Appraisal of Employees — Super Business Manager

Appraisal of employees is the process of assessing the effectiveness of an employee judged against pre-set objectives. It is the analysis of employee performance against pre-set and agreed targets as well as contribution of worker to the business.

Appraisal of employees is combined with the setting of new targets allows the future performance of the worker to be linked to the objectives of the business.

Both appraisal of employees and staff development are important features of motivating workforce, mainly intrinsic factors that can provide the conditions for effective motivation at work.

What is appraisal of employees?

Appraisal of employees is the formal assessment of an employee’s performance in fulfilling the job. The report is based on the tasks and responsibilities set out in their job description – actual performance is compared against pre-determined goals.

Appraisal of employees is usually carried out at regular intervals. It is quite common for appraisals to be conducted annually or quarterly, although interim meetings often take place. It is usually in a form of a one-on-one discussion between the appraiser and appraisee to review previous year’s performance and set next year’s objectives.

The appraisal process may require the completion of an appraisal form (sometimes conducted through a questionnaire) by both parties which is then followed up with a formal interview. The appraiser may be the employee’s line manager, a more senior member of staff or employer.

Appraisal of employees intends to provide an opportunity for employees to discuss any concerns they may have in an informal environment. However, some employees might feel stressed that they are being judged which can worsen working relationship with the appraiser. So, it is important to make the employee feel that he is on trial.

The result of appraisal may highlight any required training needs, determine whether an employee will receive a bonus, be moved up the pay scale or potential for promotion.

Reasons for appraisal of employees

Appraisal of employees is a part of regular performance management. This is the continuous process which involves planning, reviewing and mentoring of employees in order to improve their performance at work. In order to assess each and every employee, managers will use a range of data, information, meetings and interviews.

Appraisal of employees is an essential component of an overall staff-development program. Major uses of performance appraisals include the following aspects:

Provide feedback. It records and assesses an employee’s past performance in line with the job description and established targets. Also, it provides both an opportunity to praise employees for their good work as well as assist staff in reflecting on their performance at work. Finally, it can be used a basis for terminating workers when performance is poor.
Identify appropriate training. It can help to identify any barriers hindering the performance of an employee. Then, based on this knowledge, the business can determine future training needs of the worker such as additional training courses to learn new skills as well as discuss employee career planning.
Improve employee performance. Future development of the worker might take place in the form of new challenges and opportunities, promotion with additional delegated authority and chances for job enrichment. This will enable a worker to continually achieve a sense of self-fulfillment.
Set new objectives. The HR department will work closely with the worker’s functional department to set new targets and goals for next year as well as help employees to plan their careers. A career plan that the individual feels is relevant and realistic will be established that can lead to future pay rise or promotion.

Additionally, it can be used to evaluate the recruitment process itself and judge effectiveness of the induction process.

Steps in appraisal of employees

Whichever type of employee appraisal is used, a typical employee appraisal usually includes the five following steps:

The performance of an employee is recorded over the past year using reports and staff records.
The rating system is used to judge the performance of the appraisee rating the performance from unsatisfactory to outstanding.
A formal and structured appraisal meeting is scheduled to allow the appraisee reflect on personal performance.
Feedback is given and an action plan is formulated by both parties.
The appraiser completes a written report about the appraisee.
Both the appraiser and appraisee fill in and sign the final written report.
A more senior manager such as a department director countersigns to ensure that the appraiser has carried out the assessment accurately and objectively.

The Human Resource (HR) department should analyze the likely future workforce needs of the business when establishing the development plan for its employees. In this way, the business can plan strategically while an individual’s progress can be tailored to the needs of the firm.

Appraisal of employees – Evaluation

Advantages of appraisal of employees include:

Allows to assess employees. Appraisal of employees allows supervisors to objectively praise their subordinate workers on their strengths and contribution in the workplace. It is done based on set targets, hence can lead to changes in personal and professional development of employees.
Makes mutual feedback easier. Appraisals can be used to both gather valuable feedback from the staff as well as provide constructive feedback to employees. Managers can aggregate the findings of appraisals to identify common strengths and areas for improvement. Thus, training and development needs can be better planned.
Helps to reward employees. Appraisals can be used as part of job evaluation to work out levels of pay by looking at the different tasks, responsibilities, skills, qualifications and challenges that a job entails. The appraisal process can help a business to objectively reward more difficult and demanding jobs with higher pay.

Disadvantages of appraisal of employees include:

Time consuming. Appraisal of employees is usually very time consuming, therefore can be a costly. It is usually conducted on regular basis, requires monitoring, giving confidential feedback and taking follow-up actions.
Can be subjective. Perceptions, friendships and relationships at work can easily interfere with the appraisal process as remaining objective might be difficult for some appraisers. Employees can experience unnecessary stress when appraisals are linked to pay. They can also get offended by comments from the appraiser, especially about areas of their weaknesses.
May be of poor credibility. When appraisers lack the knowledge, skills, experience and confidence to carry out appraisals effectively, this can damage the credibility of the entire process. Poor credibility can then diminish and the findings.

What happens when appraisal of an employee is negative?

If an appraisee has an overall rating that poor, or below moderate, the following actions can be taken next:

The Human Resource (HR) department issues an advisory letter to the employee to explain the performance rating.
The appraisee’s job performance is discussed. This includes counseling and giving advice on shortcoming to be improved as well as discussing strategies for improvement.
Dialogue takes place concerning the consequences in case no improvement in job performance is made.
The performance of the appraisee is being closely monitored in the next couple of months, usually on monthly or quarterly basis.
If no improvements have been made within the agreed period of time, the business will take actions to most likely dismiss the employee.

In summary, appraisal of employees boils down to establishing performance standards, communicating those standards to employees, evaluating their performance in the past period of time, reviewing results with an employee, taking corrective actions and using the results to plan for the future.