Performance appraisals form a very important part of the Human Resource department since they provide crucial information for the evaluation of the employee’s skill, ability, knowledge, and job performance. The appraisals aren’t just used to eliminate productivity and behavior issues, but to motivate them to contribute a bit more.

An employee performance appraisal system is very important for the organizations to enhance their employee productivity and their outcomes. The performance appraisals are the annual process where the productivity and performance of an employee is evaluated against the predetermined set of goals or tasks.

Meaning of Performance Appraisal

The performance appraisal is a kind of process of evaluating an employee for their duties. The manager assesses and observes their work throughout a year and offers essential guidance, feedback, and further progress during their appraisal duration. It includes holding the formal discussion with an employee recollecting their performance, achievements, and various areas for improvement. The manager identifies various opportunities for an employee to develop professionally. 

Performance Appraisal is also synonyms to performance review, performance evaluation, and employee appraisal. With Performance Appraisals, regular evaluation of an employee’s job performance and overall contribution to the company is recorded. These help in providing the feedback, identify those who are performing their assigned tasks well, offer a formal moment in time to evaluate job performance, distributing raises and bonuses among the employees, and even the employees wish to know their position in the organization. 

Turning to the lexicon, Appraisals gave the meaning – “An assessment of an individual based on its working ethics and then further using that judgment for the monitory purpose, promotions or salary incentives.”

Meaning of Employee Performance

In simple words – “How well the employees are contributing to the welfare of the company’s productivity? ” And this productivity comprises all the concerns for qualitative & quantitative goals along with effectiveness and efficiency. However, it does not necessarily talk about the cost involved with it.

Sometimes performance is graded on the personnel facts of accidents, turnover, absences, and lateness. A good employee is ought to contribute to the company’s upliftment with less risk od the company’s standards.

Employee Performance is one of the most widely used term in any corporate sector, especially when the Human Resource(HR) Department presumes with the  Performance Managers. Human Resource Department plays a prominent role in designing, monitoring, implementing performance appraisals. Before appraisals, they do recruitment, selection, training, domain allocation, and company induction. It means from hiring to firing, everything is picked by them. Moreover, the HR team acts as a mediator between the Functional or Reviewing authorities and the employee. It is the HRM’s responsibility to ensure a smooth implementation of the appraisal process.

Let us dive a little more, to understand the rudimentary of the Appraisals.

Objectives of Performance Appraisal

These objectives are broadly classified into 8 sections –

• Identification of the company’s aura, by accepting its weaknesses, maintaining its strengths, and channelizing them to future tasks.
• Wherever needed or demanded by the employees, proving them with relevant informative resources in the work of tutors, study material, a training, workshop, or a professional site visit.
• This way it will help to categorize the employees and engender vital figures.
• Simultaneously do remember about the salary incentives, the badge of honors, promotions, or the reward policy.
• Another way round, if the employee expectation is not fulfilled up to a mark, sit with them, talk over it and understand where they went wrong, what made it wrong, and improvised future steps. Don’t jump on the conclusion to fire them, remember when NOTHING will work out, this would act as the very last option.
• A company’s decorum and its ongoing client project should not get disturbed because of this ever.
• Should be flexible in fabricating the HRM policies according to employees’ potential too.
• At the end of each performance appraisal, keep the research and figures transparent to the individual, to build a 2-way channel, and connect them efficaciously.

Benefits of Performance Appraisal

The main purpose of an employee performance appraisal is double: It helps any organization to decide the productivity and value that employees contribute, it helps the employees to develop their own roles or duties. Well, there would be certainly many of it, that is why it is seen in every firm. Some of them are –

• A regular and systematic appraisal system aids the HRM to properly identify the performance, areas of talent, and lacking points of the employees.
• Helps to place the deserving candidates at suitable job profiles.
• Helps the employees to acknowledge their improving points and get assistance from the seniors regarding the same, it may be a simple mentoring too.
• The process of promotions and firing becomes easy peasy.
• This helps in analyzing the HRM efforts paid, the outcome from the team’s end, and generating research for the future programs.
• Creates healthy competition among the team.
• Very sophisticated pattern to know the grievances of the company and the team.

Benefits of Performance Appraisal for Organization

Appraisals are the savvy of traits and performance, out of which employee worth and good or bad corners are deduced. Appraisals are essential for making many administrative decisions of selection, training, development, promotion, transfer, salary hikes, individual potential research, regulating, etc. In this meticulous manner, a sharp eye is kept on all the aspects of a firm to record its overall performance.

1. The employee assessments will make a huge difference in the performance of the organization. They offer insight on how employees are working and allow organizations to:
2. Address any behavioral issues that can impact departmental productivity.
3. Know where management will improve their working conditions to improve work quality and productivity.    
4. Improve decision-making in certain situations that need succession planning, layoffs, and filling roles internally
5. Support employees in career development and skill
6. Encourage your employees by contributing more and recognizing their abilities and talents. You can read more about Employee Engagement and its benefits here

Benefit of Performance Appraisal for employee

The performance appraisals or assessment is generally meant to offer the positive outcome for the employees. Insights gained from discussing and assessing the employee’s performance will help:

1. To recognize the opportunity for bonus or promotion.
2. Acknowledge the contributions and achievements made by your employee.
3. Determine specific areas where there is improvement in the skills.
4. Identify the need for more training and education for career development.
5. Discussion of the long-term goals.
6. Motivate your employee and make them participate and invested in their professional development.

