Performance appraisal: Definition, Methods & Advantages (2024)

Organizations use performance appraisal as a critical process to evaluate the performance of their employees. It involves a systematic review of employee performance, including their strengths, weaknesses, and room for growth. This process can significantly impact the employee’s performance and career development as well as the organization’s overall success.

This blog will go over the definition, objectives, process, methods, advantages, and disadvantages of performance appraisals.

What is performance appraisal?

Performance appraisal is defined as a process that systematically measures an employee’s personality and performance, usually by managers or immediate supervisors, against predefined attributes like skillset, knowledge about the role, technical know-how, attitude, punctuality, and so on.

Performance appraisal has many names across organizations. Some call itperformance evaluation, and some prefer performance review, merit rating, annual performance review, etc.

This process is carried out to identify the inherent qualities of an employee and the abilities and level of competency of an employee for their future growth and development and that of the organization they are associated with. It aims at ascertaining the value of an employee and his/her offering to the organizational performance.

Performance appraisals help managers and supervisors place the right employee to do the right job, depending on the skill set they possess. Without an ounce of doubt, every organization needs a robust performance appraisal process.

There are various methods that managers and supervisors use to evaluate employees based on objective and subjective factors. However, it can get a bit tricky, but to effectively evaluate an employee, both factors are essential.

Objectives of performance appraisal

The following are the objectives for conducting performance appraisals year after year:

• Employee promotion

  This is an essential first step towards promoting an employee based on subjective and objective factors- performance and competency.

• Employee needs

  To identify the training and development needs of an employee.

• Employee Confirmation

  To provide confirmation to those employees who were recently hired and are on their probation period.

• Making decisions about promotions and compensation

  To make a concrete decision, what should be the percentage of a hike in the salary of an employee based on the work done by them?

• Improving communication

  To encourage a proper feedback system between the manager and employees.

• Scope of improvement

  To help employees understand where they stand in the current year and what is the scope of improvement.

Performance appraisal process

The performance appraisal process is a key part of how an organization manages the performance and growth of its employees. It entails assessing an employee’s job performance and providing feedback on their strengths and weaknesses in order to improve employee performance evaluation and achieve organizational goals. Here, we will learn the key steps of the performance appraisal process:

Step 1: Employee Evaluation

In most organizations, the employee performance appraisal process means evaluating an employee every 6 months or one year for the period an employee has continually worked with the organization. In modern times, the Human Resources department sends out anemployee surveyfor them to fill out to collect data related to theirengagementandsatisfactionlevels.

Step 2: Performance quality evaluation

The employee’s immediate manager or supervisor will then evaluate the quality of the employee’s performance based on the work done in the previous year and then meet face-to-face to discuss the facts and figures.

Step 3: Actionable insight

Thefeedbackreceived from the survey can be kept anonymous. This feedback can be analyzed in real-time by using QuestionPro’sWorkforceplatform, that measures, analyzes, and activates data to get actionable insights.

For probationary employees, the probation period usually lasts between three to six months. Their evaluation is based on whether they have come at pace with the work andcultureof the organization and if they are ready to take up more responsibilities.

Performance appraisal methods

There are 5 performance appraisal methods. Using one of these methods for performance appraisals can help organizations gain partial information. However, combining one or more methods will lead to extracting better information and accurate data. It is one thing to collect data and another to do something actionable with it.

• Self-evaluation

  This is an important way to get insights from the employees and evaluate themselves. You need to first get information about how an employee evaluates himself/herself; after conducting this evaluation, the performance management has an opportunity to fairly appraise an employee based on their thoughts.

• 360-degree feedback appraisal system

  360-degree feedback, an employee is evaluated by his/her supervisor/manager, peers, colleagues, subordinates, and even management. Inputs from different sources are considered before talking to the employee face-to-face. In this process, each employee’s performance is rated according to the job done based on the job descriptions assigned to them.

  If you want to learn more about “360 Leadership Assessment,” you may look into how this holistic evaluation process goes beyond regular appraisals. It provides leaders like you with a comprehensive perspective of your organization’s strengths and areas for development, allowing you to improve your leadership skills and make a bigger difference.

