Performance Appraisal

Decisions regarding promotions, bonuses, and ongoing training depend heavily on performance evaluations. For many companies, performance appraisals are seen as a necessary evil, often done and tossed aside and never brought up again. However, performance appraisals provide countless benefits to ensure that your employees stay productive and engaged if they are fully utilized.

The concept of performance evaluation

Performance appraisal is a regularly scheduled, formal process to evaluate an employee's overall performance and contribution to the company with the goal of improving that performance. It can also be referred to as performance review or employee appraisal.

These evaluations provide formal and appropriate reviews to evaluate job performance, which helps in distributing increases and rewards among employees. Usually, this happens once or twice a year, and is done at the beginning of the year or around the middle of the year. This process is carried out by holding formal meetings in which the direct manager or supervisor evaluates performance in relation to the main tasks and responsibilities assigned to the employee.

HR is usually responsible for determining the performance appraisal mechanism, which is then implemented by managers. Active participation of employees in performance appraisals leads to further improvements at work, and this is the first purpose of conducting performance appraisals.

What is the difference between Performance Management and Performance Appraisals?

Performance management includes all interactions between employees and supervisors that will help improve performance. In contrast, performance appraisals are just one part of the performance management cycle.

The purpose of performance evaluations 

As mentioned earlier, the main purpose of performance appraisals is to continually improve company performance and workplace culture. This includes a set of objectives:

• Determine how each employee can improve in their role Employees may need additional skills to do their job better, which they can gain through targeted training. In certain cases it may be necessary to update the tools or software used to perform the work. Performance evaluation helps identify and document these needs.

• Identify strengths and opportunities for improvement within departments and the company. What do departments lack? For example, do they need additional staff, more equipment, or a larger budget to reach the optimal level of performance?

• Determine the best way to allocate rewards, promotions, and resources Performance evaluations help you know which employees are most deserving of bonuses and promotions. Furthermore, analyzing performance appraisals tells you which employees and departments will benefit from available resources.

• Documenting employee performance Promotion, disciplinary actions and termination decisions are never easy, so formal performance evaluations provide documentation for objective and defensible future decision-making based on pre-determined criteria.
• Having the tools to set future performance goals – The goals and benchmarks your company is achieving now are a good indicator of the goals that should be set in the future.

The importance of performance evaluation

Achieving the desired goals behind performance evaluations gives companies the infrastructure for growth and expansion. The importance of performance evaluations in their impact on the organization can be known through a number of aspects, including:

• Facilitating employee growth and advancement
• Enhance employee engagement and retention
• Bridging skills gaps and enhancing organizational performance
• Improve communication 
• Create a sense of responsibility 
• Make fair and transparent decisions

Methods of conducting performance evaluations

There are many approaches to performance appraisal that you can take, but there are a number of factors that determine the most appropriate method for conducting performance appraisals, such as company size, goals, and organizational culture. Let's take a look at five of the most common performance evaluation methods:

1. Management by Objectives (MBO)

Managers and employees work together to set goals and objectives, periodically discussing tangible progress on goals and identifying areas where the employee needs improvement.

2- Evaluation in a 360 degree manner 

This comprehensive method includes all ratings and opinions from co-workers, managers, suppliers, and even customers. All of this ultimately results in a body of information that managers use to evaluate employee performance against. 

3- Peer review 

The peer review method relies on the opinions of coworkers to measure performance. Team members who work closely with the employee and know his strengths and weaknesses usually provide a range of opinions and impressions.

4- Behavior Related Rating Scale (BARS) 

The Behavior Related Rating Scale (BARS) method uses a pre-defined set of performance criteria and behaviors that describe each level of performance. The employee's performance is then rated based on these criteria and behaviors. 

5- Scale chart 

TThe performance evaluation scale method uses a list of desirable attributes for the employee in any role he assumes, and then the evaluation process is carried out according to each attribute. Examples of these attributes include: teamwork, time management, responsibility, and work skills.

Five tips for a good performance appraisal process

Since no two companies are the same, it is natural that each company will have a different way of conducting performance evaluations that suits each one's circumstances and situation. However, there are a set of useful practices that every HR department should follow to conduct effective performance appraisals such as:

1. Create a clear outline for performance appraisal meetings
2. Involve employees in performance appraisals as much as possible
3. Encouraging managers to adopt their own style of communication.
4. Make sure to provide the greatest possible amount of opinions and impressions to enhance performance.
5. Thoroughly document performance appraisal sessions

Conclusion 

Performance appraisals are more than just formalities, because they provide valuable information about an employee's performance that allows decision makers to decide how to allocate resources, rewards, raises, and promotions. This information is also necessary to understand which aspects of the company are working well and which areas need improvement.

Therefore, human resources departments must create and design comprehensive performance evaluation processes that allow companies to make optimal use of the information obtained, because this helps companies facilitate employee development, make better decisions, and ultimately enhance organizational performance.

Source

https://www.aihr.com/blog/performance-appraisal/