Types of Performance Appraisal

With a right performance appraisal process, organizations will be able to improve their employee performance in the organization. Having a good performance review method will make the entire experience rewarding and effective for an employee. Let us have a closer look at the different types of the performance appraisal methods:

1. Management by Objectives or MBO:

   The management by objective appraisal is quite a modern approach of providing performance reviews to an employee, as it ropes employee in a goal-setting procedure. With the method, managers and their employee may “agree on the specific and obtainable goals with the set deadline.” The management by objective  method makes it simple to define the success & failure.

2. Self-Evaluation:

   The self-evaluation or assessment needs an employee to judge their performance against the predetermined criteria. The self-evaluation is generally taken intoconsideration during the official performance review and allow for thorough discussion and ensure that employees understand how he or she will be judged. Self-evaluation method can be very subjective to reflect the work performance, since employees can rate themselves very high—or low—but discrepancies between the employee and the employer evaluations will be insightful.   

3. Behavioral-Based Checklist:

   Behavior-based employee appraisals mainly focus on their ability of carrying out certain specific tasks, and they will be very useful for assessing their performance on the quantitative tasks & for determining who to reward and promote based on the competence in those tasks. It is possible if standards for the appraisal are carefully planned out to start with, the behavior appraisals generally tend to provide the objective way to assess employee performance.

4. Graphic rating:

   Compared to all given employee performance assessments, this can be the most traditional and simplest one. In a graphic rating method, you will create the columned table organized

   • In a first column, put the variables to be evaluated. Like: punctuality, teamwork, assiduity, creativity, and more.
   • In a next column, put the values of every variable. Like: terrible, regular, bad, good or amazing. You can provide scores from 1 to 5.The primary benefit of this appraisal is that it’s very simple to do. But, it is limited & doesn’t allow for more evaluation. For such reason, graphic rating is normally used in the conjunction with various other methods.

5. 360-degree performance appraisals:

   This particular method involves review or feedback from many people who contacted with an employee, and keeping biases at bay. This can be other clients, colleagues, customers and even an employee themselves is needed to give their view about their role in a team.

   The 360-degree performance appraisal is said to be one of the top approach as it is all-encompassing and will give a well-rounded and complete view of the employee. It not just offers a precise know-how of the employee’s behavior and attitude, but it will benefit a person by helping with their self-improvement (giving them confidence that can help your organization no end).

6. Sales Performance Appraisal:

   This method of appraisal is the simplest to conduct, but a bit painful. An employee will be simply judged by his results and his set goals. The salesmen are held to the financial goals quite more than any section of an organization. The manager & salesperson should discuss different ways of achieving their goals and changes that have to be made in order to make them reachable and realistic.

Process of Performance Appraisal

Selecting the right type of employee performance appraisal method will be very critical than ever as it reflects over what you think about your employees or how much do you really care about their morale. When you have found the perfect ideal performance review system for your requirements, the next step will be implementing it in a right way to eliminate any critical performance gaps or address pressing issues, which can impact overall Organisation performance

It is a systematic process to go through –

• Firstly decide on the performance standards needed.
• Set up Disciplinary Aspects to be followed by each individual
• Differentiate between measurable and visible objectives.
• Then wait for the actual individual outcome.
• Compare that outcome with the expected or predefined data.
• Sit with that individual or that team( varies with the firm) and review the areas of improvement and praise their good work.
• Extract corrective and learning measure from this, and then set bars for the next futuristic iteration.

Where can Performance Appraisal go wrong

• What if the whole data of the performance appraisals turns out to be incorrect at the end. Although it is a rare chance. But just imagine and feel those chills!
• Sometimes equal or necessary importance is not given to the measuring factors.
• Some of the factors are very murky to measure, as the attitude issues, cold fights, or the initiatives.
• If the managers turn out to be biased by nature or unqualified in analyzing, then that would turn as the pain in the neck.
• Do make sure that the client projects do not collide with this activity and a smooth functioning of all the other events takes place.

Frequency of Performance Appraisal

See, there is no standard figure of it, it completely pivots on the organizational beliefs, the vastness of employees, and availability of the appraisal drivers. But yes, out of practice it should be periodic and be considered important for moving ahead. For example can be done monthly, annually, quarterly, half-yearly, etc. It is not a healthy idea to shelve this practice, therefore it is advisable to schedule a mid-year appraisal.

In a nutshell, I would like to that Performative Appraisal is the most important part of any organization and amazing assistance to track productivity, aims, and employee engagement. Appraisals are a positive way for a manager to let the employees know how well they are performing the duties that are assigned to them. The HRM should take this task seriously and unbiasedly, even the employees must cooperate with the authority to ease it out.