What Is Performance Appraisal? - EmployeeConnect HRIS
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what is performance appraisal

What Is Performance Appraisal?

The performance appraisal definition can vary tremendously depending on the organisation and how much weight managers and executives give to the process. The generic performance appraisal definition is that the process involves the systematic evaluation of employee performance. Advanced organisations carry these evaluations further by using them to identify candidates for skills development, succession planning, cross-training and promotions. The following information will help managers to define appraisal as it impacts their organisation’s culture and business goals.

Why Use Performance Appraisals?

Honest performance appraisals that generate real-world work consequences can make high-performing employees feel valued and motivate those with lower rankings to improve. The most productive employees have always been those who were driven to succeed, and regular evaluations can provide this kind of impetus to every worker. Appraisals can work both ways by giving workers a forum for airing grievances and requesting new duties.

The Benefits of an Organised System for Performance Appraisal

How companies define appraisal is critical in determining how valuable the process is. The right evaluation strategy offers the following benefits for organisations and their employees:

  • Providing accurate and measurable criteria to determine salaries, wages and compensation packets
  • Identifying strengths and weaknesses to ensure that the right person is assigned to the right job, team or project
  • Enabling supervisors to compare pay data against targets and growth plans
  • Guiding staff to better work performances
  • Identifying candidates for advancement
  • Recommending additional training or remedial work
  • Matching workers with mentors and coaches
  • Fostering leadership and attainment of company objectives
  • Influencing work habits
  • Building company loyalty
  • Retaining top talent by challenging, rewarding and recognising superior efforts
  • Creating clear records to justify manager and HR decisions


Understanding the Performance Appraisal Process

It’s critical that executives, managers and employees understand the performance appraisal process to get the best results from it. Employees need to know that they’ll be held accountable for their work habits. That doesn’t mean that failures will cause workers to be fired, but it should mean that thoughtful managers will explore why each person fails to meet his or her goals, which enables better recommendations and stronger development plans to deal with any shortcomings.

The process requires commitment from the executive suite, and evaluations must have real-world results to be effective. Managers must also commit to the process by planning work and setting expectations, providing feedback, recommending career development processes and recognising and rewarding good performances and substantial progress in development. When managers commit to the evaluation process, the commitment tends to cascade throughout a given company. The following information can be crucial for understanding the performance appraisal process and developing the right system for a given company or organisation:

Aligning Each Performance Appraisal to Strategic Goals

The performance appraisal can be a company’s most valuable resource for aligning company goals with individual performances. Managers can set clear priorities for achieving a company’s overarching business objectives. That means finding the right people to work on the right projects, developing in-house talent to meet current and future needs, improving worker engagement, retaining talent and preventing people from working at cross purposes. Employees need reminders to stay focused on the big-picture issues, or they tend to get bogged down in the minutiae of their daily tasks. Communicating your company’s goals and tracking them inspire employees and keep them engaged and accountable.

Setting the Right Goals

Goals can’t be too general such as being a better person or leader because these are too difficult to assess. Instead, managers can set concrete goals such as leading a project, participating in external activities, mentoring a struggling co-worker or coming up with a plan that benefits the community. Instead of setting ‘increased sales’ as a goal, try setting specific goals for the product sales that most benefit the company. Performance appraisal goals should never be unattainable or too easy to achieve. Many managers used the ‘SMART’ acronym when setting performance goals:

  • Specific: Define exactly what’s expected.
  • Measurable: Predefine the benchmarks by which progress is measured.
  • Attainable: Goals must be within each person’s capabilities.
  • Relevant: Goals must align with company strategy.
  • Timely: Goals must have clear time limits that aren’t impossible to achieve.


Providing Continuous Feedback

Feedback is critical for motivating employees and rewarding success. Prompt ongoing feedback helps to identify problems so that remediation efforts can be implemented if needed. Showing a genuine interest in each person’s development and career positively impacts performance and encourages greater efforts. Specific and continuous feedback works best when offered while a given process is happening. Specific dates can be used to review overall progress so that workers aren’t sandbagged at their annual performance reviews.

Reviewing and Updating Goals

It’s critical to monitor goals and the incremental progress being made toward achieving them. Managers are responsible for confirming that progress is being made, and if it isn’t, goals might need updating. Additional training might be necessary. Mentoring and coaching are also powerful tools to help workers reach their performance goals. In some cases, employees might be reassigned or re-evaluated. If workers are meeting their goals easily, the goals might need to be expanded.

