M&A), functions are often filled twice. An appraisal should identify the most suitable managers for the (often changed) roles in the merged company.
Re-Organization
After a restructuring, there are usually also changes in management roles; an appraisal shows which manager is best suited to which new role.
Management development
As described above, a management appraisal can be used as a management development tool. If necessary, only the participants themselves will receive the appraisal results report.
Concept / Preparation
Preparation on the part of the company
The first step in discussions with the Management Board is to gain a precise understanding of the company’s starting position and strategic goals.
A procedure is then defined together with the client, which also includes a communication concept and the planning of the follow-up, i.e. how feedback and development areas are dealt with.
The objectives, content, procedure and follow-up of the appraisal are then communicated to the participants, often in the form of a kick-off meeting in which the Executive Board explains the objectives and the consultants conducting the appraisal are available to answer participants’ questions.
Preparation for the participants
As a participant in an appraisal, you should find out about the methods used and the people carrying out the appraisal (consultants) in order to be able to assess the seriousness of the appraisal.
As concrete preparation, we recommend that you look back at your own career, in particular to visualize successes, setbacks and important learning experiences.
It can also be helpful to get feedback from employees, colleagues and superiors.
Reasons for the failure of management appraisals
Insufficient preparation. This means that the objectives of the appraisal were not clearly defined. As a rule, there are both development goals (individual promotion of participants) and selection goals (which manager is suitable for which role), and the two goals are usually combined.
Insufficient communication to the participants. It is important to inform all participating managers transparently, truthfully, openly and comprehensively about the planned appraisal. This includes, in particular, naming possible consequences.
Abandonment of the dual control principle. The appraisals themselves should be carried out by several consultants. Sometimes two advisors conduct an interview with the participants independently; usually the interview is conducted by two advisors together. This prevents participants from getting the impression that “the counselor didn’t like me and therefore rated me poorly” (whether this was true or not is irrelevant).
Use of unscientific methods. Questionnaires and tests are also frequently used when conducting appraisals. If this is the case, only scientifically sound and valid methods should be used. If this is not the case, the entire procedure is discredited (to the point that the results become contestable under labor law).
No respectful interaction with participants. If the interview resembles an inquisition or participants have the feeling that they are being paraded by the consultants, an appraisal is doomed to fail.
Lack of follow-up. This includes participants not receiving any feedback on their results or the company not offering any support for personal development.
Project example of a management appraisal
The project example described here is about an IT company that is the wholly owned subsidiary of a service group.
The IT company was spun off into a separate subsidiary five years ago in order to improve the customer focus of the IT division and reduce costs.
As neither of these has yet materialized as expected, the company was set the target of increasing the proportion of external customers to 30% over the next five years.
This should bring a stronger customer focus to the IT subsidiary and at the same time create synergy effects to reduce costs.
Criteria/competence model
As in any diagnostic procedure, it begins with a precise understanding of the criteria to be assessed. If available, the company’s competency models are used.
In this case, interviews with the top management (board of directors) of the IT company and the parent company revealed that the competency model (see figure) does not adequately reflect the future challenges.
The interviews identified critical incidents that will be relevant for the company in the future:
The focus of the appraisal was therefore on the areas of customer orientation, entrepreneurial thinking and leadership in a change situation.
Kick-off of the appraisal
First, the participants (22 managers from the IT subsidiary) were informed about the objectives and content of the appraisal in a kick-off meeting.
The Management Board made it clear that the appraisal should give each participant the opportunity to identify and work on their individual areas of development against the backdrop of the company’s future strategy.
The consultants conducting the appraisal introduced themselves and answered questions from the participants.
Methods used
Tests and questionnaires
Beforehand, the participants were given the opportunity to complete various psychometric procedures (online).
Interview
The appraisal itself consisted of an interview lasting approximately 4 hours, which was based on both the professional biography and the competencies (see above).
Feedback on tests and questionnaires
At the end of the interview, the participants were given and explained the results of the tests and questionnaires.
Individual results report
Following the appraisal, an individual results report was formulated, which was sent to the board (client), the participant and the line manager.
Follow-Up
Four to six weeks after the appraisal, a follow-up meeting was held with the participants and their line manager; the results were discussed and an individual development plan was drawn up together.
Manager conference
After the appraisal was completed, the results of the participants were discussed in a conference with the Executive Board.
Management summary
The impressions from the appraisal were presented to top management. Psychometric data as well as qualitative findings were presented. The candidates were categorized in a portfolio:
Criticism & limits
Significance and validity
A management appraisal is more than just a snapshot. If a management appraisal is carried out professionally, the form of the day has only a minor influence on the result.
With the help of various methods (tests, questionnaires, simulations – and above all the interview), the consultants strive to understand the entire person of the manager, with their strengths and weaknesses, their history and their motivation.
Ideally, a management appraisal is like a good coaching conversation: the participants receive a personal assessment of their current situation, which they use to identify personal development potential together with the consultant.
The validity of a professionally conducted management appraisal is quite high, scientific studies (md has also had several validation studies carried out) show that the accuracy of the assessment is higher than that of all other assessors (superiors, employees, peers). Therefore, the service that a company receives is worth the price.
However, even a professionally conducted management appraisal has its limits – as with all diagnostic procedures, there is a residual uncertainty.
This is not so much because the procedure is not valid enough, but often because the environment has a strong influence.
Even a mediocre manager can be successful in the right environment (competent employees, supportive superiors) – and vice versa.
Stress, anxiety, worries among candidates for management appraisals
When managers are invited to take part in a management appraisal, a number of questions arise for those concerned:
- Can the methods used really identify my strengths, weaknesses and potential?
- What if it turns out that I don’t meet the requirements?
- How do all the successes of recent years and the positive feedback I’ve received from my superiors factor into the assessment? In the end, is one day more important than all the years in the company?
- Do the consultants understand enough about our business to be able to assess me?
- How will my superiors react when they read the report?
- Is my job perhaps even in question?
These concerns are understandable and justified. It is therefore important for companies and consulting firms to communicate the objectives and content of the appraisal transparently and openly.
Loyalty
A common question that participants in a management appraisal have is whether their own company does not already know their personal strengths, skills and areas for development well enough (especially if managers have been with the company for a long time) and why they need external advice to be assessed.
From the participants’ point of view, this is a legitimate way of questioning the company’s loyalty to the individual.
However, the company’s intentions are usually quite benevolent: aware that the assessment of managers is subject to a lot of subjective biases, the company wants to obtain a neutral and objective assessment, mostly in order to promote the potential of managers or to be able to better utilize their skills in the future.
Conclusion on management appraisals
A management appraisal is a process that is usually initiated by top management to assess the suitability and fit of a company’s management with regard to the strategic challenges ahead.
It is also a management development tool that enables candidates to assess their personal situation and identify their individual development potential.
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