Importance of Performance Appraisal

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Importance of Performance Appraisal
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What is Performance Appraisal ?

Performance appraisal refers to the process of evaluating employees’ job performance throughout a specific period of time. It typically involves the review and assessment of employee’s accomplishments, strengths, weaknesses, improvements in operations, overall behavior, conduct and contribution in the workplace.


The primary purpose of performance appraisals is to:

  • Provide feedback to improve performance of employees
  • Achieving the desired Target within the stipulated time frame
  • To ease the employees’ operations
  • Discover the areas of grey which require training and attention.
  • To decide on the compensations of employees based on their productivity and presentation
  • Career development- Identifying proficient employees and offering them promotions
  • Provide fair evaluation of employees’ work standards, etc.


Performance appraisals can be evaluated via various methodologies which include, the 360 degree performance appraisal methods in which the performance of the employee is evaluated by almost all the dignitaries of the organization (Superiors, Managers, Seniors, HRs) and even peers. 180 degree performance review, management by objective(MBO), 90 degree methods and more.


Although the employee’s performance appraisal is considered as a credible way of evaluation it might be subject to biases and favoritism. So, it is essential to have a thorough scrutiny of the procedures to ensure fairness, transparency, and objectivity throughout the process.


Now that we have a comprehensive notion of the performance appraisal process and an insight into what is a performance evaluation, let’s dive in to understand its importance in the organization.


Top 10 Importance of Performance Appraisal

The importance of performance appraisal is paramount for the seamless workflow in an organization. Performance appraisals are the methodology that ensures the evaluation of the employee performances for the benefits of both the company and the employee’s.


Let us understand the importance of performance appraisal with the perspective that would be beneficial for employees, managers and the company’s goodwill. Following are some pointers defining the importance of performance appraisals for both the managers and the employees.


1. Constructive Feedback

Performance appraisals provide constructive feedback to the employees regarding their performance and proficiency which helps them recognize the part of areas required for improvement.


The employees can use the feedbacks from their superiors, peers, and seniors to recognize their lacking, efficiency and learn new opportunities by having adequate training.


2. Discovering Adversities

Performance appraisal is a regular process in which the entire work performance of a specific period is evaluated in performance management system which as a result will emphasize the employees on discovering the adversities that are affecting their performances.


For they can also compare their actual evaluation with the evaluated report gained from the management to tally the achievements and deficiencies with that of their expectation.


This will help them discover the area of grey which need rectification and improvement.


3. Time Management

Performance appraisal can be beneficial for companies to save their time from wastage due to non-clarity or trail and error methods.


For example-When employees are confused regarding their KRA, the performance appraisal report at the end gives them a clear picture of their lacking which clarify their understanding on the tasks and ways to improve it. The employee timesheet software gives an insight to the employees work schedule which is evaluated during the performance appraisals process hence highlighting the total time spent by an employee in a particular tasks. This also gives a clarity on the time management skills of the employees.


4. Resource Management

Performance appraisals are a great way to handle the resources that are implemented for smooth functioning of businesses by scrutinizing their efficiency through evaluation of employee performances.


For Example-If resources per employee is relatively more than his/her efficiency and productivity then, either it can be cut by terminating the hired or can be navigated towards training of the same, depending on the circumstance.


5. Reward & Recognize

One of the finest quality is a performance appraisal can be used to recognize and filter out the proficient and capable employees from that of the non-performing ones. Hence, it can be of great help to reward their efficiency for improving employee retention and advancing growth by providing suitable opportunities to them.


6. Diminish Conflicts

In a diversified workplace, for employees to cope is a challenging affair due to differences in cultural, economical, social and educational backgrounds. Performance appraisals are fairly evaluated hence are credible to recognize the proficient employees to that of the non-proficient ones on the basis of their performance over a specific period and so. This diminishes conflicts which arises due to favoritism, biases in evaluation and surges the connection among the managers and the employee.


