Performance Appraisal: Everything You Need to Know
Performance appraisal refers to the process of evaluating employees work performance and this time one primary goal is to determine how the employee is growing.8 min read
2. Reasons for a Performance Appraisals
3. The Benefits of a Performance Appraisal
4. Tools and Techniques for a Better Performance Appraisal
5. The Process for an Effective Performance Appraisal
Performance appraisal refers to the process of evaluating employees’ work performance. During the performance appraisal evaluation of the employee, one of the primary goals is to determine how the employee is growing. Another thing that is evaluated is the current pay rate of each employee and varying factors that could be influencing the employee’s quality of work. Some other things that are examined during a performance appraisal include the employee’s achievements, development, and skills. When all of the answers are discovered, the employer will be able to do a better job of guiding employees who may be struggling.
It is a good idea to conduct a performance appraisal of each employee in the company on an annual basis. Once you have accumulated an adequate amount of information from the performance appraisal, you can provide the employee with some invaluable feedback on their performance. The information you garner from the performance appraisal can also be used to determine if the employee deserves a pay raise. The basic order of a performance appraisal should go something like this:
- Examine the behavior and performance of the employee while they are at work at compare what they do to the current standards set by the company.
- Take notes of everything you observe.
- Review the results and use it as feedback for your employees.
- Using the data, determine whether or not the employee will be retained, promoted, or demoted.
- Decide if a pay increase should be granted based on the employee’s strengths.
A performance appraisal isn’t exactly a onetime thing; it should be used continuously while the employee is at work to come up with a final decision about whether or not that employee should be rewarded for their work.
Reasons for a Performance Appraisals
- Keep records of an employee’s work performance to appropriately gage the proper salary, bonuses, raises, promotions, wage structure, and compensation packages.
- To get a better sense of the employee’s potential and how they might be able to grow more in the future.
- To garner the right feedback to give to employees to help them build on their strengths and address any problem areas.
- Help decide how to distribute funds appropriately to employees, particularly if the business with the employees is working with a limited financial structure.
- Reward the most high-achieving employees who are doing the best work for your company.
- Confirm that the standards set forth by your company are being met by your employees.
The Benefits of a Performance Appraisal
- After conducting a performance appraisal of an employee, it becomes much easier for management to determine if they should be rewarded with a promotion based on their work and what that promotion should be.
- Performance appraisal helps management review key information about the employee’s work quality and progress and get a better sense of what the employee’s hourly rate or salary should be.
- Developing compensation packages becomes easier for companies when they are supplied with adequate information about their employees. Things such as fringe benefits, higher salaries, allowances, and bonuses all depend on a thorough employee appraisal.
- A performance appraisal contributes to a stronger employee development system. You are able to take the information you discovered and create the proper training programs and policies for your company.
- In addition to compensation packages and employee development programs, additional programs pertinent to the company can be developed based off the information received from a performance appraisal.
- A performance appraisal is yet another way to boost clearer, more effective communication between company management and the employees that work for them.
- A better job of delegating tasks and adding new responsibilities can be done after a performance appraisal.
- If there are any conflicts or miscommunications that have not been addressed, a performance appraisal can uncover these issues.
- Not only does a performance appraisal benefit the company and the employee that is being appraised, it also benefits the manager who is conducting the appraisal. Every good manager should know how to correctly initiate a performance appraisal and routinely doing these will make a manager better at their job.
Tools and Techniques for a Better Performance Appraisal
Some examples of performance appraisal tools and techniques you can use include, ranking, paired comparison, forced distribution, essay evaluation, critical incidents, checklists, field review technique, and performance tests, among other thing. Of course, you don’t have to use every measure available to you to conduct a performance appraisal, but pick a few you think will work for your company and stick to those.
When you use the ranking system, you rank the employee under review according to his colleagues. You are basically comparing their work performance to the other people that you employ and seeing where they fall on the scale. This is an advantageous tool to use for performance appraisals because it is one of the easiest ways to measure performance. There are downsides to the ranking method that companies should be aware of. When you compare one employee to another, it is hard to get an accurate result since virtually all workers have different skill sets and specific character traits. This technique also doesn’t really allow you to gage your employee’s knowledge; instead, it is just comparing the employee to where they stand in relation to the rest of the company.
