Performance appraisal systems

A performance appraisal system is a formal method of assessing how well an employee is performing in their job. Performance appraisals are typically conducted by employers or managers at set intervals and involve the collection of quantitative and qualitative data from multiple sources such as the employee themselves, their peers, and their supervisors. This data is then used to evaluate an employee's performance relative to their job expectations, their peers, and their previous work performance. The output of a performance appraisal system is generally used to inform decisions about an employee's promotion, salary increase, or other rewards.

Example of performance appraisal systems

• 360-Degree Feedback: This type of performance appraisal system collects feedback from the employee's peers, subordinates, and supervisors. The feedback is then used to gain a comprehensive understanding of the employee's performance and behavior.
• Performance-Based Appraisal: This system of performance appraisal is based on the employee's performance against specific objectives or goals set by their employer. The employee's performance is evaluated against these predetermined criteria and then their performance is rated accordingly.
• Self-Assessment: This system requires employees to complete a questionnaire or survey that evaluates their own performance. This type of appraisal system is often used to provide employees with a better understanding of their own strengths and weaknesses.
• Goal Setting: This type of performance appraisal system focuses on setting goals for the employee to achieve over a certain period of time. The employee's performance is then evaluated based on how well they have achieved these goals.
• Competency-Based Appraisal: This type of performance appraisal system evaluates an employee's performance against a predetermined set of competencies or skills. The employee's performance is then rated based on how well they have been able to demonstrate their competencies.
• Managerial Assessments: Managerial assessments involve managers evaluating an employee's performance using a set of criteria. This type of performance appraisal is often used to inform decisions about an employee's promotion, salary increase, or other rewards.
• Objective Performance Measures: Objective performance measures involve quantifying an employee's performance using numerical data. This type of performance appraisal can provide an objective assessment of an employee's performance and can be used to compare an employee's performance to that of their peers.

When to use performance appraisal systems

Performance appraisal systems can be used to identify areas of strength and weakness in employees, track performance over time, and provide guidance for improvement. They can also be used to provide feedback to employees on their performance and set expectations for the future. Additionally, performance appraisals can help employers evaluate job applicants and make decisions about hiring, training, and development opportunities. In particular, performance appraisal systems can be used to:

• Set and measure organizational goals: Performance appraisals can be used to ensure that employees understand what is expected of them in terms of meeting organizational objectives.
• Assess individual performance: Performance appraisals provide employers with the opportunity to assess an employee's performance and identify areas of improvement.
• Identify potential: Performance appraisal systems can be used to identify potential in employees, such as their ability to take on additional roles and responsibilities.
• Align individual performance with organizational goals: By tracking the performance of individual employees against organizational goals, performance appraisal systems can help ensure that employees are working towards the same objectives as the organization.
• Support employee development: Performance appraisals can be used to provide guidance to employees on how to improve their performance in the future.
• Establish pay and promotion criteria: Performance appraisal systems can be used to determine an employee's salary and promotion eligibility.

Steps of performance appraisal systems

A performance appraisal system is a formal method of assessing how well an employee is performing in their job. The steps of a performance appraisal system include:

• Establishing Job Expectations: This involves determining the job duties and responsibilities, as well as the skills and knowledge required to perform the job.
• Establishing Performance Standards: This involves setting performance goals and objectives that employees must meet to be considered successful.
• Collecting Performance Data: This involves gathering information about an employee's performance from multiple sources, such as their peers, supervisors, and the employee themselves.
• Evaluating Performance: This involves assessing the data collected in order to determine whether or not an employee is meeting their job expectations.
• Taking Action: This involves taking appropriate action based on the evaluation of an employee's performance. This could include rewarding them with a promotion, salary increase, or other rewards.

Advantages of performance appraisal systems

Performance appraisal systems have several advantages for employers, managers, and employees alike. These advantages include:

• Increased clarity of expectations: Performance appraisal systems provide employees with a clear understanding of the expectations their employer has for them in terms of their job performance, as well as the criteria they must meet to be considered successful. This allows employees to better focus their efforts on achieving the desired results.
• Improved communication: Performance appraisal systems provide a structured forum for managers and employees to regularly discuss job performance, allowing for better communication and problem solving.
• Objective feedback: Performance appraisal systems provide an objective measure of an employee's performance, allowing managers to provide consistent feedback to their employees.
• Improved accountability: Performance appraisal systems create a clear record of an employee's performance and help to ensure that they are held accountable to their job expectations.
• Motivation and development: Performance appraisal systems can help to motivate employees and identify areas for development, allowing employees to focus on improving their performance.

Limitations of performance appraisal systems

Performance appraisal systems can be a useful tool in evaluating an employee's performance, but they are not without their limitations. Some of the key limitations of performance appraisal systems include:

• Bias: Performance appraisal systems can be subject to bias, both conscious and unconscious, on the part of the assessor or the employee being assessed. This can lead to inaccurate evaluations or a lack of objectivity.
• Limited Feedback: Performance appraisals are often conducted at set intervals, meaning that feedback can be limited and may not reflect an employee's current performance.
• Limited Context: Performance appraisals are usually conducted in a limited context, meaning that other important factors, such as an employee's contribution to team morale, may not be taken into consideration.
• Time-Consuming: Performance appraisals can be time-consuming for both the assessor and the employee being assessed. This can be a hindrance when it comes to productivity.
• Costly: Performance appraisals can be costly to implement and maintain, especially if they involve complex evaluation methods or require the use of third-party services.

Performance appraisal systems — recommended articles

Performance appraisal process — Skills and abilities — Merit rating — Training and development — Performance management best practices — Monitoring of performance — Reporting performance — Skills development — Appraisal method

References

• Boice, D. F., & Kleiner, B. H. (1997). Designing effective performance appraisal systems. Work study, 46(6), 197-201.
• Brown, M., & Heywood, J. S. (2005). Performance appraisal systems: determinants and change. British journal of industrial relations, 43(4), 659-679.