What is a Performance Appraisal?

An employee performance appraisal, also known as a “performance review or evaluation” is a

process used by organizations to give employees feedback on their job performance and formally
document that performance. The process involves a manager or consultant examining and
evaluating an employee’s work behavior by comparing it with preset standards, documenting the
results of the comparison, and using the results to provide feedback to the employees to show
where improvements are needed and why. Performance appraisals are typically conducted
annually, providing periodic feedback to employees, making them more self-aware in terms of
their performance evaluation metrics. They play a crucial role in acknowledging the work an
employee has done over a specific time and identifying areas for improvement

What are performance appraisals used for? Performance appraisal aims to:

1 - Evaluate an employee's performance One of the primary objectives of performance appraisal is

to measure an individual’s performance in relation to his or her goals, expectations and aspirations
for self-improvement, as well as to gauge the broader objectives of the organization.

2- Provide feedback A performance appraisal seeks to promote a space for feedback to be shared,
in order to develop talent and positive leadership and thus generate Champion Minds. This
feedback should not only come from the employee, but also from those who work closely with the
employee on a daily basis, such as colleagues and supervisors. For feedback to be given effectively,
it must be objective, specific, honest, respectful, and looking for ways to improve versus remaining
in error.

3- Design a training plan Once organizational objectives and employee performance have been
identified through performance appraisal, we can identify opportunities to create a training plan
to develop different employee competencies that are key to achieving the company’s objectives
and goals.

4- Motivate work teams Motivation and recognition of employee success is one of the main
drivers of motivation according to Maslow’s hierarchy of needs. It can be a very powerful tool to
motivate and inspire people, complementing salary improvements, training programs or
promotions with other recognition tools such as certificates, award ceremonies, tributes, etc. If
you want to motivate your employees, start by recognizing them for their achievements and use
objective feedback to help them grow and develop.

5- Assist in making decisions on compensation and promotions To maintain a healthy

organizational climate and retain the best employees, you can implement a results-based
compensation plan and a career plan where every employee has the opportunity to develop
within the organization. Performance appraisal allows us to obtain feedback from employees to
create a performance plan that is objective, fair and equitable. In this way, objective performance
criteria can be identified to help us set compensation and promotion levels

Types of Performance Appraisal

1. Competency-based performance evaluation: evaluates the employee's performance in relation
to the specific skills, knowledge, and behaviors required for their position.

2. Results-based performance evaluation: evaluates the employee's performance based on the

objectives and goals set for their position, focusing on the results achieved.

3. 360-degree performance evaluation: gathers feedback on the employee's performance from

different sources, including supervisors, colleagues, subordinates, and clients.

4. Critical incident performance evaluation: evaluates the employee's performance based on

specific incidents that have had a significant impact on their work.

5. Objective-based performance evaluation: evaluates the employee's performance based on

specific objectives they have achieved over a set period of time.

6. Behavior-based performance evaluation: evaluates the employee's performance based on their

behaviors and attitudes in the workplace.

7. Behavioral competency performance evaluation: evaluates the employee's performance in

relation to specific behavioral competencies required for their position, such as communication,
collaboration, and problem-solving.

8. Self-assessment performance evaluation: asks the employee to evaluate their own performance
and then compares it to the assessment made by their supervisor.

These are some examples of types of performance appraisals that can be used by organizations to
measure their employees' performance.

Benefits and Common Mistakes of Performance Appraisal

Performance appraisals are crucial in any business since they provide valuable insights into an
employee's performance. If performance appraisals are done correctly, they can lead to a series of
beneficial results. However, if done incorrectly, the employee's evaluation process can actually
lead to lower levels of job satisfaction and productivity. An effective performance appraisal
process is made up of two essential components (evaluating and motivating). Evaluating involves
assessing past performance, while motivating puts the spotlight on getting employees to boost up
their future performance. The appraisal process cannot go forward unless there is effective
communication between the evaluator and the person evaluated.

Benefits

1. Ease recognition and stimulation of hidden talents.

2. Provide information that can be worthwhile when making decisions about promotions and
salary increases. This information is critical in ensuring that our employees are rewarded for their
hard work and dedication.

3. Help in identifying the training and development needs of employees. This enables them to
acquire new skills and knowledge that will benefit both them and the organization.

4. It enables the management to become aware of the strengths and weaknesses of its staff.

5. It helps by identifying areas where improvements can be made and providing feedback to
employees.

6. Assist in setting goals and objectives for employees. This helps align the employee's goals with
the organization's goals.

Common mistakes

● Not providing complete and accurate information: It should identify both positive and negative
factors in the employees’ behaviors and performances. As managers, we want to tell employees
what they are doing right, but also if there’s room for improvement.

● Failure to set up tools: We need to provide them with tools or training, and we then must
continually verify they can perform at an above-average level.

● Lack of follow-ups: A common mistake is a lack of follow-ups after the performance appraisal
process.

● Lack of training: This can lead to ineffective evaluations and a lack of understanding of the
purpose of the process, it also could take in bias in the performance appraisal process. This can
include favoritism and discrimination.

● Overpowering employees: Basically overpowering employees with large amounts of negative

information that they have not heard during coaching. This usually causes the employees to “turn
off,” or stop listening to their managers.

Employees will just “raise their shields” to ward off all the negative information. This is a natural
human characteristic. We are naturally suspicious of negative information for a variety of
psychological reasons (defense mechanisms), so when employees get a plethora of negative
information, they tend to discount or even disbelieve it. As a result, the evaluation may be useless
as a motivator.
Current Tendencies of Performance Appraisal

1. Shift from annual reviews to continuous feedback:

Many organizations are now moving away from traditional annual or semi-annual performance
reviews and adopting a more continuous feedback model. This involves providing regular feedback
to employees throughout the year, rather than waiting for a formal review period. Continuous
feedback can be done in a variety of ways, such as through one-on-one meetings, check-ins, and
informal conversations.

2. Increased use of technology:

Technology is being used more and more to support performance appraisals. This includes using
software to track employee performance, provide feedback, and manage goals. Technology can
help to make performance appraisals more efficient and effective.

3. Focus on employee development:

Performance appraisals are increasingly being used to help employees develop their skills and
knowledge. This can be done by identifying areas for improvement and providing training and
development opportunities.

4. Emphasis on results:

Performance appraisals are now more focused on the results that employees have achieved,
rather than just their activities. This can help to ensure that employees are focused on achieving
the organization's goals.

5. Use of multiple raters:

Performance appraisals are often conducted by multiple raters, such as the employee's manager,
peers, and customers. This can provide a more comprehensive view of the employee's
performance.
In addition to these trends, there are a number of other factors that are influencing performance
appraisals, such as the rise of remote work and the increasing diversity of the workforce. As the
workplace continues to evolve, it is likely that we will see even more changes in the way that
performance appraisals are conducted.

Additional trends that are emerging in performance appraisals:

Use of data and analytics: Organizations are increasingly using data and analytics to inform
performance appraisals. This can help to identify trends and patterns, and to make more informed
decisions about employee development.

Focus on employee well-being: Organizations are recognizing the importance of employee well-
being and are incorporating it into performance appraisals. This may include assessing the
employee's work-life balance, their mental health, and their overall physical health.

Use of artificial intelligence (AI): AI is being used to automate some of the tasks involved in
performance appraisals, such as collecting data and providing feedback. This can free up time for
managers to focus on more strategic activities.