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The Importance of a Performance Appraisal​​

The Importance of a Performance Appraisal​​

The Importance of a Performance Appraisal​​

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The only HR Software without Limitations

Every organization is trying to get the most out of its employees' work through performance management because, after all, that’s where the magic happens. And this often comes down to communication and expectation management.

Suppose your employees aren’t getting 360-degree feedback on the individual performance of their competencies and guidance on how a wide range of things can be improved. In that case, they’re left wandering around in the dark.

This is why the annual performance review is quite common practice for most, but this is not nearly often enough. And that’s where staff appraisals come in.

Performance assessment and appraisals create regular conversations with human resources and help align goal setting throughout your organization.

Regardless of how big or small your team is, individual employee appraisals are crucial for nurturing a cohesive working environment that sets your company up to grow and succeed.

And in this article, we’re going to explore exactly how to do them well.

What Is An Appraisal?

A formal and effective performance appraisal can greatly benefit both the employer and the employee. Unfortunately, they are increasingly undervalued and underutilized by both parties.

A recent survey from the Society for Human Resource Management found that 72% of organizations conduct formal appraisals only once a year.

In comparison, only 2% of employees gave their employer an ‘A grade’ for their performance assessment.

Employers must recognize that formal appraisals have a significant impact on how satisfied, motivated, and productive their employees feel.

An appraisal is a tool used to connect with an employee to assess and evaluate their effective performance, hear from them about how they are doing, and set measurable organizational goals and expectations for them.

This can be achieved in numerous ways, whether in person or virtually, but the principles remain the same. The performance appraisal process can be carried out within an individual review period.

Some companies perform regular reviews on an annual basis, whereas some find that time too long and prefer to have more frequent check-ins with their team members.

The goal is to align job expectations between the staff member and the organization, and create an employee development plan to move forward effectively. This includes ensuring employee satisfaction.

Here are some examples of how these appraisals can be structured:

  • Casual appraisals: These happen on an ad-hoc basis when management wants to get closer to their staff members. Typically, they will take the form of an informal conversation around individual performance without an explicit agenda. This opens up lines of communication and leaves the structure open to wherever the conversation goes;
  • Formal appraisals: These are more structured, and an agenda is set out in advance. The employee can prepare their thoughts, and the manager can spend time looking through their recent performance to make the most out of the meeting;
  • Weekly, monthly, or quarterly recaps: These are somewhere in between formal and informal – and they happen regularly. Because they are set in the calendar, they form bookmarks on work periods and allow for tight performance feedback loops.

Some types of performance appraisals include:

  • Traditional performance appraisals: A line manager conducts an evaluation based on an employee's work with evidence supporting how well they are doing;
  • 360-degree review: Colleagues, supervisors, and the employee make an evaluation, allowing for regular feedback from all directions of the team;
  • Self-appraisals: An employee reviews their performance, considering their accomplishments and mistakes;
  • Employee-initiated review: An employee asks their manager for a review to determine how they are performing and to request to take on more projects or a higher position;
  • Group performance appraisal: Managers review how the overall team in an organization is performing, sometimes opening the feedback for individual workers to review their peers;
  • Upward appraisal: Staff members provide consistent feedback on how their team leaders are doing;
  • Negotiated appraisal: A mediator helps a manager and employee discuss positive and poor job performance, usually starting with a review of the employee's positive performance before offering constructive criticism.

Preparation For Employee Performance Appraisal Is Key

There is a big difference between effective appraisals and ineffective ones. When you get them wrong, they quickly become administrative exercises that actually don’t drive real business and personal success.

So, your processes must be set up in such a way that they actually deliver on what you’re trying to get out of them.

The most important thing to get right here is the preparation. You want to have all the relevant information at your fingertips to have a productive and informed conversation.

The more effort you put into good preparation, the better that appraisal will go.

Before The Appraisal Meeting

Preparing for an effective performance appraisal helps employees examine both their strong and poor performance attributes more objectively.

So, do not walk into the appraisal meeting without thinking about the review period.

Review the previous year’s performance appraisal process and career goals established for the current year. What organizational goals were met?

Then think about the performance you expect in terms of a SWOT Analysis.

  • What are the employee’s strengths?
  • What are the employee’s weaknesses?
  • What opportunities do you see in regards to the employee’s performance?
  • What threats do you see?

Make sure to also keep notes throughout the year to track accomplishments and company goals you have for the following year.

