Effective Performance Appraisal

                               Source: https://www.publichealthnotes.com/performance-appraisal-its-process-and-types/

"Performance appraisal is evaluating an employee’s current and/or past performance relative to his or her performance standard."

– Gary Dessler

What is Performance Appraisal?

An individual's work performance is evaluated systematically and on a regular basis in relation to the specified job requirements. It's a judgment of the employee's relative value to the company, skills and limitations, and potential for further development. Performance reviews, evaluations, development conversations, and employee assessments are other names for performance reviews.

How Performance Appraisals Work?

Performance evaluations are often developed by human resources (HR) departments as a tool for workers to grow in their careers. They provide feedback on how well employees are performing their duties, making sure they are managing and reaching the goals set for them and helping them if they fall short. The distribution of a company's limited budget for incentives, such as increases and bonuses, is helped by performance evaluations. Additionally, they give companies a way to identify the staff members who have contributed the most to their growth so that they can properly reward their top contributors. Performance evaluations help employees and their supervisors pinpoint opportunities for development and professional growth as well as create a plan for the employee's promotion through more training and greater responsibilities.

The Methods of Performance Appraisals

Organizations can improve employee performance within the company by using the appropriate performance appraisal methodology. Effective and gratifying employee performance reviews can be achieved with the right methodology.

1. Management by Objectives (MBO)

Management by Objectives (MBO) is an appraisal technique in which managers and staff jointly decide what goals should be prioritized during a certain appraisal period and then plan, organize, and communicate those goals. Following the establishment of specific goals, managers, and subordinates regularly discuss the steps taken to maintain control and debate whether it is possible to accomplish the goals.

The SMART approach is used to validate objectives to determine whether they are specific, measurable, attainable, realistic, and time-sensitive. This performance appraisal method is intended to efficiently connect organizational overarching goals with employee objectives.

Employees are evaluated based on their performance at the conclusion of the review period (quarterly, half-yearly, or annual). While failure results in a transfer or additional training, success is recognized with a promotion and a pay raise. The emphasis in this approach is typically placed more on measurable objectives, while non-tangible factors like commitment and interpersonal skills are frequently ignored.

2. Assessment Centre Method

The German Army first introduced the idea of an evaluation center back in 1930, but it has since been refined and adjusted to match the circumstances of the present. Employees may clearly see how others perceive them and how it affects their performance using the assessment center method. The key benefit of this approach is that it not only evaluates an individual's current performance but also forecasts future work performance.

Employees are required to participate in social-simulation activities such as in-basket exercises, casual chats, fact-finding activities, decision-making difficulties, role-playing, and other activities that ensure success in a role during the evaluation. This method's main flaw is that it is a time- and money-consuming procedure that is challenging to manage.

3. Psychological Appraisals

Psychological evaluations are useful for identifying employees' untapped potential. This approach focuses more on evaluating an employee's potential performance than on reviewing their prior work. These evaluations are used to assess an employee's performance in seven key areas, including interpersonal, cognitive, intellectual, leadership, personality, emotional intelligence, and other associated skills.

To accurately evaluate an employee, qualified psychologists use a range of tests (in-depth interviews, psychological exams, talks, and more). However, it is a lengthy and difficult process, and the effectiveness of the results is greatly influenced by the psychologist performing the procedure.

When performing psychological assessments, specific scenarios are taken into consideration. For instance, an employee's response to a combative customer can be used to evaluate that employee's persuasion abilities, behavioral response, emotional response, and more.

4. Ranking Method

The rating process involves the rater assigning a performance score to each of his subordinates. Simply placing a man in a rank order constitutes this. This method compares an individual's ranking within a work group against that of another employee. Each employee's standing in relation to others is evaluated using his numerical rank. It can also be done by comparing a person's job performance to that of another competitor in the group.

Benefit for organization

Employee evaluations can influence an organization's performance. They give organizations knowledge on how workers are contributing and allow them to:

✅ Determine how management may enhance working circumstances to boost output and the caliber of the work produced.

✅ Before they have an impact on departmental production, deal with behavioral difficulties.

✅ Recognizing employees' abilities will motivate them to give more.

✅ Encourage the professional and skill development of staff

✅ Enhance strategic decision-making when internal hiring, succession planning, or layoffs are necessary.

Benefit for employee

Performance reviews should benefit the employees who get them. The knowledge gathered through evaluating and talking about an employee's performance can:

✅ Recognize and thank an employee for their accomplishments and contributions.

✅ Recognize the chance for a bonus or promotion.

✅ Determine and advocate for the need for more education or training to advance your profession.

✅ Find out what areas of your talents need improvement.

✅ Encourage a worker and make them feel invested in and involved in their professional progress.

✅ Discuss an employee's long-term objectives openly.

Conclusion 

In conclusion, employee performance reviews are an important procedure that gives both the employer and the employee a chance to evaluate the employee's performance and pinpoint areas that need improvement. It aids in increasing job satisfaction, coordinating employee goals with corporate objectives, and providing a fair and impartial assessment of an employee's efforts. However, fairness, consistency, and transparency are necessary for this process to be successful. Additionally, employers need to make sure that the appraisal procedure is ongoing and that their staff members receive regular coaching and feedback. Employers can accomplish this by fostering a culture of continual improvement that benefits the whole company in addition to enhancing employee performance.

Reference Sources

Bajracharya, S. (2018) Performance Appraisal Methods - Businesstopia, Businesstopia. Available at: https://www.businesstopia.net/human-resource/performance-appraisal-methods (Accessed: April 24, 2023).

J, A. (2020) What is Performance Appraisal? definition and methods - The Investors Book, The Investors Book. Available at: https://theinvestorsbook.com/performance-appraisal.html(Accessed: April 24, 2023).

ADAM HAYES (2022) Performance Appraisals in the Workplace: Use, Types, Criticisms, Investopedia. Available at: https://www.investopedia.com/what-is-a-performance-appraisal-4586834 (Accessed: April 5, 2023).

Patricia Guevara (2023) Importance of Performance Appraisal | SafetyCulture, SafetyCulture. Available at: https://safetyculture.com/topics/how-to-conduct-an-effective-performance-appraisal/importance-of-performance-appraisal/ (Accessed: April 23, 2023).