The Purpose of Performance Appraisals

For most workplaces, performance reviews are used to establish and support skills training and career development, along with rate of pay, promotions, and workforce management.

Performance appraisals essentially have three functions:

  1. To provide feedback on individual performance
  2. To be a starting point for changing workplace behaviors
  3. To provide data to managers for future skill assessments and assignments
Generally, the performance review process includes setting clear and specific expectations for each employee and providing periodic feedback as it pertains to the established goals.

What employees are looking for in an appraisal is useful feedback. They want to understand how they can improve and earn higher ratings.

Performance Appraisal Methods

By choosing the right performance review method for your organization, you can make the whole experience effective and rewarding.

360-Degree Feedback
This appraisal method evaluates employees by using feedback from managers, peers, customers, the employee themselves, and any direct reports they may have. Through this type of appraisal, employees gain awareness of how they are performing and the impact they are having. It’s a great kick off point for starting self-development or a coaching, mentoring, or other career development activity.

Management by Objectives
This method is when the manager and employee work together to identify, plan, and communicate about objectives to be completed during a specific period (quarterly, yearly, etc.). These tend to be more tangible goals rather than gaining proficiency in soft skills. There are usually intermittent check-ins to measure achieving those set objectives that tie into the organization’s overall objectives. Success is measured by meeting those objectives in the period allotted.

This is perhaps the oldest system of appraising work/worth. It simply ranks all the employees on a team, in a group, or in the company from highest to lowest in order of performance. Essentially each employee is compared with every other employee on one trait. The downside is that measuring the differences between employees is difficult, and some employees might excel in an area that is a challenge area for another

Forced Distribution
The ratings of employees fall along a bell curve. Managers and supervisor allocate a percentage of the ratings within the group to each performance level on the scale. However, the actual distribution may not fall in the shape of a bell, forcing leaders to push some employees to either side that would actually fall within the middle.

Graphic Rating Scales
Perhaps the most used type of performance appraisal, graphic ratings list several factors (attendance, quality of work, etc.) that a supervisor rates an employee on. The rating usually falls in a scale such as unsatisfactory, fair, good, great, and allows the rater to determine performance of an employee along a scale.

Behavior Ratings
Behaviorally-anchored rating scales focus on employee behavior rather than specific characteristics. Specific behaviors represent degrees of performance and are used as reference points. This type of appraisal is expensive because it’s based on extensive analysis and the collection of data for each role at a company.

Setting Strong Goals for Employees

Goal setting is a vital part of the appraisal process. They’re the criteria that an employee will be evaluated against, and they usually align with the overall organizational and team-specific goals.

Common types of goals include:

  • Job specific – These are based on pre-established job duties that are laid out in the job description. They should be met continuously until the job description or job role changes.
  • Project – These goals are often set on a project basis, and last the duration of the project.
  • Stretch – These types of goals are generally a little harder to achieve and are usually used to expand the knowledge, skills, and abilities of high-potential employees.
Goals should also be developed with a SMART mentality, meaning they need to be specific, measurable, attainable, relevant, and time-bound.

Specific goals should answer the 5 “W” questions – who, what, where, which, and why – so that employees don’t lose focus or motivation.

Measurable goals help track the progress of an employee in meeting the goal and helps the employee stay focused to meet deadlines and remain excited about achieving the goal.

Achievable goals are realistic and attainable because they need to be met and are not stretch goals.

Relevant goals align with other goals within in the organization and help drive employees forward in their jobs.

Time-bound goals give a deadline to focus on and something to work toward.

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Performance Appraisals (Part 7 of 8): Conducting the Appraisal