Also be clear on the timeframe the appraisal is measuring. In general, it should be the time between last year’s appraisal and this year’s appraisal.

During the Appraisal Meeting

Remember that a traditional performance appraisal is about effective communication between managers and employees. This can be obtained by:

  • Having a practical approach and input toward improving employee performance management and setting developmental goals for the coming year;
  • Suggesting ways to remove employee performance review barriers or ways to improve productivity;
  • Talking about career development;
  • Taking 360-degree feedback as a reflection of another person's perspective. It is an excellent opportunity to learn something about each other.

After the Appraisal Meeting

Generally, it is primarily the supervisor’s responsibility to ensure no surprises at appraisal time. Supervisors should discuss positive performance and areas for improvement throughout the year.

However, it is in the employee’s best interest to open up a discussion about performance during the year, even if the supervisor does not initiate it.

The sooner employees know where they are concerning performance, the sooner priorities can be shifted, or problems can be fixed. Communication is essentially a shared responsibility.

So, consider your appraisal as a learning opportunity where you should take away valuable information about yourself, your staff, or a new objective for the coming year.

Streamlining Your Appraisal Process

Here at flair, our internal communication tool is worth its weight, because it does a lot of the heavy lifting.

You can create custom questionnaires ahead of time that move towards your business goals.. You can then send those to employees in advance.

This helps to codify all of the essential information that will inform the discussion.

So, instead of spending the meeting discussing information, you can focus on higher-level analysis and planning that makes the most of your time together.

Once you have settled on that plan, it can be entered straight back into the tool to be tracked moving forward.

This is a great example of how technology can be leveraged to ensure both employees and employers leave each interaction happy and on the same page.

What Should You Discuss During Appraisals?

The importance of a performance appraisal​​

Here are some of the critical things you should be discussing during an appraisal:

  • How are things going at the moment?
  • What is the current status of projects?
  • What is the highest priority at present?
  • What has been accomplished since the last appraisal?
  • What are the biggest roadblocks being faced?
  • What is top of the list in terms of professional development?
  • How can the organization better meet targets?
  • Is the working environment an enjoyable one? What can be improved?

This is obviously not an exhaustive list, but it should give you a sense of the kinds of things you can discuss. An appraisal should be two-way, open and transparent, flexible, and objective, at its core.

Performance Appraisal Benefits

Make Your People Feel Valued

To be fully satisfied, an employee needs to feel that they’re valued and produce good work.

The formal appraisal is a great opportunity to give your employees honest feedback, spurring them to work smarter and better.

Employees really admire frequent praise and recognition, so letting them know you are aware of the high standard work they’re doing will help you to retain hard-working talent.

Your team will also appreciate your expert advice on their personal brand, and what key areas they should be focusing on strengthening.

Set New Targets

The most productive employees are those who are constantly driven. So, setting achievable targets during the appraisal helps motivate employees, and empowers them to feel more confident when they hit them.

The appraisal is also useful for realigning business objectives with changing market conditions, making targets relevant and accurate.

For instance, during a particularly stagnant period of nationwide growth, you may wish to reign in your forecasts to avoid disappointment.

Resolve Grievances

Often, managers can be engrossed in the business's day-to-day operations to get an insight into an employee’s frame of mind. The appraisal is a great time to address any concerns you or they may have.

Strengthen Bonds

It’s essential for team cohesion and overall productivity that managers have strong relationships with their team.

Use this occasion to align priorities and discuss various matters of interest to the business with your team members – almost like a brainstorming session.

Refocusing Your Team

Appraisals can be used to help communicate your vision to team members. This is your chance to clarify and articulate the company’s purpose, ensuring that everyone is singing from the same hymn sheet.

It’s also an opportunity to manage employees’ promotion expectations. Those with an unrealistic idea of their role within the business will benefit from a rational assessment of their current skill set.

During performance appraisals, managers can reiterate their plans for employees. This helps individuals understand their daily job responsibilities and what their manager has in store for them.

Oversight On Current Projects

It can sometimes be hard to adopt a helicopter view of ongoing projects as a busy manager.

Formal appraisals are a good opportunity to step away from the hustle and bustle of everyday work and reflect upon the overarching direction your team is heading in.

Assess The Training Needs Of Your Team

Different people within your team will have different expert levels. Use the appraisal to assess your employees’ portfolio, identifying areas that may require additional training and support.

For instance, if multiple employees are struggling to meet a daily quota, an employer could provide a workshop on working more efficiently or consider lowering the target for employees.

