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Everything You Need To Know About Employee Performance Appraisals

Employee Performance Appraisals
What is the role of performance appraisals at work? How do they benefit the employees and the organization? What are the various methods of conducting performance reviews? Read on to find out.
Manali Oak
Last Updated: Feb 7, 2018
"I have worked with a couple of organizations in the past few years. I have come across understanding managers who never failed to appreciate my performance. I have also worked under managers who never failed to point out my shortfalls and never bothered to laud my excellence at work. I must admit, from both types of managers, I have learned a lot. Today I own a small company and have around 50 people working under me. However, I don't like them to call me their boss. I prefer to be their guide, their mentor. I make it a point to appreciate the smallest of their achievements. I believe in them and their abilities. My job is to keep them going." - J. Arnold, business manager
Appraisals give the employees an opportunity to contemplate their performance at work. It is the time when employees look forward to a raise in the salary, promotion and more importantly, a review of what they have meant to the organization. For the managers, appraisals are about reviewing the past performance of their employees and providing them with useful feedback along with tips to improve. A performance appraisal is the way in which the work performance of employees is evaluated. Employee performance is assessed in terms of the quality and quantity of work he/she has put in. It is calculated in terms of the time and effort invested by the employees in achieving the tasks assigned to them.
Purpose of Employee Performance Appraisals
Reviews of employee performance taken within an organization are known as performance or employee appraisals. They aim at analyzing employee performance, identifying his potential and his weaknesses, in order to determine employee training needs. Decisions about salary revision and promotion of employees are also a part of performance appraisals. Ideally, a performance appraisal should give way for an open communication between the employees and their manager/employer. It should provide employees with the means to communicate their points of view about the organization structure with the management and openly discuss the difficulties (if any) they face at the workplace.
As people differ in their abilities and aptitude, no two people can perform identically. Depending on their capacities, they show a difference in the quality and quantity of work they are able to do within a stipulated period of time. It is necessary to understand these differences between individuals and weigh their performance at work, accordingly. Decisions regarding the promotion of an employee need to be taken with due consideration to his/her abilities, as promoting an individual implies assigning him/her additional responsibilities.
Performance Review Methods
Appraisal cycles differ from one organization to another. Some follow six-monthly appraisals while some have annual performance reviews. In some organizations, project completion is followed by a performance review of those involved in the project. In most organizations, performance appraisals comprise an overview of the employees' key accomplishments during the review cycle and analysis of the factors that contributed to his/her accomplishments as also those which inhibited the employee from performing optimally. An appraisal gives the employer/manager the opportunity to understand the career aspirations of the employees as well as their training and development needs. Performance appraisals give the employing organization, a chance to accept employee feedback, which might give them valuable suggestions for overall improvement of the organization.
Employee performance appraisal methods followed in organizations vary depending on the organization size and nature of work. The performance parameters may vary for employees in different departments depending on their job profile. But the basic criteria for performance evaluation are, an employee's output at work, his contribution to organizational growth and his overall behavior. The employee appraisal methods can be classified as:
Management by Objectives (MBO)
MBO is a system wherein the management and the employees discuss the organizational goals, define the objectives and work out an action plan. The employee performance is reviewed after the set goals are met and the employees are rewarded accordingly. The merit of this method is that employees feel motivated to achieve the goals as they are a part of the goal-setting process.
360-degree Appraisal
Also known as a multisource or multi-rater feedback system, this appraisal method uses feedback from an employee's subordinates, supervisors and peers to assess his performance. Feedback from external parties like customers may also be included. The advantage of this method is that an employee is assessed by different raters, thus involving an all-round analysis. But factors like rater's experience with the employee and the time they have spent together, influence the employee rating.
Behavioral Rating
Behaviorally anchored rating scales (BARS) is one known method of performance appraisal. In this method, employee behavior during critical incidents or while performing tasks on the job, is judged. Data collected from employee behavior on the job, is translated into performance ratings.
Other Methods
Other performance review methods include trait-based systems, essay appraisal method, checklist method, comparison method, field review, etc.
  • In an essay appraisal method, the evaluator writes an essay on the employee's performance at different levels. The writing summarizes employee performance as also his strengths, weaknesses and training needs.
  • In the checklist method, performance parameters are enlisted and employees are graded on a certain scale for each of the parameters.
  • There are other methods like comparison and ranking in which employee performance is gauged with reference to a certain optimum level of performance.
Wordings for Performance Appraisals
Some employers/managers work towards finding effective phrases for appraisal. They struggle in wording their appreciation and spend time in preparation before the appraisal process begins. But searching for the so-called effective phrases is not really necessary. Appreciation only requires genuine feelings. A deliberate use of effective words can sound artificial. Appraisals are about expressing concern towards one's employees and encouraging them to keep going. Well, it's not as easy as it sounds. The manager needs to sound professional and refrain from making any personal comments on the employees. The management should be able to make the employees feel comfortable at the time of the appraisal meeting. Employee issues, if any, need to be addressed wisely.
Prior to the appraisal meeting, appraisal forms have to be filled. So let's start with what an appraisal form should consist of. The form should primarily consist of the employee details like name, designation, job profile and his tenure with the organization. The form should have comments by the employee about his own performance and his supervisor's/manager's comments about his strengths, weaknesses and development needs. The appraisal form should also consist of a plan of action. It should be focused on assessing only employee performance and not employee character.
In rating employee behavioral traits or when assessing employee performance on specific criteria, the management needs to use rating scales which may be numeric (say, a scale of 1-5) or ones like these.

Outstanding, Exceeds Expectations, Meets Expectations, Improvement Needed
Excellent, Above Average, Satisfactory, Unsatisfactory
Outstanding, Good, Unacceptable
Depending on the job profile of the employee and nature of the organization, the employee skills to be assessed may vary. Generally, skills such as responsibility, quality of work, productivity, target-orientedness, creativity, decision-making, dependability, domain knowledge, technical skills, interpersonal skills, leadership, motivation, resourcefulness, commitment and overall behavior are assessed as a part of performance appraisals. For employees at the managerial level, skills like delegation, responsibility, decision-making, risk-taking and skills to conduct appraisals, need to be assessed. There should be an NA field with each performance parameter being scaled, as some parameters may not apply to employees in certain positions. For example, for an employee working at the executional level (non-managerial), decision-making may not be applicable.
Here are some employee appraisal phrases or wordings that can be used during appraisal meetings and on employee review forms. Given in separate columns are phrases that can be used to highlight positive traits and wordings which can be used describe weaknesses or areas to improve.

  • Finds new responsibilities and shoulders them effectively
  • Works well without guidance
  • Is a team player
  • Has excellent communication skills
  • Adapts easily to change
  • Open for feedback. Takes criticism constructively
  • Excellent at (specify work areas)
  • Can manage time effectively. Can prioritize
  • Is an active listener
  • Has outstanding (specify areas/skills)
  • Lacks initiative, needs to act more responsibly
  • Cannot work without supervision
  • Needs to work on team skills
  • Needs to develop communication skills
  • Is not flexible to change
  • Needs to be more open to feedback and accept criticism
  • Needs to be trained in (specify work areas)
  • Shows ineffective time management, lacks prioritizing skills
  • Needs to develop listening skills
  • Could do better at (specify areas/skills)
Performance appraisals are an important part of career development of the employees. They are instrumental in keeping the employees motivated. Productivity is the result of satisfaction at work. Employee recognition breeds this satisfaction. True, performance appraisals form an integral part of one's life at work. But self-appraisal is nonetheless essential. It is important to evaluate your own performance once in a while and pat your own back for your accomplishments.