- What is a Performance Appraisal?
- What is the purpose of a Performance Appraisal?
- Performance Appraisal Objectives
- Types of Performance Appraisals
- Benefits of performance appraisals
- Process of performance appraisal
- Difference Between Performance Management and Performance Appraisal
- Should You Take Performance Appraisals Seriously?
It’s that time of the year again- when we jot down all our accomplishments and hope to get recognition and preferably, a salary hike.
Yes, we are talking about Performance Appraisals.
Performance review is crucial for all working professionals as it evaluates their productivity and performance throughout the year, offering insights into their strengths and weaknesses.
No wonder that as per a survey done by Naukri, 68% of people believe that performance appraisals play a huge role in their career growth.
If you are new to all this and are trying to grasp the nitty-gritty of performance appraisals, this blog is for you
Read this article to learn about performance appraisals- from their objectives and types of performance appraisals to the advantages of performance reviews.
Let us start by understanding...
What is a Performance Appraisal?
Performance appraisal is the process of assessing an employee’s performance based on the goals and business objectives of the company to reward efforts and provide feedback.
During a performance review, managers evaluate their employees based on their skills, productivity, ownership, initiative, and goal achievement for the year.
This assessment helps organizations make informed decisions regarding promotions, bonuses, salary increments, and R&R (Rewards & Recognition).
What is the purpose of a Performance Appraisal?
A performance appraisal assesses and improves employee performance by providing structured feedback on their work. It helps identify strengths and areas for development, ensuring employees align with organizational goals.
Performance appraisals foster communication between employees and managers, clarify expectations, and set future objectives. They also play a crucial role in making decisions about promotions, salary adjustments, and training needs.
By regularly evaluating performance, organizations can enhance productivity, boost employee engagement, and drive continuous improvement, ultimately contributing to the overall success and growth of both the individual and the organization.
Performance Appraisal Objectives
By now, you must have a basic idea of why we need performance reviews and appraisals. To bring more clarity, here are some objectives of performance appraisals:
- Evaluate employee performance over some time (Usually annually)
- Review performance to provide constructive feedback
- Set goals for the upcoming year
- Identify strengths and weaknesses
- Find areas of improvement and training avenues
- Discuss career aspirations and career growth plans with your manager
- Spot trends in employee performance
- Draw a career map to ensure a positive learning
- Ensure that the employee goals align with the business needs
Types of Performance Appraisals
While each company has its method of evaluation, most companies follow these performance appraisal methods:
Self-appraisal
It all begins here! Self-appraisal, also called self-assessment, is your chance to shine. Here, you can record your achievements from the past year, assess your growth, and discuss your efforts.
It brings clarity to your supervisors about your annual performance and gives them a basis to initiate your appraisal process.
Annual performance review
The annual performance review is a crucial process that allows employees and managers to assess individual contributions and set goals for the future.
This structured evaluation typically involves a comprehensive discussion about the employee's accomplishments, strengths, and areas for improvement annually.
Annual performance review is a two-way communication channel, where employees can share their perspectives and challenges they may be facing, and employers can give constructive feedback to help employees understand their performance and motivate them to excel in their roles.
Performance reviews also play a pivotal role in professional development. Goal-setting discussions enable employees and managers to align on expectations, fostering a sense of purpose and direction.
Additionally, these evaluations often contribute to decisions regarding promotions, salary adjustments, or training opportunities.
While the traditional annual review format has faced criticism for its potential to be stressful, many organizations are adopting more continuous and feedback-oriented approaches to enhance employee engagement and development throughout the year.
The most common type of performance appraisal, this method evaluates employee performance every year. The steps followed here are:
- Goal setting
- Self-appraisal
- The formal meeting for performance review by managers
- Define ratings and benefits
- Goal setting for the next year. The ratings often range from poor to excellent.
360-Degree Feedback
True to the name, this appraisal process is based on the feedback of your team, colleagues, subordinates, and supervisors. It helps your supervisors evaluate your performance holistically and gives an insight into your professionalism.
360-degree Feedback is a comprehensive performance appraisal method that gathers input from multiple sources, including peers, subordinates, supervisors, and self-assessment, providing a well-rounded perspective on an individual's capabilities.
