Employee appraisal refers to the process or system companies use to assess how effective an employee is in their current role. Long story short, it is a mechanism used by companies to evaluate the job performance of an employee.
The appraisal uses criteria and is compared with predetermined and agreed targets.
Employee appraisal can take various types. It is a one-to-one appraisal. Or, it is a 360-degree appraisal by accommodating a judgment by a close person such as a colleague, boss, or client.
Employee appraisal tells how productive an employee is. Getting exemplary achievements should be maintained or increased. On the other hand, a bad score becomes the basis for improving in the future.
Employees who meet targets can receive higher salary increases, bonuses, or other financial rewards. And management will probably consider the best among them to be promoted.
The reasons for employee appraisals are important
Employee appraisal is important because it forms the basis for salary increases or bonuses. In addition, it also becomes an integral part of employee development programs where companies identify the bottlenecks in a particular job and determine the appropriate training.
In addition, employee appraisal is also important for:
- Identify areas for improvement.
- Identify people who deserve to be promoted.
- Examine organizational efficiency in recruiting and training.
- Motivate staff by discussing and recognizing their achievements.
Types of employee appraisal
Employee appraisal has different types and methods. For example, it is done through a questionnaire by asking employees to fill out a score sheet to rate themselves against a target.
Then, they discussed it with the boss for the final result. After the assessment, managers, and employees can identify and agree on training and development needs.
Employee appraisals can take the following types:
- Formative appraisal
- Summative appraisal
- 360-degree appraisal
- Peer appraisal
- One-to-one appraisal
The formative appraisal takes place at the beginning, middle, and end. It focuses on determining what is working well or not and why. Then, employees are expected to maintain what is good and improve what is not before the subsequent evaluation.
The evaluation aims to improve employee performance from time to time. The assessment results form the basis for employees to understand where they have done well and areas where they should improve.
A summative appraisal is carried out at the end of the year by summarizing employee performance against pre-agreed targets. It describes in writing the achievements and performance in a year.
The assessment aims to evaluate the employee’s contribution and performance, whether they have achieved the standards or benchmarks that have been determined and agreed upon beforehand.
Assessments usually also result in recommendations or new targets for employees in the coming year. It also comes with a defined accountability level. In addition, the evaluation may also provide advice about competency areas to be developed or improved.
A 360-degree appraisal evaluates performance by gathering feedback from managers, colleagues, customers, or even clients. Usually, eight to ten people complete a questionnaire describing an employee’s performance.
This assessment aims to provide complete information about how well an employee is performing. Feedback from the people with whom he interacted is an important input for evaluation. It becomes additional information besides evaluating their performance and technical skills.
While providing a more thorough picture, feedback is often based on opinion and subjectivity. Therefore, this assessment must be done with caution.
Self-appraisal requires employees to reflect on their performance and assess themselves against performance targets and goals agreed upon by their managers.
Before meeting with the manager, the employee will usually be asked to complete an evaluation form in person. The form is used as a basis for discussion during the annual performance review meeting with managers.
Employees and managers then discuss the results. Managers may agree and disagree on some points. And they will negotiate whether the self-assessment can be mutually agreed upon to determine the final evaluation.
Peer appraisal is slightly different from a 360-degree appraisal. Peer appraisal only involves appraisals by colleagues. So, it includes fewer people than in a 360-degree assessment, excluding managers or bosses.
The company will ask other employees in the same position to rate an employee. They will provide feedback on how well he is doing.
One-to-one appraisal evaluates the regular and formal employee performance by managers. It is usually done at least once a year.
Managers will review employee progress against their targets. Based on the final evaluation results, they will also set targets for the coming year.
In addition, during this assessment, managers may identify future training needs for employees and future career plans.
Essay appraisal evaluates in writing the employees’ performance, strengths, and weaknesses by superiors based on facts and supporting information. Also called the free-form method or traditional form of appraisal.
Rating appraisal system
Under this appraisal method, employees receive a rating for each aspect measured, which reflects their performance during the appraisal period. It may relate to their accomplishments, progress towards goals, and impact on co-workers.
Upward appraisal involves evaluating more senior employees by those who are more junior. It was similar to peer appraisal but involved a different level.
Reasons for poor employee performance
Several reasons explain why employees perform poorly; the following are:
- Low involvement in work, perhaps, in part, is a toxic work environment.
- Not knowing what the job is, for example, the company does not clearly specify the job description attached to a position.
- Insufficient knowledge or skills, for instance, because they are not supported by adequate training.
- Frustration over the barriers to their work, perhaps, due to heavy workload, which increases stress.
- Not seeing rewards such as salary increases, bonuses, or promotions so, there is no reason for employees to be more productive.
- Illness or other personal problems which prevent employees from working optimally using their knowledge and skills.
- Low motivation, perhaps, due to aspects of the job (workload or boredom) or finances (salary and bonus).
- Poor management, which, for example, impacts company policies, the work environment, and employee motivation.
Solutions to improve poor employee performance
Several ways to improve poor employee performance. Offering counseling services is an example.
Through counseling, management provides positive feedback to employees to improve their performance. It may involve:
- Help employees to better understand themselves.
- Develop effective solutions to work problems.
- Help employees see problems with a more positive view and a different perspective.
Another way to fix poor performance could be through:
- Provide training and development programs so employees have adequate knowledge and skills to do the job.
- Organize regular reviews to outline problems and find solutions together.
- Set realistic targets, which will ultimately make employees more motivated.
Pros and cons of employee appraisal
Employee appraisal provides several benefits. For example, it helps identify needs for training and development to improve performance or plan for a future career. Managers can identify them during appraisal or observation interviews.
Other benefits include:
- Motivate employees because it becomes an opportunity to recognize every good work
- Confirming target fulfillment by employees, which is then used as the basis for salary increases, bonuses, or promotions
- Come up with new ideas for business interests during discussions with employees
- Identify problems at the lower level which need to be fixed in the future
- Identify good practices to disseminate throughout the organization
- Increase employee engagement with managers because they have time to discuss professionally
However, employee appraisal also has cons. For example, subjective judgments result from poorly conducted interviews or poorly designed forms. It gets higher when managers tend to be tendentious in giving assessments.
In addition, negative assessments can lead to demotivated employees, mainly if managers assess them by assigning low scores to employees they don’t like and high marks for their people.
Some employees are also afraid of their weaknesses being exposed. Or they don’t like criticism from their manager. They may also feel stressed during the assessment.
Lastly, employee appraisals take time to conduct appraisals with all employees. It will be even longer if the company has a lot of employees.