7. Improves Employee Connection

Performance appraisals of the employee are based on performance review by various personnel in the organization including superiors, peers, seniors, managers, HRs and so. This diminishes biases in a performance appraisal report as it passes through multiple opinions, proper evaluation of facts and reports. As a result the deserving employees’ efficiency are rewarded and for the non-performers training and workshops are initiated to improve their capabilities. This creates a sense of belongingness among the employees to rely on the organizational policies to empower them and provide them opportunities to grow.


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8. Surges Retention

Fair evaluation of employees performance in the performance appraisals processes enhance retention of employees by ensuring them deserving recognition and rewards that motivates their enthusiasm to work better as well as by navigating their efforts towards goal accomplishment by providing them adequate training.


The performance appraisals report gives the highlight of employee’s strength, weaknesses and proficiencies hence assisting the management to decide on adequate compensation or training to employees which are surreal motivation for them in their journey to elevate their skills for career advancements.


9. Values Proficiency

With a performance appraisal report, that is evaluated with fair practices such as 360 degree process or so the filtration of the capable employees from the non-capable ones helps the management recognize the proficient employees and value it as a virtue of their efforts by rewarding them attractive promotions and compensations.


In this the employees also becomes attentive towards their daily tasks and goal attainment to perform efficiently and enjoy the benefits of rewards.


10. Propels Attentiveness

The performance appraisals can enhance attentiveness among employees towards their work as they get compensated for their efforts, skills and proficiency.


Furthermore, The focus of employees surges enhancing their productivity which is profitable for the business operations and functioning.


Benefits of Performance Appraisal

The benefits of performance appraisals are myriad and holds greater significance in converging the efforts of the employees towards goal achievements of the company.


The employees and their performance are subject to fluctuations which can only be accessed or controlled by adequate evaluation techniques that are included in the performance appraisals methods.


We have 5 efficient benefits that highlights the importance of performance appraisals they are mentioned below:


1. Stimulates Growth

With the effective evaluation of performance review of the employees, the companies can stimulate the growth of both its employees and their performance productivity that ultimately intrigues the profitability of the organization as a whole.


The significance of a performance appraisal report is it emphasizes on both the strengths and weaknesses of the employees and helps in navigating their efforts towards the accomplishment of the tasks successfully.


2. Career Advancement

The performance appraisal reports of an employee’s performance highlight his/her actual performance in a specific period. It also provides a platform to compare the estimated accomplishments to the real ones achieved with fairness and constructive feedback. This also provides them the opportunity to learn, grow, and explore, multiple proficient possibilities that surge their career graph.


3. Work Refinement

With the procurement of adequate appraisal reports on performance reviews of the employees, the employees can refine their work by grasping the constructive feedback and working on it. You can apprehend the shortcomings or areas of lacking and nurture the strengths hence fostering learning and improving capability and skills to work better.


4. Comprehend Understanding

The performance appraisal report helps the employees get a comprehensive understanding of their performance. They can get an insight into their work report depicting their accomplishments and failures which can be useful for them to work for improvement by acquiring adequate training and nourishing their skills for career advancement opportunities.


5. Work Review

The work gets reviewed in the process of performance appraisal which enhances its credibility and gives the employee clarity of the type and quality of work. The performance and its metrics are carefully evaluated in comparison with the KRA (key result areas) assigned to each employee which gives a clear perspective of the employee’s efficiency, proficiency, skill, and knowledge.


“Bide Time”

The importance of performance appraisal is imperative for both employer and employee as it holds major significance in improving performances as well as intriguing growth and career advancements.


This necessitates and mandates the process to be fair to avoid discrepancies. Performance appraisal is a vital procedure to review the functioning of the employees and to be vigilant of whether the KRA is achieved or not.


This not only surges the productivity of the employee but also helps them to get constructive feedback from superiors to grasp training for their self-development.


The performance appraisal month is around the corner and this is the bide time to wait patiently for your efforts to flourish with fruitful outcomes. So, give your best and calmly wait for the rest.


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