This multi-dimensional approach fosters holistic insights into strengths, weaknesses, and areas for improvement. It promotes a more accurate and fair assessment, enhancing self-awareness and professional development.
The 360-degree feedback process cultivates a culture of continuous improvement and collaboration, enabling individuals to refine their skills and contribute effectively to organizational success.
Managerial Appraisal
Managerial appraisal is the most traditional and widely used form of performance appraisal, where a manager or supervisor evaluates the performance of their subordinates.
Typically conducted on an annual or semi-annual basis, this method involves the manager assessing the employee's achievements, competencies, and areas for improvement based on predefined criteria and objectives.
The advantages of managerial appraisals include providing a structured and authoritative perspective on an employee's performance, aligning individual goals with broader organizational objectives, and offering opportunities for feedback and career development.
Managers, being closely involved with their team members, can offer personalized feedback and set realistic performance expectations.
However, managerial appraisals can also present challenges, such as potential bias and subjectivity, especially if the manager lacks proper training in appraisal techniques.
Additionally, if feedback is not delivered constructively, it can lead to employee dissatisfaction and reduced morale. To mitigate these issues, organizations often provide training to managers on how to conduct fair, objective, and effective appraisals.
Objective-Based Appraisal (Management by Objectives - MBO)
MBO focuses on evaluating employees based on their achievement of specific, predefined objectives or key performance indicators (KPIs). This method emphasizes setting clear, measurable goals that align with the organization's overall strategic objectives.
Employees and managers collaboratively set these objectives, ensuring mutual understanding and commitment. The appraisal then measures success against these agreed-upon targets, making the process transparent and results-driven.
MBO fosters accountability and provides a clear framework for assessing performance. However, it can overlook qualitative aspects of performance and may lead to a narrow focus on results, potentially neglecting long-term development and innovation.
Behaviorally Anchored Rating Scales (BARS)
BARS is a performance appraisal method that combines elements of the rating scale and critical incident techniques. BARS involves defining specific behaviors that represent various performance levels for a given job. These behaviors serve as "anchors" on a rating scale, which evaluators use to assess an employee's performance.
The process begins with identifying key job responsibilities and tasks, followed by gathering critical incidents—specific examples of effective and ineffective behavior related to each responsibility. These examples are then used to develop a scale with behavioral descriptions corresponding to different performance levels, ranging from poor to excellent.
BARS provides a clear and detailed assessment by linking ratings to specific, observable behaviors, reducing ambiguity and enhancing objectivity. This method is advantageous because it allows for more consistent and reliable evaluations.
However, developing BARS is time-consuming, requiring significant effort to identify appropriate behaviors and ensure the rating scale is relevant to the job.
Benefits of performance appraisals
Performance appraisals require a lot of effort, but why is it important? Here are some advantages of performance appraisals:
- Goal setting: one of the most crucial benefits of performance appraisal is goal setting. Appraisal processes help employees and employers assess performance and identify weak areas that need improvement.
- Career growth: Appraisals can help you identify areas of improvement and highlight your weaknesses, making it easy to pursue the required training. It eases upskilling and training efforts, enabling overall career growth.
- Feedback: Working without feedback is fruitless since there will be no accountability or responsibility. Timely and constructive criticism can help you with the scope of improvement and skill development, enabling overall career growth
- Self-awareness: Performance appraisals can help you gauge your strengths and weaknesses, increase self-awareness and make career growth simpler! It identifies areas of improvement, giving you direction to upskill and evolve in a structured manner.
- Better job satisfaction: There is no better feeling than being recognized for your hard work; performance appraisals provide the perfect opportunity for this. Knowing your efforts are being recognized and rewarded increases motivation and is more likely to make you motivated and happy in your job.
How does performance appraisal work?
Performance appraisal is a systematic evaluation process where an employer assesses an employee's job performance. It typically involves setting objectives, measuring achievements, and providing feedback.
Various methods like self-assessment, supervisor evaluation, or peer reviews may be used. Criteria often include job knowledge, productivity, communication, and teamwork.
The process helps identify strengths, weaknesses, and areas for improvement. Feedback is crucial for employee development and can inform decisions on promotions, training, or rewards.
Appraisals should be fair, transparent, and conducted regularly to maintain employee motivation and organizational performance.
After reading all about performance appraisals, let us take a look at the process involved.
