Employee Appraisal

A performance appraisal is a systematic and periodic process of measuring an individual’s work performance against the established requirements of the job. It’s a subjective evaluation of the employee’s strengths and weaknesses, relative worth to the organisation, and future development potential. (Terra, 2024)

Performance evaluations, performance reviews, development conversations, and employee appraisals are other names for performance appraisals. Performance appraisals, sometimes referred to as performance reviews or evaluations, have a variety of purposes and play a crucial role in businesses. Here are some of the key purposes:

• Help or production supervisors observe subordinates more closely and do a better coaching job.
• Motivate employees by providing feedback on their performance.
• Provide backup data for management decisions concerning merit increases, promotions, transfers, dismissals, etc.
• Improve organisation development by identifying people with promotion potential and pinpointing development needs.
• Establish a reference and research base for personnel decisions. (professional management accounting institution, 2001)

Types of performance appraisals

Performance appraisals can be broken down into four distinct and significant types:

1. 360-Degree Appraisal
2. Negotiated Appraisal
3. Peer Assessment
4. Self-Assessment

Methods of performance appraisal

1. 720-degree feedback
2. The assessment center method
3. Behaviorally anchored rating scale (BARS)
4. Checklist method
5. Critical incidents method
6. Customer/client reviews
7. Field review method
8. Forced choice method
9. General performance appraisal
10. Human resource accounting method
11. Management by objective (MBO)
12. Performance tests and observations
13. Project evaluation review
14. Rating scales
    
    

The appraisal process

The appraisal process consists of six steps:

1. Establish performance standards with employees.     
2. Mutually set measurable goals.
3. Measure actual performance.
4. Compare actual performance with standards.
5. Discuss the appraisal with the employee.
6. If necessary, initiate corrective action.

Challenges and Pitfalls

Employee appraisals can be valuable tools for performance management and development within organisations. However, there are several challenges and pitfalls that organisations may encounter during the appraisal process.

• Bias
• Subjectivity
• Lack of clarity
• Poor communication
• Resistance to feedback
• Inadequate training
• Inconsistent application
• Concentrate on past performance
• Neglecting development opportunities
• Legal risks

To mitigate these challenges and pitfalls, organisations should invest in training for managers, establish clear and objective performance criteria, foster open communication, and regularly review and refine their appraisal processes to ensure fairness, accuracy, and effectiveness.

Advantages of performance appraisals

• It helps pave the way for skill development.
• It helps with human resource decisions such as which employees deserve a pay raise and by how much.
• Determines a company’s future goals and objectives.
• Improves employee morale.
• Rewards top performers.

Conclusion

Performance appraisals serve as indispensable tools in modern organisational management, offering a structured framework for evaluating and enhancing employee performance. With a plethora of appraisal types and methods available, organisations can tailor their approach to suit their unique needs and objectives. However, while performance appraisals offer numerous benefits, they also pose inherent challenges such as bias, subjectivity, and inadequate communication. To overcome these hurdles and maximise the efficacy of the process, organisations must prioritise training, clarity, fairness, and ongoing refinement. By doing so, they can leverage performance appraisals not only to assess performance but also to foster employee development, drive organisational success, and cultivate a culture of continuous improvement.

 

References

Terra, J. (2024) What Is a Performance Appraisal? Types, Methods, Objectives & Benefits, Simplilearn.com. Available at: https://www.simplilearn.com/what-is-performance-appraisal-methods-process-article.

professional management accounting institution (2001) Human resource management. colombo, sri lanka: society of certified management accountants of sri lanka.