Another simpler, long-term way of conducting a performance appraisal of an employee is by keeping a logbook and tracking the employee’s performance periodically. Whatever you recorded during the period of time that you evaluated the employee can be used when you finally decide to rate the performance. This practice is known as the critical incident technique. By conducting your performance appraisal with this method, you are able to objectively rate your employee’s performance on a series of incidences that occurred during the performance appraisal period. The downside to this technique is that it is always easier to notice negative incidences than it is to notice positive incidences; therefore you may unwittingly be tracking more negative situations than positive ones.
The Process for an Effective Performance Appraisal
- Step One: Get all of the preparation out of the way before you even begin evaluating an employee’s work performance. Prepare your methods, procedures, and the overall strategy that you will use. Prepare by gathering all supplies and materials you may need along with the necessary documents. Have what you need to track and record the employee’s work performance on a daily basis, positive and negative incidences, and other pertinent reports. Be prepared to report specific events and achievements. Have a plan to keep all of your paperwork organized and filed away appropriately. Remember throughout the entire process that there is more to the performance appraisal than simply tracking the relevant skills and performance of the employee. Which brings us to the second step:
- Step Two: Keep the employee who is being appraised as informed as possible. Tell them that the performance appraisal will be happening. Let them know the time and place for the appraisal (and if there will be any changes in scheduling, let them know about this). Also tell the employee the reasons for why they are being appraised as well as the type of appraisal that will be conducted. If you are the manager of a company and you have been provided a specific appraisal form, there is generally detailed information regarding the process of how you should conduct the appraisal. If there is no information on this form about the primary questions you should ask, talk to anyone higher up in management about what they want to know and compile a list of these questions to make your appraisal more productive.
- Step Three: Designate a spot to hold the performance appraisal meeting. After conducting the performance appraisal for a certain period of time, you will need to hold a meeting with the employee who was being appraised and review the information with them. Obviously you would not want to hold this meeting in a busy, public area or right in the middle of the office with other employees working around you. Designate a quiet, private spot and conduct the meeting the same way you would conduct an interview when screening a potential job candidate.
- Step Four: Set the tone for the entire meeting by greeting the employee with the proper introductions. Ensure that the employee being appraised is relaxed. Start on a positive note and be inviting and friendly. It is highly likely that the employee could be feeling very anxious about the meeting, so you want to do everything you can to set their mind at easy.
- Step Five: Review the appraisal and measure the employee’s performance. This is the part that is terrifying to the employee (hence, a warm introduction is so important). Go over each task, achievement, activity, and objective concisely and methodically. Go through everything one point at a time and keep your talking points separate. Don’t use vague language or ramble about one thing for too long. Speak in plain language keeping the dialogue clean and clear. Holding this dialogue is a lot easier when you have prepared for the meeting correctly.
- Steps Six: Have a strategy in place to move forward with an actionable set of goals. After going through the performance appraisal review, speak with your employee about a mutually agreed upon plan about the next steps for them. In this talk, you should go over the following talking points: strengths and weakness, the employee’s current job duties, their career goals, and the priorities of the department they currently work in. If it is needed, discuss new training techniques that could be implemented such as attending seminars and workshops, taking new courses, getting professional coaching and mentoring, shadowing someone, reading new material, and reading relevant guides and manuals. Everyone improves and learns differently, so decide on the training tactics that would be best for the employee. Lastly, if the employee who is under performance appraisal is deserving of a salary raise or some other type of promotion, discuss this with the employee.
- Step Seven: Allow the employee to say anything that is on their mind. If they have additional thoughts or ideas, let the employee know that you welcome these things and you genuinely want to know what they have to say. Additionally, make it known that this is the time to ask any relevant questions and get the answers they need.
- Step Eight: End on a positive note. Just as you opened the meeting up positively, so too should you close it in such a way. Even if you had to go over some uncomfortable details regarding poor performance, a bad incident, or some other negative matter, let them know that you appreciate their contribution to the company and that meeting. Also remind them that you and the management team are dedicated to helping them flourish in their job role and their career aspirations.
- Step Nine: Once the employee has left the meeting room, take a few minutes to go over some of the highlights of the meeting on your own. Jot down anything that stuck out to you. Keep a record of the primary talking points, what was agreed upon, and the follow up plans. The follow-up should confirm that all important documents are immediately copied (if needed), filed away, or sent to the appropriate department. Record all the information from the meeting for your own files and to send to your boss.
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