1. Goal setting
The first step is to define goals for the upcoming review period. Setting performance goals and clear expectations gives your supervisors a benchmark to measure progress and achievements and helps you with a clear direction of work.
2. Measuring performance
Throughout the review period, your supervisor will monitor your progress to identify your strengths and weaknesses, record your accomplishments and share feedback. In this stage, your job is to maintain a progress report.
Include all tasks you have accomplished or struggled with in this period, skills developed, special projects, and additional work.
3. Self-appraisal
At this stage, evaluate your progress and give yourself a rating. Assess this rating against the standards set during the goal setting. Make sure you carry out self-appraisal fairly and honestly; justify the rating you give yourself with a list of projects and their impact.
4. Discussion
Discussion is where reality checks happen. Self-appraisal is a perspective of your performance, but what your supervisor thinks is crucial too. During these discussions, you can put forth your opinion, learn what they think, and discuss strengths and areas of improvement with your supervisor. You can also use this window to justify your review and bridge any difference of opinion.
5. Performance appraisal
After all the hard work in the first four steps, it is time for the final result! Here, your supervisor will give you a final rating based on which you will get a salary hike, promotion, incentives, perks, etc. The rating and discussion will also pave the way to help you develop new skills and pursue relevant training opportunities.
Difference Between Performance Management and Performance Appraisal
| Feature | Performance Management | Performance Appraisal |
|---|---|---|
| Scope | Continuous and ongoing process | Periodic and usually annual |
| Focus | Broader, includes goals, development, and feedback | Specific evaluation of past performance |
| Purpose | Improve overall organizational performance and employee development | Assess individual performance for reward and recognition |
| Feedback Timing | Regular and timely feedback | Typically provided once a year |
| Participants | Involves employees, managers, and teams | Primarily involves managers and employees |
| Goal Alignment | Aligned with organizational objectives | Often focused on individual goals and objectives |
| Nature of Feedback | Emphasizes constructive feedback and coaching | Mainly focuses on ratings and rankings |
| Continuous Improvement | Emphasizes ongoing improvement and learning | May not always lead to continuous improvement |
| Flexibility | Adaptable to changing goals and circumstances | More rigid, tied to fixed evaluation periods |
| Communication | Open communication and dialogue between managers and employees | One-way communication from manager to employee |
| Employee Involvement | Encourages self-assessment and employee participation | Limited involvement of employees in the process |
| Outcome | Enhanced overall organizational performance and employee satisfaction | Determination of rewards, promotions, or corrective actions |
Should You Take Performance Appraisals Seriously?
Yes! Performance appraisals are significant for all employees for many reasons, the most crucial being the formal and structured way of sharing constructive feedback and recognition.
Performance appraisals can help you identify your strengths and weak spots. Also, it takes away the suspense of right or wrong, making it easier for you to understand what to do and meet expectations.
In the big picture, performance appraisals are significant for overall career growth since they provide clarity and help you accomplish challenging goals that contribute to skill development and career advancement.
Above all, performance appraisals influence decisions about salary hikes, promotions, and other rewards by identifying your contribution to the organization.
While performance appraisals may not always be systematic, they are a crucial tool to improve employee performance, engagement, and career development, making them significant for all employees.
So get ready, and prepare to get the appraisal you have earned!
All the best!
Read Congratulation Messages for Achievement
FAQs:
1. What is meant by performance appraisal?
Performance appraisal is a systematic evaluation of an employee’s job performance and contributions to the organization. It involves assessing skills, achievements, and growth against set objectives and providing feedback for improvement.
2. What are the 7 ways of appraising performance?
The seven ways of appraising performance include:
- Self-Appraisal
- Managerial Appraisal
- 360-Degree Feedback
- Peer Review
- Upward Appraisal (Subordinate Review)
- Objective-Based Appraisal (Management by Objectives - MBO)
- Behaviorally Anchored Rating Scales (BARS)
3. What is the basic purpose of performance appraisal?
The basic purpose of performance appraisal is to evaluate and improve employee performance, align individual goals with organizational objectives, and support career development by providing feedback and identifying training needs.
4. What is HR performance appraisal?
HR performance appraisal refers to the systematic process managed by the human resources department to assess employees' performance, provide feedback, and make decisions related to promotions, compensation, training, and development.