Identifying Gaps in Skills or Abilities

Appraisals offer a valuable opportunity for managers to recognise each worker’s training and development needs. Reviews spotlight any gaps in training, skills and native abilities while giving both managers and their subordinates an ideal space to work out what needs to be done in the best interests of both the company and each team member.

Establishing a Development Plan

Regardless of industry, company size or business objectives, managers should write a performance development plan for each team member. The plan might include cross-training, skills development, earning industry certifications, developing networks of associates, attending seminars or receiving coaching from a mentor, manager or skilled co-worker. Well-conceived development plans provide thoughtful suggestions about how employees can increase their skills and earn promotions in the organisation. The best managers even recommend development activities that could advance careers outside the company because many millennials care more about their personal reputations and growth than staying loyal to the company or industry.

Linking to the Annual Performance Review

There should be a clear linkage between each review’s assessment and recommendations and the company’s concept and mission statement. The incremental steps and goals used to boost performance should integrate with the annual review. Nothing has the potential to be more frustrating than meeting performance goals and finding out they have little impact on advancement, meeting overall company objectives or aligning with the organisation’s overall business concept. Failure to link ongoing progress with company goals or to hold each employee accountable for performance progress can make workers cynical about the stated goals and company mission.

Linking to Remuneration Reviews

The performance appraisal and review processes needs to be important in earning pay raises, promotions and new responsibilities. If pay raises are awarded based only on seniority or years of service, employees lose their motivation to increase their skills and strengthen their job performances. Links to remuneration reviews let workers know that their performances have real-world effects on how much money they earn.

Linking to Succession Planning

It’s quite common for new employees to wonder how far they could advance in a given company, and clear links to succession planning in the performance appraisal process provide blueprints that ambitious new hires (and overlooked existing talent) can follow to develop the requisite skills for career advancement. Employees will look forward to reviews where they can find out how far along they’ve progressed toward earning a promotion or qualifying for a senior position.

360-Degree Feedback

360-degree feedback expands the appraisal process to include insights from co-workers, customers and other company stakeholders. Anonymous surveys can cover a range of issues, and these forms can be filled out by managers, customers, peers and business associates. A single manager or supervisor often misses key issues that others see more clearly. These feedback assessments can be used to give people a better idea of their own strengths and weaknesses and as part of the appraisal process.

The Role of Technology in Appraising Performance

Technology-based performance appraisal tools validate manager suggestions and reinforce performance appraisal assessments. Research shows that technology has helped to make appraisals more appreciated, effective and common in all types of organisations.  Technology offers big benefits in two primary areas of the performance appraisal process:

  1. Automation
    Performance appraisal automation tools reduce the time that managers must spend gathering data for performance reviews. Software can capture data from teams, divisions, past supervisors, co-workers and others to provide a more complete profile of each employee. Automation can measure efficiency, track progress towards goals and identify candidates with the job skills for special projects. Automated reports can analyse attendance, chronicle how many times a worker is late and track how often an employee is involved in disputes.
  2. Metrics
    Metrics measure four areas of performance: work quality, work quantity, work efficiency and organisational performance. Efficient employees work with minimal supervision and expenses. Metrics show how often deadlines are met without work quality being compromised. This is powerful information, and it can guide a performance appraisal by identifying whether a given employee needs to work faster, smarter or more carefully.


Performance Appraisal Examples

Performance appraisal examples can inspire managers to take their role in the process seriously. Responsible supervisors work for the company’s best interests, and a performance appraisal raises the bar for both employees and their managers. Today’s technologies can easily track all the efforts of managers and workers. Any half-hearted efforts by managers soon become apparent, but many managers haven’t been properly trained in how to conduct a performance appraisal. A few examples of the kind of positive-reinforcement language to use include:

  • ’Deals effectively with others’
  • ’Provides timely feedback and meets others’ expectations’
  • ’Cultivates openness in sharing information’
  • ’Retains composure in difficult circumstances’
  • ’Looks for common ground and tries to build a consensus’
  • ’Welcomes suggestions from others’
  • ’Shows strong leadership skills’

Using positive opening remarks opens the way for more detailed discussions about any performance weaknesses.

Performance appraisal allow HR departments and managers to define staff roles, set realistic but challenging targets, identify behavioural issues and reward staff who bring added value to your organisation. That’s why organising and promoting the performance appraisal process is so critical to success in today’s challenging environment of attracting, retaining and developing top talent.

Ari Kopoulos

CEO at EmployeeConnect