Letting your team know that you’re thinking about their development will help instill an ethos of ambition, in turn driving the business to be more productive and aspirational.

Increase Employee Engagement

Regularly involving employees in the performance review process can lead to more engagement and a desire to stay long-term with a company.

When employees can see how their actions affect the company overall, they are more likely to perform better.

Frequent performance appraisals also show employees that their manager cares about them and is willing to take the time to provide them with the instruction needed to help them flourish.

Evaluate KPIs

Employers can evaluate how well an employee reached their key performance indicators and provide feedback on what focus areas to set for the next review period.

Creating a system with continuous goal-setting helps to ensure employees reach their full potential.

Provide Documentation

Keeping a record of employees' work over a specific appraisal period allows managers to track an employee's development journey and job performance.

Organizations can keep documentation of each employee in a personal folder to review at a later date. This helps inform upper management about employees who they may not interact with regularly.

Realign Work

During the day-to-day operations of a company, employees sometimes forget how their efforts make a difference.

Employees can remember why their work matters by receiving feedback on projects they have completed. Performance appraisals also offer managers a chance to reiterate the company mission for their external customers.

Common Appraisal Mistakes To Avoid During Employee Performance Reviews

Staff and performance management steps

There is a wide range of things that managers get wrong with employee appraisals, here are just a few:

  • Inadequate preparation. We touched on this one above. If you aren’t doing the necessary preparation for appraisal meetings, you are wasting your time. The conversation is only productive when you can use the time to have a genuine conversation;
  • Consistent schedule. Appraisals work really well when done regularly, as they create a workflow for the employee. When they are planned at regular intervals, they naturally demarcate the year into different chunks, which allow for more accurate reflection. When they are ad-hoc, they can lose their effect;
  • One-sided discussions. Often managers will want to dictate terms during these discussions because they are trying to guide employees down a certain path. This doesn’t work because employees will shut down when they feel that they are being lectured. It’s much more effective and problem-solving to engage with them openly and honestly, letting them be a collaborative partner as you plan the next steps. This requires some emotional intelligence, but also some trust in your employees that they understand the mission and can find their way to get the job done;
  • Appraisals and job performance evaluation reviews need to feel like a safe space for an employee. If you are going to get any candid feedback or make any progress for an employee’s career development., you need to make that person feel heard. The moment you appear combative as a manager – and try to use status pressure to get more out of your employees – you will be resented. You have to make it clear that you’re on the same team, and that by working together,  you can find a win-win for everyone involved in the process.

You can avoid any performance appraisal hiccups by adopting the following modern performance appraisal methods and practices:

Use A Range Of Evaluation Criteria

One formula for overcoming some of the setbacks in formal reviews involves using more than one criteria for job performance to evaluate a person’s success over a period of time.

Managers generally rely on only one KPI for every main list of tasks, but if they were to use two or more, then they’d have a more comprehensive view on which to base their evaluation.

By doing this,  the impact of the halo effect, errors of recency, contrast, or attribution are reduced.

Minimize The Use Of Appraisals Based On Individual Traits

Performance reviews based on personal traits are subjective, and they have little or nothing to do with the employee’s behavior.

Overall, they should not be used unless there is a specific reason why an individual feature must be used to do a job successfully.

It’s an inaccurate form of appraisal based on individual traits, which makes it much harder to defend if it leads to disciplinary action with legal implications.

If we eliminate these aspects from our evaluations, we reduce the negative impact of stereotyping or any other kind of bias.

Train Appraisers To Overcome Common Issues During The Appraisal

A simple training process can mitigate or even eliminate the problems that generally arise. In terms of the issues that arise, reviewers realize they can bypass them.

Even problems related to bias or stereotyping can be resolved in a simple workshop to maintain strong relationships.

When they discover they’re making a mistake, most professionals want to put it right. So, performance review training gives managers the knowledge and tools they need to do their job correctly.


At the end of the day, staff appraisals are a potent tool for pushing your business forward – as long as you use them effectively.

Here at flair, we’ve seen clients of all types find great value in them as they bring everyone together in the same direction.

It’s all about communication and expectation management during the evaluation process. That’s the magic recipe. But you’ll be surprised at how many companies get these ingredients wrong.

If you want to bring your staff to the next level, consider using a multi-purpose HR tool to drive invaluable appraisals.

It’s a complete platform that sits on top of your existing processes to make them more holistic, efficient, hands-on, and constructive – so that you can serve your employees better and focus on what matters most, your business.


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