• Graphics rating scale

  The graphic rating scale is one of the most commonly used methods by managers and supervisors. Numeric or text values corresponding to values from excellent to poor can be used on this scale. Members of the same team who have similar job descriptions can be parallelly evaluated using this method. This scale should ideally be the same for each employee’s performance.

• Checklists

  The evaluator is given a checklist of several behaviors, traits, attributes, or job descriptions of the employee who needs to be evaluated. The checklist can contain sentences or simple attributes, and the evaluator thus marks the employee’s performance based on what describes the job performance of the employee. If the evaluator believes that the employee has certain traits, it is marked positive otherwise, it is left blank.

• Essay method

  This is also known as the “free-form method.” As the name suggests, it is a descriptive method that elaborates on performance criteria. A major drawback of this method is to keep biases away.

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Advantages of performance appraisal

While some businesses may consider performance evaluation as a time-consuming and administrative task, there are several advantages of using employee performance appraisal processes. In this section, we will go over some of the most potential advantages of performance appraisals and how it can benefit both employees and organizations.

1. A systematic performance appraisal method helps the managers/supervisors to correctly identify the performance of employees and also highlight the areas they need improvement.
2. It helps the management place the right employee for the right kind of job. This is a win-win situation for both the employee and the organization.
3. Potential employees who have done some exceptional work are often offered a promotion on the basis of the result of performance evaluation.
4. This process is also effective in determining the effectiveness of the training programs conducted by the organization for the employees. It can show managers how much an employee has improved after the training. This will give actionable insights to the managers on how to improve the programs.
5. It creates a competitive environment amongst the employees in a good way. Employees try to improve their performance and get better scores than their colleagues.
6. Managers use this as a platform to get first-hand feedback from employees to talk about their grievances and how to handle them.
7. Keeping year-on-year records of appraisals gives managers a very good idea what is the pattern of the growth rate of employees and which ones have a declining rate, and what actions need to be taken to improve it.

Disadvantages of performance appraisal

While performance appraisal is an effective tool for assessing employee performance and providing feedback, it is not without disadvantages. In this section, we will look at some of the major disadvantages of performance appraisals and how they affect employees and organizations.

1. If the attributes being used in this method are not correctly defined, the data collected won’t be useful.
2. Sometimes biases can be an issue in this system.
3. Some objective factors can be vague and difficult to pin down. There are no known scientific methods to measure that.
4. Managers sometimes are not qualified enough to assess the abilities of the employees, thus being detrimental to the growth of an employee.

If you want to know how the skills and qualities people show at work and in life, explore behavioral competency.

How QuestionPro helps in performance appraisal?

QuestionPro is a powerful online survey and research platform that can assist organizations with performance appraisals in a variety of ways. Here are some of the advantages of using QuestionPro for performance appraisals:

• Customizable surveys

  QuestionPro gives organizations customizable survey templates that they can use to make their own performance review questionnaires. These templates are created by industry experts and are based on best practices, ensuring that the surveys are effective and efficient.

• 360-Degree feedback

  QuestionPro enables you to gather feedback from a variety of sources, such as peers, subordinates, supervisors, and customers. This type of 360-degree feedback can give a complete picture of an employee’s performance.

• Automated reminders

  QuestionPro provides automated reminders to employees to ensure they complete their appraisal surveys on time. This feature relieves the administrative burden on HR departments while also assisting organizations in meeting appraisal deadlines.

• Real-time reporting and analytics

  QuestionPro offers real-time reporting and analytics to assist organizations in understanding employee performance trends and identifying areas for improvement. These reports can be distributed to managers and employees in order to facilitate discussions and goal-setting.

• Integration with HR information systems (HRIS)

  QuestionPro integrates with a variety of HRIS systems, allowing businesses to automate the performance appraisal process and reduce administrative costs. This integration ensures that performance data is correct, up-to-date, and simple to manage.

Explore how a performance appraisal survey facilitates employee performance evaluation by gathering valuable insights from supervisors, colleagues, and self-assessments.

QuestionPro can be a useful tool for businesses looking to improve their performance appraisal process. It can help you collect more accurate and comprehensive feedback, save time, and streamline your HR processes. Try QuestionPro today to improve the performance appraisal process in your company!

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