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A performance appraisal is an evaluation done on an employee’s job performance over a specific period of time. It is the equivalent of a report card on an employee and how their manager assessed their performance over the prior year.
Anyone who has worked in more than one department or at more than one organization can attest to the fact that not all performance appraisal processes are the same.
The varying systems and processes are all over the map. Unfortunately, some are done so poorly that they are not only designed to fail, but also to create a negative experience for both the manager as well as the employee.
Companies and managers use a number of common appraisal methods to assess employee performance. Each technique has pros and cons. To determine which technique works best for your business, you need to understand the purposes of appraising performance. A performance appraisal should motivate an employee to better performance by helping him understand why he needs to move away from poor performance or toward critical objectives.
Rating Scales
The graphic rating scale and behavioral rating scale are two common rating scale appraisal techniques. With the graphic scale, employees are simply assigned a score on criteria important to job success. The behavioral scale focuses on actual behaviors. Pros of ratings scales include ease of use and understanding. Many managers and employees are familiar with them. They offer a simple way to communicate areas of strengths and weaknesses. A common negative of rating scales is the assumption that they are directly tied to an employee's raise or bonus. This can cause score inflation. Managers can also have negative bias toward employees.
Narrative Techniques
The narrative technique and critical-independent method involve more details analyses of job performance. You write an essay assessment of performance with the narrative and keep a running log describing positive and negative performance and behaviors with the critical-independent method. A pro of these techniques is the thoroughness of detail in analyzing employee behaviors. Additionally, you can focus on praising positive behavior and addressing areas for correction. A concern is the reaction of the employee, though. He might interpret the evaluation too positively or too negatively relative to a scoring system.
Comparison Methods
The multiperson comparison method and forced distribution methods are two common comparison appraisal techniques. These approaches compare the subject employee's performance to peers. This allows you to communicate to employee areas in which he over- or under-performs relative to others in similar positions. This can motivate performance in competitive workplaces and among competitive employees. The risks of these methods include the potential of in-fighting and the lack of harmony you might see in your employee ranks.
360 Feedback
A popular contemporary appraisal technique is the 360 degree feedback. In this method, employees are evaluated by colleagues, customers, subordinates, other interested parties an supervisors. The major advantage of this technique is that it offers the employee a glimpse of how others view his performance in various relationships critical to his job. It also allows a better chance to compare different perspectives in the evaluation process. Biased evaluators, poor alignment with goals and negative employee feelings are among cons of this approach.
There are many varying opinions on the subject of performance appraisals and why they are done. Some organizations do performance appraisals because they feel obligated to do them – because everyone else does.
Some organizations do performance appraisals to make sure they have a piece of paper in the employee’s file – in case they ever need to do corrective action.
But successful organizations understand the importance of incorporating performance appraisals into their performance management process and strategy.
Advantages of performance appraisals:
· They provide a document of employee performance over a specific period of time.
· They provide a structure where a manager can meet and discuss performance with an employee.
· They allow a manager the opportunity to provide the employee with feedback about their performance and discuss how well the employee goals were accomplished.
· They provide a structured process for an employee to clarify expectations and discuss issues with their manager.
· They provide a structure for thinking through and planning the upcoming year and developing employee goals.
· They can motivate employees if supported by a good merit increase and compensation system.
Disadvantages of performance appraisals:
· If not done right, they can create a negative experience.
· Performance appraisals are very time consuming and can be overwhelming to managers with many employees.
· They are based on human assessment and are subject to rater errors and biases.
· Can be a waste of time if not done appropriately.
· They can create a very stressful environment for everyone involved.
Finally, performance appraisals are only as good as the performance management system it operates within. Organizations that only do performance appraisals for the sake of doing them are wasting their time.
But organizations that incorporate performance appraisals into a comprehensive performance management system and use them to implement business goals have an advantage for accomplishing their goals and ultimately their strategic plan.