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What’s it: Employee appraisal refers to a program to assess employee performance. It assesses how effective an employee is in their current role in relation to pre-set criteria and targets. Also known as performance appraisal, performance review, or performance evaluation.
There are several methods to run this program. Certain methods involve direct appraisal from superiors to subordinates. Others may involve colleagues at the same level or several parties such as superiors, subordinates, coworkers, and possibly customers.
Why is employee appraisal important?
Employee appraisal is an important human resource management program. It can significantly impact your employee’s morale and engagement when executed effectively.
Through it, your company can evaluate how well employees carry out their duties and jobs according to the job description. For example, did they achieve the set target or not? Then, you can take appropriate action.
Your company can use the results to determine salary increases and bonuses. In addition, you might also use it to set promotions to prepare high performers for higher positions.
Performance-based promotion is important. On the one hand, for employees, it boosts their morale. And, on the other hand, your company ensures the position is filled by a competent person. By running an appraisal program, your company can evaluate how well employees perform and how qualified they are in their abilities and skills.
Then, employee appraisal is also vital to evaluate and identify strengths and weaknesses in human resources in your company. Through it, your company can also identify possible obstacles in each job. So, you can use the results to take appropriate action. For example, you might re-evaluate existing training, development, and motivational programs to develop new ones more appropriately.
What are the types of employee appraisals?
Several alternatives are available to evaluate employee performance. It may involve managers evaluating subordinates or vice versa. Meanwhile, other methods may require the closest individuals to give an appraisal. Here are the types:
- Traditional appraisal
- Rating appraisal system
- Peer appraisal
- Upward appraisal
- Self-appraisal
- 360-degree appraisal
- Formative appraisal
- Summative appraisal
Traditional appraisal
Superiors evaluate their subordinates’ performance, taking place at least once a year. This method is also known as essay appraisal, free form method, or one-to-one appraisal.
Superiors collect information and supporting facts to assess their subordinates’ performance. For example, they evaluate the subordinates’ ability to perform tasks according to the job description and their progress towards their targets. In addition, they may also evaluate the strengths and weaknesses of each subordinate to identify their training needs and future career plans.
Rating appraisal system
Employees get a rating for each aspect assessed. It may be related to performance and progress in achieving predetermined targets. In addition, their impact on coworkers is probably another assessed aspect. The rating reflects their performance during the assessment period.
Peer appraisal
Coworkers in the same division or team appraise an employee’s performance. They have the same position. Assessors exclude supervisors or managers. This assessment method is important to improve performance and provide constructive feedback. Also called peer-to-peer appraisal.
Upward appraisal
Similar to peer appraisal but involves a different level, where junior staff appraises more senior staff. Or it’s staff against its managers.
This method is important for providing feedback and revealing how effectively the managers carry out their duties. This is because the staff is considered to understand the superiors’ behavior and performance in detail. Thus, companies can use the results as input in management evaluation and development.
Self-appraisal
This method encourages employees to take responsibility and objectively assess how well they are doing their job. First, they filled out an evaluation form and highlighted the achievements related to the given task, job, or target. Then, they submit it to superiors for review and discussion for final evaluation.
360-degree appraisal
This method involves feedback and opinions from the closest parties to evaluate employee performance, other than oneself. It may involve managers, coworkers, subordinates, or even customers. They get several identical questions. Their answers are then used to evaluate the employee.
Although time-consuming, this appraisal allows for a comprehensive perspective. In addition, the feedback is useful for identifying future training needs.
Formative appraisal
It combines formal and informal appraisal methods to monitor employee progress and provide them with support and guidance for improvement. It monitors employee performance in detail and provides continuous feedback to them.
Summative appraisal
It evaluates employee performance by comparing it to pre-agreed standards or benchmarks. Assessment results are usually used to determine salary increases, annual bonuses, or promotion opportunities.
What are the benefits of employee appraisal?
Motivating. The appraisal program is a means for companies to recognize employees performing well and reward them through salary increases, bonuses, or promotions. In addition, it becomes a way to encourage and motivate those who do not perform well to improve themselves to get the award.
Training needs. By evaluating employees in each position, your company can identify the weaknesses and strengths of each employee and take corrective action. For example, it requires your company to design a suitable training and development program. By doing so, your company can improve employee performance and direct them to higher work standards.
Clear direction. Your company sets targets for each position. These targets serve as a guide and provide employees with clear goals on what they need to achieve. Then, you evaluate whether the employee achieved the target or not. Setting targets and evaluating performance are ways to ensure your employees stay motivated by goals.
Benchmarking. Your company doesn’t always have to take industry best practices as benchmarks. You can also start from within. You identify best practices from top performers and share them across the organization. It is a way to achieve continuous improvement by adopting best practices within your company.
Trust. Through employee appraisals, you improve the professional relationship between superiors and subordinates. They have time to discuss the assessment and various internal problems to find a solution. It increases the trust between them.
What are the costs of employee appraisal?
Running an assessment program for all employees can be time-consuming. Hence, it may only be once a year or every quarter in some companies.
In addition, bad office politics can make this moment bring down people they don’t like. Thus, it can be less objective and fair, leading to disappointment and disharmony among your employees.
Finally indeed, appraisals and compensation packages can motivate your employees. Those who excel are rewarded equally. Meanwhile, those who perform poorly are motivated to improve their performance to get the prize.
But, often, some employees may lose motivation after getting negative results. And their morale gets worse if it’s due to personal problems between them and the boss rather than from an objective performance appraisal.
