A lot goes into running a successful organization. Business decisions aside, organizations need to be able to maintain an employee-centric culture to maximize productivity. They need to have a clear picture of their entire workforce, discuss shortfalls with employees, show them the ropes and develop an appropriate action plan for growth.
These are, however, easier said than done. A robust performance appraisal process can help managers do all this and more. But what’s the meaning of a performance appraisal? Let’s find out.
Definition Of A Performance Appraisal
A performance appraisal is a regular review of an employee’s performance, personality and behavior on the job. Various attributes such as versatility, leadership, cooperation, decision-making skills, initiative and contribution to the organization are taken into account. Managers evaluate employees’ achievements, development and growth against a set of predetermined standards and organizational expectations.
Organizations widely use performance appraisal processes to get a clear understanding of where they stand in terms of their workforce to enhance productivity and boost progress.
Performance Appraisal Objectives
Now that we know the meaning of a performance appraisal, let’s look at a few of its primary objectives. A performance appraisal aims to:
Managers must provide frequent constructive feedback to employees on their performance. This not only helps employees recognize their strengths and weaknesses but also guides them in the right direction, boosting efficiency.
Identify Training Needs
Managers must identify employees who fall short of organizational expectations and goals through a performance appraisal. Employees can be trained according to their needs to help them develop or upgrade their skill sets and improve performance.
Simplify Raises And Terminations
Sometimes deciding which employees to promote or terminate becomes challenging for managers. A thorough employee performance evaluation highlights the top performers in a workplace so that positions get filled by the most deserving candidates. Managers also depend on evaluation results to support termination decisions.
A performance appraisal process defines and sets goals and standard performance measures. These goals help employees understand what’s expected of them and perform according to expectations.
Effective performance appraisal seeks to achieve happier employees, structured processes and improved growth. Dissatisfied and underperforming employees can be detrimental to productivity, causing an organization to incur losses. Once employees are aware of the standard requirements of their job and receive regular feedback, they’re motivated to deliver quality work.
Methods Of Performance Appraisal
A powerful performance appraisal method can go a long way in boosting employee performance and productivity. According to the Strauss and Sayles classification, such methods can be divided into two types—traditional and modern.
Traditional performance evaluation methods mostly center on an employee’s past performance, considering traits such as attitude, initiative, judgment, leadership, dependability and integrity. Following are some of the traditional methods of performance appraisal:
This is one of the simplest forms of employee performance evaluation. HR departments prepare a list of statements describing employee behavior on the job. Evaluating managers check the statements that apply to the particular employee being evaluated.
Critical Incident Method
The critical incident method is a performance evaluation tool that measures an employee on the basis of key incidents on the job. This includes analyzing how an employee reacts and responds in a critical situation, the skills they use and how they collaborate with their fellow workers.
One of the most subjective methods of performance appraisal, this technique requires the evaluating manager to write a description of an employee’s performance and behavior on the job. The description usually focuses on an employee’s strengths, weaknesses, areas of improvement and relationship with coworkers.
Traditional methods of employee performance evaluation are usually elaborate and time-consuming. Because they tend to be subjective in nature, fairness in ratings is often questioned.
Modern methods are more objective and focus on potential, work results and job-specific accomplishments of employees. Some of them are:
Management By Objectives (MBO)
In this method of performance evaluation, managers and subordinates collaborate, identify and set certain objectives to be achieved during the period of appraisal. Regular meetings are held between managers and employees to go over the progress made and address issues hindering productivity. At the end of the appraisal period, managers measure employees’ contribution and performance and offer relevant feedback.
Assessment Center Method
The assessment center method requires employees to participate in social and job-related simulations. These range from in-basket, fact-finding and role-playing exercises to informal discussions and decision-making problems. Managers observe the employee and gain an understanding of their potential for success in different roles and responsibilities.
A multidimensional method of performance evaluation, this technique collects feedback on employee performance from multiple people who interact or work in close contact with the employee under review. Such people may include the employee’s peers, seniors, juniors and customers. It’s a method widely used by organizations because it offers a complete overview of an employee’s performance and is free from bias.
All performance appraisal methods have their own pros and cons. It’s up to an organization to decide what works best for its own distinctive requirements and goals.
Best Practices For Effective Performance Appraisal
While the definition of a performance appraisal might seem simple enough, the actual process can be challenging for managers, requiring continuous planning, monitoring and review. Here are a few best practices for effective performance evaluation:
Managers must define and set evaluation standards and expectations early on in the performance appraisal process. This ensures employees know what their position entails and can align their own work goals with organizational objectives. The standards must be clear and easy to understand. While informing employees of these standards, managers must also consider employee feedback and opinions.
Having tangible examples of accomplishments and areas of improvement to refer to during review simplifies the appraisal process for both managers and employees. It makes the feedback offered more credible. Employees understand what they’ve done well and what they need to work on.
Managers must tactfully communicate the results of the appraisal to their employees, balancing positive attributes with areas needing improvement. Experts also recommend asking for employee input through probing questions. What is that one skill or achievement the employee is proud of? Which part of the job do they enjoy the most? What is the most challenging part? What do they hope to accomplish in the near future? Active listening, knowing when to praise and being specific in terms of suggestions allow managers to extract the best out of each employee they review.
Being well-equipped and prepared to conduct an employee performance evaluation helps managers sail through the process. Such preparation may involve having copies of year-round performance data, speaking with an employee’s seniors or coworkers and studying their past performance review reports. Managers may also consider setting a tone for one-on-one conversations with each employee.
An effective performance appraisal process fosters open communication between managers and employees, encouraging top performers and redirecting those falling behind.
Road To Success
The success of an organization’s performance appraisal strategy largely depends on its managers, who are instrumental at every step of the evaluation process. Managers must establish performance standards, communicate these standards to employees, consistently monitor employees in terms of progress and contribution, discuss appraisal results and offer feedback—all while maintaining fairness and equity.
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