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Purpose of Performance Appraisals

Purpose of Performance Appraisals

The purpose of performance appraisals is misunderstood today by both, the employee and the employer. It is very important to understand why these appraisals are done by all organizations, and all the right ways to structure them. Read on to know the actual purpose of a performance appraisal.
Neha Joshi
Today, almost every organization in this world follows the process of employee performance appraisals. The logic applied is simple to understand. The growth of the organization lies in the growth of every single employee. The purpose of these appraisals can be looked at from two perspectives: one, from that of the employee; second, from that of the employer. Performance appraisal is a term that is highly misunderstood by most employees. They understand the true meaning of this concept only after they have attended and been through their very first appraisal. As an employee, it is not only important for you to know the purpose of this appraisal, but also to understand the performance appraisal phrases, so as to evaluate your appraisal once it's done. If you're an employer, it's important you form the appraisal with absolutely correct and appropriate phrases.

What is The Purpose of a Performance Appraisal?

An employee has to understand the purpose and importance of a performance appraisal, so that he consciously keeps a check on his work right from the first day of his job. The benefits of performance appraisals are too lucrative to miss out on. If you are an employer, you can refer to and implement processes such as Behaviorally Anchored Rating Scales (BARS) and Management By Objectives (MBO), while structuring the performance appraisal process for all employees.

Lacking Factors
The main purpose of a performance appraisal is to review the work done by every employee and see how the employee has progressed from the day he has joined the organization. Employers try to track and detect phases in the entire work period where the employee must have worked less than his potential. The reasons for these are searched for, and if they aren't found, the employee is asked for an explanation. Sometimes, if the problem is from the organization's part, these problems are rectified. If not, they have a negative effect on the appraisal.

Salary Negotiation
Monetary appraisals are another purpose of performance appraisals, promotions and demotions being one. An employee is liable to receive the rewards for the extra work he does. If his performance has been exceptionally well, a reward from the company is expected in the form of salary appraisal or in the form of a promotion. On the contrary, if he hasn't delivered as promised, it might even result in demotions and transfers. Rewards such as extension of monthly benefits and incentives, are also another purpose.

Improved Training
As I have mentioned before, the employers or the management try to detect times when the employee hasn't produced much, whereas at other times, he has. Such phases are recorded for all employees and the causes for such low performances identified. Once identified, they are kept in mind while restructuring the training so that the problems can be avoided during the next recruitment. Similarly, another purpose of these appraisals is also to identify new methods of producing better. If an employee has done exceptionally well, the management evaluates the reasons for this performance and tries to inculcate the same in other employees.

Development Needs
The management understands that it has to take efforts for individual growth of the employee as well. When the employee is reviewed during a performance appraisal, the management tries to detect areas where it can help the employee to grow more and grow better. They might identify some areas, working on which, the employees might work more. Careers are planned for employees, which helps in employee retention. Other related aspects are discussions of future objectives, goals, and targets.

Internal Relations
Another purpose of performance appraisals is also to improve the communication between the management and the staff. During these performance appraisals, the employees can discuss their grievances with the management and seek solutions for help. If there are any other issues related to performance which need discussion, they can be talked about during the appraisal. Employees can give suggestions to help improve the work environment, which again plays an important role in the individual performance of an employee.

It is very important that you are absolutely fair during the employee performance appraisals, as they form a very important part of employee retention. At the same time, from the employee's side, good work and conduct will help you reap benefits in no time. Also make sure you discuss everything with the management during the appraisal. Best of Luck!