Performance appraisal

Definition

The term “performance appraisal” refers to the regular review of an employee’s job performance and overall contribution to a company.

Purpose 

Companies use performance appraisals to give employees big-picture feedback on their work and to justify pay increases and bonuses, as well as termination decisions. Performance appraisals are usually designed by human resources (HR) departments as a way for employees to develop in their careers. They provide individuals with feedback on their job performance, ensuring that employees are managing and meeting the goals expected of them and giving them guidance on how to reach those goals if they fall short.

  Performance appraisals also help employees and their managers create a plan for employee development through additional training and increased responsibilities, as well as to identify ways that the employee can improve and move forward in their career.

Period 

They can be conducted at any given time but tend to be annual, semiannual, or quarterly.

Types

An organisation can use a wide variety of methods for conducting performance appraisals, depending on the nature of its business, the industry it operates in, the scale of its operations and the specific duties and responsibilities of its employees. These are some common types of appraisals:

1. Negotiated appraisal

Negotiated appraisals involve the use of a mediator during employee evaluation. Before offering any criticisms, the reviewer highlights what the employee is doing well. This type of evaluation is beneficial in situations where there is tension or disagreement between the employee and the manager.

2. Management by objective

Management by objective (MBO) is an appraisal method that involves both the manager and employee working together to identify goals for the employee. Following the establishment of a goal, both parties discuss the employee's progress towards achieving the said goals. When the review period is over, the manager assesses whether the employee met their goals and, in some cases, provides incentives for doing so.

3. Assessment centre

The assessment centre method allows employees to understand how others perceive them. This helps them understand the impact of their performance. Pre-assessment, assessment and post-assessment are the three stages involved in the assessment centre method. During the evaluation, the manager puts the person in role-play scenarios and exercises to see how successful they are in their current role.

4. Self-appraisal

A self-appraisal is when an employee reflects on their own performance. They can identify their strengths and weaknesses using this method. They can also highlight their achievements with the company, such as completing a large number of sales in a particular month. This type of appraisal usually entails filling out a form, and the manager may choose to follow up with a one-on-one meeting based on the written self-assessment.

5. Peer reviews

Peer reviews use coworkers as the evaluator for a particular employee. This type of performance evaluation can help determine whether a person works well in a team and contributes to their fair share of the workload. The employee who reviews the individual is usually someone who works closely with them and is familiar with their abilities and attitude.

6. Customer or client reviews

Customer or client reviews occur when those who use a company's product or service provide an evaluation. This gives the company insight into how others perceive the employee and their company. This type of evaluation can aid in improving employee performance and customer interactions.

7. Behaviourally anchored rating scale

Behaviourally anchored rating scale (BARS) appraisals measure an employee's performance by comparing it to specific behavioural examples. Businesses assign a score to each example to aid in collecting qualitative and quantitative data. This data helps managers evaluate an employee's performance against predetermined standards for their position.

8. Human resource accounting

The human resource accounting method or cost accounting method looks at the monetary value an employee brings to a company. It also considers how much it costs the company to keep the employee on the payroll. Service value and interpersonal relationships are two factors that this type of appraisal considers and lays emphasis on.