Decisions on promotions, bonuses and ongoing training are largely based on performance evaluations. For many companies, performance evaluations are perceived as a necessary evil, as it has traditionally been done and thrown aside without returning to them again. However, performance evaluations provide countless benefits to ensure that your employees ' productivity and engagement are maintained if they are taken full advantage of.

The concept of performance appraisal

Performance appraisal is a regularly scheduled formal process of assessing the overall performance of an employee and his contribution to the company with the aim of improving this performance. It can also be referred to as a performance review or employee evaluation.

These evaluations provide reviews of a formal and appropriate nature to assess job performance, which helps to distribute increases and bonuses among employees. Usually, this happens once or twice a year, and this is done at the beginning of the year or approximately in the middle of the year. This process is carried out through the establishment of formal meetings at which the immediate manager or supervisor evaluates the performance in relation to the main tasks and responsibilities assigned to the employee.

HR is usually responsible for determining the mechanism for evaluating performance, which is then carried out by managers. The active participation of employees in performance evaluations leads to further improvements in the work and this is the first purpose of conducting performance evaluations.

What is the difference between performance management performance management and performance evaluations performance Appraisals

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

The purpose of performance evaluations 

As mentioned earlier, the main purpose of performance evaluations is the continuous improvement of the company's performance and workplace culture. This includes a set of objectives, namely:

• Identify how each employee can improve their role – Employees may need additional skills to better perform their job, which they can acquire through targeted training. And in certain cases it may be necessary to update the tools or programs used to perform the work. Performance evaluation helps in identifying and documenting these needs.

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

• Determine the best way to allocate bonuses, promotions and resources – Performance evaluations help you find out which employees are most deserving of bonuses and promotions. Moreover, the analysis of performance evaluations tells you which employees and departments will benefit from the available resources.

• Documenting Employee Performance - Promotion, disciplinary procedures and termination decisions are not easy at all, and therefore official performance evaluations provide documents for making objective and defensible future decisions based on predetermined criteria.
• Have the necessary tools to set future performance goals - The goals and standards that your company is achieving now are a good indicator of the goals that need to be set in the future.

The importance of performance evaluation

Achieving the desired goals behind performance evaluations gives companies the infrastructure to grow and expand. The importance of performance evaluations in their impact on the organization can be seen through a number of aspects, including:

• Facilitating employee growth and advancement
• Enhance employee engagement and retention
• Closing skills gaps and enhancing organizational performance
• Improve communication 
• Creating a sense of responsibility 
• Making fair and transparent decisions

Methods of conducting performance evaluations

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

1. Management by goals (MBO)

Managers and employees work together to set goals and objectives, so that they periodically discuss tangible progress at the level of goals and identify areas where the employee needs improvement.

٢-evaluation in a 360-degree way 

This holistic method includes all assessments and opinions from co-workers, managers, suppliers and even customers. All of which ultimately results in a set of information that managers use to evaluate employee performance based on. 

٣-peer review Peer review 

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

٤-behavior-related rating scale (BARS) 

The behavior-related rating scale (BARS) method uses a predefined set of performance criteria and behaviors that describe each level of performance. The employee's performance is then ranked based on these criteria and behaviors. 

٥-graph scale 

TThe graph-scale method of performance evaluation will serve a list of desirable traits that an employee has in any role he performs, and then the evaluation process is carried out according to each trait, examples of these traits are: 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 has a different way of conducting performance evaluations that suits the circumstances and situation of each one of them. However, there are a set of useful practices that every HR department should follow to conduct effective performance evaluations such as:

1. Create a clear outline for performance appraisal meetings
2. Involve employees in performance evaluations as much as possible
3. Encourage managers to adopt their own style of communication.
4. Make sure to provide as many opinions and impressions as possible to enhance performance.
5. Thoroughly document performance appraisal Sessions

Conclusion 

Performance evaluations are more than just a formality, because they provide valuable information about employee performance that allows decision makers to determine how resources, bonuses, raises and promotions will be allocated. This information is also essential to understand which aspects are working well within the company and which ones need to be improved.

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

Source

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