Performance Appraisal is an organizational process in which information is collected and analyzed to establish the comparative worth of an employee. It is a collective measure of the work an employee does so as to understand his value add to the company or the organization. The employee is rated based on his previous work during the year so as to motivate him for improving his work in the future. In short, it is a systematic way in which performance of employees in an organization is reviewed and assessed for a given period of time so as to motivate them for the future.

Objective of Performance Appraisal Process

Performance Appraisal methods mainly focus on the analysis of an employee’s contributions though it offers other additional benefits also. It helps the management to understand the gap between the actual and the desired performance of an individual. This aids in monitoring and modifying organizational benchmarks based on the employee performance levels.

The system is used as a feedback mechanism about the employee’s previous work. The supervisor talks to the employee about his work and performance based on the assessment. It also helps rate employees in an organization on a comparative scale so as to understand the contribution level of each.

Benefits of Performance Appraisal Process

Performance appraisal is a powerful tool that helps to understand the work and value of an employee. It helps in assessing the achievements and contributions made by employees towards realizing the organizational goals. It also acts as a source for the management to take interest in the personal growth of an employee as it directly reflects on his productivity and efficiency in the future.

The performance appraisal method helps in improving the relationship levels between the employee and the supervisor as it leads to an increased interaction about their carrier prospects and growth. An employee can also perform a self-assessment on his strengths, weaknesses, etc. and take necessary precautions or training so as to identify and develop such needs. It also acts as a medium of clarification between the employee and the supervisor based on their expectations and responsibilities on technical and management fronts. The method also helps in reducing the grievances or concerns of the employees with respect to the opportunities provided to them by the organization.

The Performance Appraisal Process

The appraisal process includes 5 steps starting with goal setting and ending with decision making.

1. Goal Setting – This is the first step in the appraisal process. The organizational standards and benchmarks are set against individual employees so as to judge whether they are successful or not. The performances of the individuals are measured against these initial set standards. It is important that the standards set are clear and easy to understand as difficult goals might de-motivate the performance of the employee.

2. Communicating the Goal – Once the goal is set, the goal needs to be communicated to the employee. Ample timelines need to be provided to him for goal planning and realization. Proper channels of communication are best required to be adhered. Face-to-face or direct communication can help resolve any kind of miscommunication taking the employee out of focus. Depending on the employee’s feedback, the goal or standard can be modified to suit the scenario.

3. Measurement of the Actual Performance – At the end of the appraisal period, the actual performance of the employee is measured. The work done by the employee throughout the year is monitored and carefully recorded.

4. Comparison of Actual and Desired Performance – The actual performance that is recorded throughout the year is compared with the initially set standards. This comparison and the resulting deviations explain the actual performance of the employee. The positive or negative deviation that results from the comparison is a major factor for deciding the performance appraisal rating.

5. Discussion – Once the comparison is done, the result is discussed with the employee to understand his side of the performance ratings. If the deviations are negative, the supervisor discusses about possible problems and way of resolving them with the employee. In case of positive deviation, the employee is motivated and provided pointers for future improvement.