Performance appraisals are employee reviews used by organizations to assess the performance of employees. Performance appraisals are the best ways to ascertain an employee’s strengths and areas for development. With an in-depth understanding of the merits and demerits of performance appraisal, organizations can figure out whether they would like to implement it in their system.
This article will help you better understand the definition of performance appraisal, types of performance appraisal, how they are conducted, their advantages and disadvantages and the best type of performance appraisal an organization can opt for.
Performance Appraisal Meaning
Performance appraisal means a time-to-time review of employees’ job performance and assesses their contribution to the organization. It evaluates employees’ skills, accomplishments, growth, and weaknesses. Performance appraisal is alternatively known by various terms such as annual, evaluation, performance review, or employee appraisal.
Organizations utilize performance appraisals to share broad-level feedback for their work and justify the increment in pay and bonuses or terminal decisions. Although performance appraisals can be conducted any time of the year, they are majorly conducted on an annual, semi-annual, or quarterly basis.
Methods Or Types Of Performance Appraisal
In this section, we will be shedding light on the types of performance appraisal as it is essential both for employees and managers to know about these types so that the performance of the employees can be evaluated adequately and they can be rewarded accordingly.
The different types of performance appraisal are:
The 360-degree appraisal is considered one of the best types of performance appraisal. It includes seeking feedback from different individuals who are in touch with every employee and involves a well rounded approach for assessing the employee. These individuals can be fellow colleagues, customers or clients and the employee himself. This type of appraisal helps managers to get an overall picture of employees’ performance and also helps employees to understand their true potential and work on their weaknesses. In fact, one of the reports by Forbes suggests that more than 85% of the Fortune 500 companies deploy a 360-degree performance appraisal method. Therefore, this method can be used by organizations looking to assess the overall performance of their employees.
Trait And Behavior-Based Appraisal
Trait and behavior-based appraisals help employers to evaluate the characteristics that contribute to an employee’s overall personality, such as confidence, creativity, ability to work collectively with other team members and extroversion. For instance, it can be as simple as how a customer support executive speaks or behaves with a customer. However, one of the setbacks of this type of performance appraisal is that it is highly subjective and certain character traits are relatively more obvious than others, which makes assessors ignore certain behavioral characteristics that are equally important.
Employee Self Appraisal
Self appraisal refers to the performance appraisal where employees reflect upon their personal performance. Here, they primarily determine their strengths and weaknesses. Furthermore, they recount their accomplishments while working in the organization, such as completing a project before the given deadline. In this type of appraisal, usually both employees and managers fill in a form which is later compared and reviewed by the manager and the differences and feedback are shared through an online meeting.
In this type of performance appraisal, coworkers are considered as evaluators for a specific employee. This helps to understand whether that particular employee is working adequately with the team and is contributing the expected share of work. Generally the individuals assessing the employee are the ones who work closely with that employee and are well aware of their skills, abilities and behavior.
Project Evaluation Review
This performance appraisal method involves assessing an employee’s performance upon completion of a project. Unlike other yearly or quarterly appraisals, this evaluation takes place as soon as the employee is done working on a project. This plays an important role in helping the team members grow with every project.
Management By Objective
Management by Objective or MBO is a type of appraisal which involves both manager and employee working collectively on the goals that the employee should achieve. Upon finalizing the goals, both individuals have a discussion on how the employee needs to progress to fulfill the set goals. As the review time comes to an end, the manager assesses whether the employee was able to meet the objectives and sometimes offers suggestions or incentives based on the performance.
It is a different type of performance appraisal, and wherein a mediator is involved at the time of performance evaluation. During the first phase of this process, the manager discusses the things that are done adequately by the employee before sharing any negative comment, and in the second phase, discusses the shortcomings of the employee, which is followed by the intervention of the mediator if any disagreement occurs between the employee and manager about the performance.
Performance appraisals are highly essential for any organization to work stably and maintain a healthy work environment. This is due to the fact that performance appraisals help organizations to track and evaluate the performance of their employees and award them accordingly. Furthermore, it helps employees to understand their true potential, know their strengths and shortcomings and perform better to get rewarded for the efforts they put in a project or assigned tasks. Keeping in mind the importance of performance appraisal, organizations must take the appropriate steps to choose the right type of performance appraisal so that both the company and the employee can benefit from it.