What is performance appraisal?

A performance appraisal is the regular review of an employee’s performance in the organization.

Most companies conduct a yearly appraisal programme due to which the appraisal programme is also called as an annual appraisal; apart from the other terms such as performance review, employee appraisal, etc.,

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There are few companies that conduct the performance appraisal on a half-yearly basis too.

Organizations use performance appraisal programme to analyse an employee’s performance throughout the current cycle.

Apart from feedback, they also discuss the renewed pay structure for the year, an extension of the agreement, termination of the employees are also topics of discussion during the performance appraisal.

Attendance manager app

Promotions and internal job postings are other matters that are looked into during the performance appraisal. This is the time most managers look at moving the right employee for the right job.

Employees usually improve their skills throughout the year in hopes of a promotion or moving to a different project they have eyes on. Performance appraisal is the time employees discuss their future plans with their managers at length.

What happens during a performance appraisal?

We looked at what a performance appraisal is. Let us understand what purpose a performance appraisal serves to the employer and the employee and what happens during a performance cycle.

The most basic purpose of a performance appraisal is for the organization to analyse an employee’s worth and contributions they made to the organization. Various factors such as attendance, efficiency, attitude, quality of work, amount of work, etc.,

Collecting and analysing this information is easier said than done. Numbers are easy to access. There are different teams within the organization that will keep track of an employee’s performance that can be accountable through data.

Absenteeism, quality and quantity of the work completed throughout the appraisal cycle, etc., are some of the measurable data by the Human Resource or project manager.

However, criteria such as attitude, willingness to work, etc., comes into the picture. It is, however, the project manager’s job to analyse an employee’s behaviour on the production floor to get an idea about these parameters.

Performance appraisal cannot only be about the numbers. Numbers and behaviour go hand in hand. Only then will the employee be the right choice for the organization.

There are various methods through which employers evaluate the performance of an employee. All evaluation methods fall into two categories:

1. Traditional methods

Traditional methods emphasise on the assessment of the employee’s personality traits such as Initiative, Dependability, Creativity, Integrity, Intelligence, etc.

Types of traditional methods include:

  • Ranking Method
  • Checklist
  • Forced Choice
  • Forced Distribution
  • Critical Incidents
  • Behaviourally Anchored Rating Scale
  • Field Review
  • Performance Tests and Observations
  • Confidential Reports
  • Assay Method
  • Cost Accounting Method
  • Comparative Evaluation Approaches

2. Modern methods

Modern methods emphasise on the evaluation of the work results shown by the employee.

Types of modern methods include:

  • Management by Objectives
  • Psychological Appraisals
  • Assessment Centres
  • 360-Degree Feedback
  • 720-Degree Feedback

Irrespective of the methodology used to evaluate performance appraisal, there are mandatory components that are a part of the performance appraisal. They are:

1. Define expectations

At the beginning of a performance cycle, it is essential for the reporting manager to sit with the employee and prepare a criteria chart.

This will explain what is expected off the employee for the complete performance cycle.

Doing this will ensure that the employee and manager are on terms with the expectations set, and there are no discrepancies during the performance appraisal discussion.

2. Measure and evaluate

Now that we know what a manager expects from the employee, it is the manager’s task to periodically measure the employee’s performance on the basis of the criteria set.

Once there is actual data, it is easier for the manager to evaluate the employee’s progress.

3. Provide feedback

Provide feedback based on the evaluation made throughout the year. Positive and Negative items need to be discussed at length during these sessions.

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It is necessary for managers to provide constant feedback throughout the year so that the employee has a chance to make amends to their working method.

The feedback will hit as a surprise to the employee if it comes to them only once a year.

It is necessary for managers to provide constant feedback throughout the year so that the employee has a chance to make amends to their working method.

The feedback will hit as a surprise to the employee if it comes to them only once a year.

4. Record performance

No companies do manual performance appraisal now. Those were the cavemen times. All appraisal proceedings are done in a strategic, automated method.

Once the feedback session is successfully completed, managers need to record the employee performance on the internal portal to complete the automated performance appraisal procedure.

Once the 4th step is completed, the process returns to the next performance appraisal cycle by initiating the 1st step again, and then flow continues.

Advantages of a Performance Appraisal

Allow us to take you through some of the significant benefits of having a systematic and fair performance appraisal procedure in place.

1. Having a systematic performance appraisal procedure in place helps the manager to evaluate the employee’s performance throughout the year. This will clearly show the strengths and weakness of the employee and their areas of interests.

2. Gathering employee information will also help managers in understanding the progression possibilities of the employee.The Right employee for the right job can be identified through this process.

3. Managers can also create training plans for the employees to help them enhance the skills they lack.

4. By sharing feedback based on the data gathered, managers will enable employees to understand their strengths and shortcomings. Manager’s constructive criticism will encourage employees to work harder to improve their performance.

5. Employees with potential are promoted or moved to a programme that best suits their profile. This works as an excellent motivator for the employees and will boostthem towards maintaining their current performance, if not improve it.

6. The appraisal is also where managers analyse if the training programmes and feedbacks shared with the employee have been put to effect. It shows if the employee has actually improved post training or feedback or let them fly in the air.

7. There are also chances that the training and feedback programmes are not as effective as they need to be. Managers and initiate changes in the training programmes and feedback style to make them more acceptable by employees.

8. Appraisal creates healthy competition among employees and this will, in turn, work as a motivator for the employees.

9. Managers are also known to use appraisal programmes to understand employee’s mental health and personal grievances. Manager can act on the grievances and make possible changes to accommodate the employee’s well-being.

10. The records maintained for performance appraisal will also show the managers which employee has had a steady or improving performance rate and which employee has a continuously deteriorating performance rate. This will help managers in preparing an appropriate further course of action for all employees.

11. Performance appraisal data will also work to provide insight into the hiring process of the organization. Managers understand if the existing hiring process is capable of recruiting candidates with the skill set the programme requires and make amends to the process if needed.

Things that could lead to a negative impact on performance review discussion

1. Nobody likes it when someone shouts at them when something goes wrong. So, when managers share feedback, it is crucial for them to keep this in mind. Feedback should be shared in the form of constructive criticism; only then will employees want to work on the inputs shared.

2. There are chances of employees losing their jobs after an appraisal review meeting. If an employee shows no improvement or shows no intent to work on the feedback shared, the organization has the authority to terminate the employee. Employees could also be transferred to a different programme or demoted too.

3. Managers need to ensure that the numbers recorded in the employee’s performance data are accurate. Employees will find out if the numbers are forged or not recorded appropriately, and this would lead to major legal consequences to the manager and the organization.

4. The criteria set for an employee’s performance appraisal need to be relevant to their work profile. It is not possible for employees to work towards criteria that areirrelevant or not useful. This will lead to employee dissatisfaction and escalations.

5. Managers need to ensure that weightage is equally distributed among the vital factors. Giving more weightage to factors that are not crucial to the programme does not make any sense.

6. There is no scientific method to gauge factors such as Attitude, Willingness to learn, Initiative taken, etc. Managers find it difficult to provide justification to employees about the reason they provided the scoring.

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7. There are instances where the managers are not adequately qualified to evaluate the employees and their capabilities. This leads to them making mistakes in the evaluation process. Such mistakes could gravely affect the successful growth of the employee.

So, here is a brief introduction to Performance Appraisal. Hope you have received a clear perspective of what it is.