Performance Appraisals

Performance appraisals can be important tools to give employees feedback and assist in their development. Yet feedback is only one reason why companies perform appraisals. In many companies, appraisals are used to administer rewards such as bonuses, annual pay raises, and promotions. When employees have goals, they tend to be more motivated if they also accept feedback about their progress. They may also be used to document termination of employees. Research shows that performance appraisals tend to be viewed as more effective when companies tie them to compensation decisions and to terminate lower performers. This is not surprising in light of motivation theories such as reinforcement theory, which indicates that behavior that is rewarded

A performance appraisal is a process in which a rater or raters evaluate the performance of an employee. More specifically, during a performance appraisal period, rater(s) observe, engage with, and rate a person’s performance. Then, when it is time for a performance valuation, these observations are documented on a form. The rater usually conducts a meeting with the employee to communicate performance feedback. During the meeting, the employee is evaluated with respect to success in achieving last year’s goals, and new goals are set for the next performance appraisal period. Giving employees feedback is not synonymous with conducting a performance appraisal, because employees may (and should) receive frequent feedback. The most effective feedback immediately follows high or low performance. Therefore, waiting for a formal process to give feedback would be misguided. A formal appraisal is often conducted once a year, even though there are some organizations that conduct them more frequently. For example, there are advantages to conducting quarterly appraisals, such as permit managers to revise goals more quickly in the face of changing environmental demands. Conducting appraisals once a year has the advantage of being more convenient for managers and for effectively tying performance to annual pay

Sufficient notice; letting employees know what criteria will be used during the appraisal. Unfortunately, in many companies the first time employees see the appraisal form may be when they are being evaluated. Therefore, they may be rated low on something they didn’t understand was part of their performance. Fair hearing; ensuring that there is two-way communication during the appraisal process and the employee’s side of the story is heard. Ultimately means the exchange of information and/or ideas from the supervisor to the employee or vice versa throughout the appraisal process. Judgment based on evidence; documenting performance problems and using factual evidence as opposed to personal opinions when rating performance not speculation and/or