Many performance appraisal systems are not as effective as they should be.
Here are four steps to include when using a performance appraisal for a new hire (which can also work with existing employees):

1. Establish expectations early
New hires benefit from having a performance appraisal system which is highly structured.
You should make clear what the critical job elements are that they will be evaluated upon, and how these will be measured.
These elements should truly be critical to the basic performance of the job: if an employee does not perform them well, their employment will most likely be discontinued, and everyone should understand this to be part of the employment agreement.
It is best to use a set of goals which all parties can agree upon: clear, concise, and easily understandable performance metrics are best.
These goals should be specific, measurable, achievable, relevant, and timely, relative to an employee's performance.
You should provide your employee with a copy, and keep a copy for yourself as well, with signatures to indicate agreement to these standards.

2. Follow-up regularly
Most employers wait until the end of a performance cycle to give employees appraisals, and this is a mistake.
At the end of a performance cycle, there is almost nothing an employee can do to improve their performance, which creates unnecessary stress and ill will for all involved.
Instead, it is much better to follow-up on a regular basis with new hires, explaining on a weekly or bi-weekly basis how their performance on critical job elements has been, and which elements they still need to devote more attention to.
This gives employees the opportunity to give their very best efforts, and if these are not sufficient, then all parties involved are aware of what the outcome is likely to be.

3. Identify additional opportunities
Assuming most employees satisfy their critical job elements, it is then important to develop a set of additional job requirements which also need to be performed.
While these opportunities may be done more or less at the discretion of the employee, they should be explained as being important steps the employee can take to distinguish themselves as being valuable contributors worthy of promotion and advancement.
These additional opportunities can be provided in writing at the same time as the critical job element expectations, but it should be emphasized that these are added duties for the employee, and less vital for the purposes of staying employed.
It may help to include language in writing to indicate the optional, but highly recommended nature of these additional duties, just so there is no confusion or dispute later on.

4. Perform the formal evaluation
Finally, with this system in place, most employees will have all the requirements and feedback needed to do an outstanding job.
Any annual (or semiannual) formal performance review should then simply be a summary of what has already been observed so far, with more than adequate opportunities available for employees to meet expectations, as well as greatly exceed them if they desire to do so.

In this way, a performance appraisal for new hires can be fair, motivational, and yet also provide excellent documentation if unfavorable hiring decisions must be made later on.
This makes it easier to keep employee morale high, while also being clear about the expectations for performance.
Copyright 2010, by Marc Mays