Performance appraisal is imperative to a company seeking increased organizational growth. That's why it's of utmost importance that we understand the objectives of performance appraisal and what it entails.
Performance appraisal is the systematic evaluation of employees based on the quality and quantity of their job performance.
The performance appraisal process is also popularly referred to as:
- performance evaluation
- performance review
- merit rating
- or employee assessment
Executing a performance appraisal process helps to highlight the skills, competencies and advance employees' development. Also, it is crucial to ascertain the contributions of an employee towards the organization.
Consequently, the objectives of performance appraisal will help you get an idea of how an effective performance appraisal process should actually be conducted.
8 Top Objectives Of Performance Appraisal To Assess Employees Development
Listed below are the top 8 objectives of performance appraisal applicable not only for performance reviews but also any formal meetings with your employees:
Objective 1: Goal Setting Is Integral To Systematic Evaluation
Goal setting is an essential process to build a superior performance appraisal system.
No matter what you seek to achieve with your performance appraisal system, goal setting is its first step.
Employees should know what is expected of them. Goal setting makes it easier to set the standard performance levels.
During goal setting, you need to make it clear on what basis will the job performance be evaluated. Clearly describe what you are looking for from the employee.
Subsequently, allow employees to have a say in the goal-setting process. Discuss the time, resources, and assistance the employee needs to accomplish their set goals.
SHRM recommends that for goal setting to be more effective:
- Employees should focus on a few significant goals.
- Those goals should be SMART.
Related Article: 5 Tips To Make Goal Setting For Employees More Impactful
Objective 2: Provide Frequent Feedback For Increased Job Performance
There's no way to get better at something you only hear about once a year.
The working of a performance appraisal process starts way before the actual performance evaluation.
Here, constructive feedback plays an extremely vital role in employees' development.
Ideally, the performance review should not be the first time an employee hears about his job performance. The performance review should act as a summary meeting where the employee is supervised on how well they took and acted upon the given feedback.
The quality and quantity of feedback given drastically improve the performance appraisal process. Your best employees, as well as the poor-performing ones, need timely feedback to reach their full potential.
With frequent and meaningful feedback, an employee:
- Gets a constant update on his/her work performances. Thus, the employee gets a chance to look and improve upon his strengths and weaknesses.
- Positive feedback motivates employees to improve their performance.
- Regular feedback makes it easier to assess the data later during the performance evaluation.
To get the most out of a feedback process, invest in something more meaningful than the traditional feedback process.
360-degree feedback is a more modern and systematic evaluation of analyzing feedback.
Here, feedback is collected not only from the manager but also from peers and colleagues. This ensures that the input received is more well-rounded and accurate.
Related Article: 360 Degree Feedback: Definition, Benefits, Alternatives
Objective 3: Simplify Promotion Awarding Decisions
Every employee seeks to climb up the corporate ladder and further their career development.
So how should a manager decide which employee deserves the much-needed promotion?
The performance appraisal system helps to identify the top performers of a team. This, in turn, helps ensure that the top positions get filled by the most deserving candidates.
Objective 4: Encourage Quality And Quantity Work Performance
This is one of the most common reasons for companies to have a performance appraisal process.
A performance appraisal process helps to increase the performance of the employees in the following ways:
- A performance appraisal system helps set the standard performance requirements from employees across the whole organization. This, in turn, motivates employees to do quality and quantity work.
- For employees who want to further their career development, the performance appraisal process helps them demonstrate that they are the top performers.
- If employees get a clear report of their job performances, they get an idea of their strengths and weaknesses.
- When managers take time out to analyze and discuss the performance evaluation, it sends an underlying message to the employee that he is valuable.
- In the case of poor performers, performance reviews provide the wake-up call needed to gear up and work harder towards their goals.
Objective 5: Counsel Poor Performing Employees
The hard truth is that not everyone will meet your organizational standards.
Delivering an employee performance evaluation for a poor performer is a difficult task for any manager.
Low performance can be attributed to the following factors:
- A lack of proper goal-setting.
- Lack of performance despite a strong effort. It might be a result of low skills or knowledge.
- Lack of motivation.
However, discussing only the negatives of someone's work performance may lead the employee to resent you.
The key to delivering a performance review for a poor performer is to balance out the strengths and weaknesses.
Notice how I used the word "counsel." That's because you don't need to reprimand your employees.
More often, poor performers are aware that their job performance is not optimum. Instead of getting ridiculed (as they might be expecting), a manager should instead counsel the underperformers.
Counseling in itself is a two-way process. The manager needs to work with the employee to understand the cause of the unsatisfactory quality and quantity of work.
Objective 6: Determining Training And Development Needs
A performance appraisal system helps you understand how an employee is faring against their performance expectations.
Thus it becomes easier to identify and prioritize the employees' development needs.
An efficient performance review will help you determine the need for training employees to further their skills and competencies. This will make employees better equipped to contribute to their organization.
Similarly, after the performance evaluation, managers understand better where the employees are lagging behind. This, in turn, helps managers decide the type and amount of training required on a company-wide basis.
Related Article: E-learning: The New Way of Employee Training
Objective 7: Creating A Plan To Improve The Performance Of The Employees
Identifying the areas of strengths and weaknesses of your workforce is just the first step.
The next step is to build a plan to improve the performance of the workforce.
Here, a performance appraisal provides a great base to start.
Holding a performance review makes it easier for managers to clearly communicate their expectations.
Communicating these expectations should be a part of a plan that attempts to improve the overall workforce performance.
These plans might include further training and development, additional mentoring, or more efficient goal-setting. The manager should make sure that the employee is kept in the loop with continuous feedback.
Objective 8: Suitable Recognition
69% of employees say they would work harder if they felt their efforts were better recognized. (Source)
A formal performance appraisal process makes it easier for managers to reward and recognize the organization's top performers. Rewards can be in the form of bonuses, salary hikes, or monetary incentives.
However, rewards can also be non-financial compensation such as company awards, promotional opportunities, and more exciting projects. And in the long term, you need to modernize your process to make it more effective and productive for the organization.
Related Article: 50 Rewards and Recognition Ideas to Boost Employee Recognition
Summing It Up
Having a clear set list of objectives of performance appraisal will help you gain a competitive edge over others. This will enable you to make more rational decisions regarding overall organizational development.