What is Appraisal?
Appraisal at work is also known as performance appraisal or performance assessment of the employees. It is a systematic methodology or process implemented by the employer to evaluate the performance, skills, and competencies of the employees over a specific period of time.
The essential factor of an appraisal is to get an insight into the overall workforce accomplishments and achievements within a specified duration of time.
The primary reasons for performance appraisals are:
- Performance measurement of employees’ skills, competencies, and accomplishments.
- Setting goals for the upcoming business year.
- To understand the strengths and weaknesses of employees, etc.
After knowing what is an appraisal, let us understand the reasons or purpose of an appraisal process and how is it effective for the organization.
1. What is the purpose of an appraisal?
Performance appraisal is an essential requisite for measuring the value of employees’ contribution towards organizational goal attainment, as well as making tailored and informed decisions to improve performances in case of adversities.
A few other reasons for an appraisal are as follows:
▸ Evaluation: Measuring the Performances of employees and finding out the areas of improvement to enhance overall organizational efficiency.
▸ Goal-setting: The pivotal purpose of the appraisal is to set goals for the organization. It provides an estimate of metrics that highlight the diversities, efficiencies, and scope of improvement, hence enabling management to set goals in accordance.
▸ Informed Decision-making: Appraisal pinpoints the development needed and accomplishments achieved, hence enabling management to make tailored informed decisions as per the prevailing situation.
▸ Rewards & Recognition: An appraisal is an organized way to reward the efforts of employees for their exceptional or standard performances in a business year.
▸ Enhancing Employee Satisfaction: Appraisals are crucial for boosting the morale of employees as they give them recognition as well as increase their net pay and award promotions.
▸ Documentations: An appraisal is considered a significant document as it can be used during promotion, transfers, mergers, acquisitions, and for any disciplinary or legal action. It provides the feedback as well as the performance history of an employee in the past years.
▸ Increasing Organizational Effectiveness: The appraisal process is beneficial for enhancing organizational effectiveness. The appraisal process calls attention to improving the deficiency in the process, systems, individuals, groups, management, etc. hence providing the management with sufficient time to make tailored decisions on the crucial matters and come up with beneficial alterations.
2. How many types of appraisal are there?
Appraisal types for any organization depend on various factors like the company’s work culture, policies, company size, geographical location, objectives, nature of work, and more. A few companies even use a combination of appraisals to get a clear insight into employees’ performance.
Out of the many types of appraisals, let us discuss a few vital and common ones that are prevalent in many organizations such as:
➔ 360-Degree Feedback
This is a type of appraisal process in which feedback is gathered from supervisors, peers, subordinates, and sometimes even customers. As the name suggests, it is a comprehensive analysis of employees’ performance which includes the opinions of both internal (peers, management, etc.) and external audiences (customers, clients, etc.) in an organization. It is also known as multiple-rater feedback, as it involves the perspectives of multiple personnel in an organization.
Techniques used to conduct 360-degree feedback contain the following:
- Customized Questionnaires
- Feedback Discussions
- Utilization of Performance Management software and more.
This is a kind of appraisal process that can be evaluated by the employees themselves. Employees evaluate and review themselves in a self-assessment form, which is then compared to the manager’s assessment review form.
The self-assessment works as a disclosure for the employees to review all their past performances and make acquaintance with their work trends, processes, approaches, and managing techniques.
This would further help them with the strategical decision-making procedure to add value to their performances and make an estimate of potential changes required for its accomplishments.
➔ Management by Objectives (MBO)
This is one of the most used techniques where the management and employees together frame the objectives aligning with the organizational goals and performance is then evaluated as per the intensity, productivity value, and deliverance quality of the objective achieved. You can always rely on the MBO process as it is a mutual consideration for setting up objectives for the organization. So, it may be less volatile and conflict-free than other processes.
Tools such as spreadsheet, OKR (objectives and key results) software, project management software, and more.
➔ Annual Performance Appraisal
Annual performance appraisals also known as yearly appraisals or once-in-a-year reviews are frequent procedures in most organizations. It is all about the yearly reviews of employees throughout the year when employees and managers come together to discuss the performances of the current passing year, set objectives for the upcoming year, and frame KRAs that they need to follow for goal accomplishment in the coming year.
➔ Real-time Feedback
Real-time feedback appraisal is a continuous feedback process where the appraisal is an ongoing process. Most contemporary workplaces adopt the process of real-time feedback, which is based on the concept of reviewing performances regularly on a quarterly or weekly basis. This is usually conducted in meetings where managers provide feedback to the employees on the face or through any online platform.
➔ Key Performance Indicator (KPI)
In this kind of appraisal, employees’ performance is evaluated based on certain key indicators which are set prior to the beginning of the tasks. The KPIs can include various metrics, such as:
- Revenue generated
- Profit margin
- Risk management
- Project completion timeframe
- Employee engagement rate
- Attrition rate
- Production efficiency and more.
The KPI is different for various departments and teams in an organization. So, the metrics for evaluation vary or may vary as per that.
➔ Behaviorally Anchored Rating Scale (BARS)
It is a performance appraisal technique that is based on a rating scale with a specific rating parameter ranging from 1-5 that provides more objective feedback than subjective. It considers both traditional approaches of feedback and critical incident techniques for its evaluation.
➔ Peer Review
Peer Appraisal is a type of performance appraisal technique in which performances are reviewed by peers or colleagues of an employee. It has its own pros and cons as it elevates team-building as well as can be subject to bias, conflicts, and dilemmas.
➔ Critical incident Appraisal
Critical incident appraisal is a type of appraisal process in which managers keep a record of specific retaliations of employees in certain incidences. It includes both positive and negative behaviors or performances of employees in a few critical incidents.
3. How often should appraisals happen?
The frequency of the appraisals varies as per the organizational culture, size, location, company policies, objectives, and more.
Usually, the business year of an organization is considered as one financial year, so it is convenient to conduct an appraisal process yearly to get an amplified report on performances and make strategies in accordance to match the financial as well as organizational goals.
4. Which characteristics of an employee should be considered for an appraisal?
The characteristics of employees that should considered during the appraisal include:
- Job performance as per KRA
- Adaptability of employees in critical incidences
- Quality of work deliverance
- Time management
- Teamwork and collaboration
- Communication skills (Both verbal and non-verbal)
- Training and learning temperament
- Leadership qualities
- Risk management techniques
- Accountability & Responsibility
- Work Ethics etc.
5. Are there any laws about performance appraisal?
Yes, with the aim to implement fairness in performance appraisal processes, there are various laws and regulations to govern and protect employee rights as well as promote transparency in the performance management process.
Some of the key laws and norms relating to performance appraisals include:
▸ Contractual Agreements and Company Policies