Employees are the cornerstone of every company. Managing and directing employees is a key factor in determining the success or failure of the business. For that reason, every manager understands the importance of measuring their employees’ performance and making sure that they are performing in accordance with the pre-set standards. With this in mind, managers apply performance appraisal techniques in order to examine their employees’ capabilities.
Performance appraisal is the systematic evaluation and review of employees’ performance. It uses objective methods to measure their total contributions in achieving the organization’s goals. The results are then compared to pre-set expectations and goals. In this article, we will be examining the following:
- Performance appraisal techniques
- Benefits of performance appraisals
- How to implement the Performance appraisal
- Download Free Performance Appraisal Template
- Limitations of implementing performance appraisals
Coming up with a 100% reliable and objective performance appraisal method is no easy task. On that account, psychologists and HR experts have been trying to design different techniques to measure and evaluate employees’ performance.
The most popular and commonly used method of employees’ evaluation. Standard evaluation or standard appraisal is based on using “standard rating scale” where every employee is compared to a set of standards or expectations then graded based on their performance to a rating usually from 1 to 5. The appraisal is conducted through holding interviews or directly observing employees while performing their tasks.
Contrary to the popular opinion that employees overrate themselves, most modern research suggests that employees are very aware of what they can and cannot do. They are more likely to be harsh on themselves in these evaluations as to not be perceived as arrogant etc. Moreover, self-assessments give you better insights into how the employees perceive their work and their daily tasks. Plus, employees are less likely to dispute over the appraisal results with their managers. Self-assessments also play an important role in motivation as they provide employees’ with a sense of significance and trust.
Many managers prefer conducting 360-degree appraisals, which involve self-assessment, peer-evaluations, supervisors, and subordinates evaluations. The 360-degree appraisal is one of the most valid and reliable measures of performance. In addition, it does not just measure employees’ perceived performance in the organization, but also their relationships with other people.
Personal and career development
Performance appraisal measures employees’ performance, allowing them to identify their points of strengths and weaknesses. This helps in employees’ personal growth, as they will try to overcome their weaknesses and enhance their strengths. This will result in improving their performance and gaining new skills and experience.
Another way to utilize performance appraisals is by examining previous results to understand how the company is currently performing. This can help managers determine future organizational goals and objectives. It can also help in assigning and reallocating employees to the most suitable positions based on their abilities and skills.
Performance appraisals leave a positive impact on motivation through identifying hard-working and high performing employees and reward them on their effort. This job recognition gives a sense of appreciation and significance to employees. Similarly, identifying high performers would also allow the company to efficiently allocate the promotions, bonuses, awards, and raises to those who truly deserve it. In addition, performance appraisal is a key feedback and communication tool. Upon collecting performance results, companies would be able to provide a sense of direction to those who need guidance. It will also allow employees to communicate their issues and difficulties in their daily tasks, which would help to improve their motivation.
Companies can use data obtained from appraisals to design training programs that are well suited for each employee’s needs. This will result in improving employees’ skills and increasing their chances to get promoted in the company. Performance appraisals can also be used to determine the effectiveness of the training by measuring employees’ performance and comparing results before and after implementing the program.
- First: determine the organizational objectives and performance expectations from your employees.
- Second: these objectives and expectations must be communicated throughout the organization and agreed upon by the employees.
- Third: design a valid and reliable appraisal program that objectively measures and evaluates employees’ performance.
- Fourth: implement the appraisal program.
- Fifth: analyze the results and communicate them to your employees. You should also listen to their feedback and make any necessary changes to future appraisals.
How to use the performance appraisal on excel
We divided the performance appraisal into two main sections. The first one measures the main skills and attributes that we believe essential to have for all employees in most positions. The second part contains customizable cells in which the evaluator can add the main tasks of the relevant position to be evaluated.
The third column is where the evaluator gives a score that ranges from 1 to 5, depending on the provided rating guideline. The meaning of these grades can be seen in the fourth column ranging from unsatisfactory to exceptional. The fifth column is for any comments or notes the evaluator wishes to add. The sixth column indicates whether the employee needs training in the respective skill or task based on their score. Finally, the last row contains the overall results which can be used to compare employees’ performance with each other
Validity and reliability
Validity is defined as whether the evaluation tool is measuring what it is supposed and meant to measure accurately. Reliability is defined as whether the evaluation tool provides consistent results every time. It is impossible to find an evaluation tool that is 100% valid and reliable. So, there is always a percentage of uncertainty and errors in the appraisal results.
Because it is difficult to come up with a 100% valid and reliable tool, potential biases when conducting the appraisal are likely to exist. For instance, although 360-degree assessment is very reliable and useful for the business, supervisors might be either too lenient or too harsh while evaluating their subordinates. Similarly, employees might over or underrate their supervisors depending on their relationship with them.
Setting goals that are impossible to accomplish can lead to general dissatisfaction when they are not met. Consider a manager setting a 100-unit of sales every day even though the current market capacity only allows for 50 units. No matter how hard employees try to meet this goal, they will not succeed. Though it is not their fault, employees will be considered underperforming due to their inability to attain the goal.