Performance appraisal in the workplace

Performance appraisal is a popular management topic. Performance appraisal research began in the early 1920s and continues today. Performance appraisal is crucial to any organization's performance management. It involves assessing employee performance and giving constructive comments to improve skills and meet company goals.

This article covers the basics of performance appraisal, its purpose, types of appraisals, pros and cons, how to create effective appraisal systems, how to implement them, and how to assess their impact on employee performance.

What is a performance review and why?

To maximise performance, companies will involve employees in setting work goals so they can give suggestions. This greatly affects motivation. Employee performance is evaluated against job standards and expectations during a performance appraisal.

This article identifies strengths and weaknesses. Supervisors can provide staff feedback and help them improve. Performance reviews usually include quantitative and subjective measures. Quantitative data like revenue, production, and customer satisfaction are objective measures. Subjective measures, on the other hand, depend on the evaluator's assessment of the employee's conduct, communication, teamwork, and attitude.

Performance should be assessed based on both what is done and how it is done, including behaviours. Setting goals and expectations is the first step in a performance appraisal. SMART goals are specific, measurable, achievable, relevant, and time-bound. Clear objectives assist employees understand their roles and link their efforts with company aims. After the performance period, supervisors or managers evaluate the employee using data and proof.

This may involve analysing work samples, performance indicators, customer or colleague feedback, and one-on-one performance meetings with the employee. The evaluator gives the employee comments on their strengths and weaknesses during the appraisal meeting. Constructive, detailed comments should focus on behaviours and outcomes, not personality.

Keep an open relationship with the employee, encouraging them to ask questions, clarify, and give feedback on their performance. Performance assessments have several uses in organisations. They formalise recognition and reward for high-performers, encouraging them to keep going. They also reveal areas where employees need more training or development to improve their skills.

Many organisations recognise people's accomplishments during this time. The boss may say "Thank you," give them a voucher to spend on something they want, or give them extra time off. This supports company ideals and boosts performance. Performance assessments can also identify underperforming staff. Identifying performance issues early allows businesses to provide the assistance and resources needed to help individuals grow and contribute more.

Overall, performance appraisals help a company promote ongoing progress and professional advancement. By offering regular feedback, defining clear expectations, and acknowledging achievements, companies can foster high performance and employee engagement.

How are performance reviews done?

The presumed process underpinning performance appraisal comes from social comparison theory (Festinger 1954), feedback intervention theory (Kluger and DeNisi 1996), and equity theory (Adams 1965). Social comparison theory implies that people compare their performance to their peers. Seeing others succeed motivates one to do well.

Feedback intervention theory states that when people receive feedback showing a difference between their aspirations and their performance, they work harder to close it and improve. This hypothesis suggests that educating employees about performance gaps between corporate norms and colleagues can inspire them to improve.

Equity theory concludes by comparing employee inputs and outcomes to peers. High-performing individuals may be motivated by perceived fairness of recognition and incentives, while underperformers may be encouraged to improve by seeing uneven treatment between high and low performers. This encourages everyone to do better.

Performance appraisal types

Organisations use various performance appraisals. The most prevalent types:

1. Periodic traditional appraisals provide a structured analysis of employee performance. They give detailed feedback and align goals. Due to their infrequency, they may not accurately record ongoing performance. Recommendation is to have a year-round conversation to ensure prompt and regular feedback.
2. 360-Degree Feedback: Peers, subordinates, and supervisors provide feedback to assess employee performance. This method reduces prejudice in appraisals. Multiple opinions can be time-consuming and difficult to manage. However, 360-degree feedback provides a more complete picture of an employee's performance, typically from a customer's perspective. To maximise this process, the 360 review should precede the assessment review. Manager, employee, and 360-degree feedback can be considered when reviewing performance. To maximise skill growth, a training and development plan would be decided upon after the appraisal.
3. Management by targets (MBO): MBO assessments clarify goal formulation and performance assessment by creating and attaining defined targets. Setting quantifiable and achievable goals can be difficult and limit flexibility.
4. Behaviourally Anchored Rating Scales (BARS): BARS ratings examine employee performance objectively using particular behavioural characteristics.

Developing an effective appraisal scheme

Developing and maintaining a complete set of behavioural indicators is laborious. Making a successful appraisal system Organisations should consider the following when creating an appraisal scheme:

• Consider the company's strategic and operational goals. How do individuals assist their success?
• Set goals and criteria for employee performance evaluation that match with corporate aims.
• Clear company values-based behaviours can help you measure performance based on employee work.
• Supervisors should learn how to evaluate, give feedback, and set reasonable performance targets.
• Engage employees in the appraisal process by fostering self-appraisal, providing constructive performance comments, and considering their opinions.

How to implement an appraisal scheme?

Careful planning and execution are necessary when implementing an evaluation process. Here are some actions to think about:

1. Explain the appraisal scheme's objective, benefits, and expectations to employees and managers.
2. Train and support supervisors and staff on appraisal criteria, processes, and feedback.
3. Conduct regular performance reviews to ensure consistency and improvement.
4. Maintain performance appraisal records for future reference and decision-making.
5. Make sure the procedure is followed up on, e.g. If you promise training, do it.
6. Establish a compliance monitoring system. Managers must commit to it, and all staff should benefit.
7. Utilise an employee engagement survey to track management performance and maximise its benefits.

Evaluating how appraisal techniques affect the performance of employees

Organisations ought to assess how their employee performance is affected by their appraisal programmes. This can be accomplished by:

• Gather input from supervisors and employees to assess the appraisal scheme's efficacy on a regular basis.
• Track performance indicators to determine the effectiveness of the assessment method, such as worker productivity, job satisfaction, and retention rates.
• Surveys should be used to learn how employees feel about the appraisal process and how it affects their growth and motivation.

Evaluation forms and assistance

Assessment templates offer an organised format for assessing employee performance, which helps streamline the assessment procedure. These templates usually have sections for goal-setting, performance evaluation against predefined standards (e.g., behaviours), feedback documentation, and development plans.

Companies can either construct their own bespoke appraisal templates or use ones that are already pre-designed and compliant with industry standards.