Every appraisal season, the HR team rolls up its sleeves to facilitate a merit-based appraisal process. It all starts with self-appraisal form filled by employees, performance discussions between supervisors and their team members leading to finally ensuring that the evaluation is done as per the Performance Management process chosen. Let’s understand this tool in detail.

What is the Purpose of a Performance Appraisal System?

While for a highly effective Performance Management process, setting holistic and SMART expectations is critical, performance appraisal systems help leaders evaluate performance and competencies of employees. This ensures that a merit-based process is institutionalized for a fair recognition and reward practice to be carried out. Also, this process helps identify employees who needs mentoring and guidance in their roles. The right developmental and action plans will enable the organization to be fitter and more capable to manage market transformation. It may even be ready to lead the transformation.

A good Performance Management process can help the organization:

  • Institutionalize a merit based fair assessment process
  • Promote high-performance work culture in their teams.
  • Help struggling employees with necessary resources.
  • Evaluate team performance
  • Identify the scope for improvement.
  • Capture qualitative and quantitative feedback to draw insights.
  • Build a capable and robust workforce
  • Improve the quality of output.

Most popular Types of Performance Appraisal System

Performance appraisal systems vary according to the appraisal methods they support. These include:

Straight-Ranking Appraisal HR teams compare an employee’s performance with their colleagues and rank them. Effectively, they identify the best performers and the worst performers through the process. Yet, it’d be a challenge to evaluate most employees who lie in the middle. So, even though it’s a simple method, it needs to be meticulous to be objective and ensure fairness.

360-degree Appraisal When appraisals depend on one person, it’s easy for the recency bias to affect the evaluation. Since this method involves colleagues, clients, and customers, it is considered as one of the preferred practices in HR feedback management. Many Fortune 500 firms use this feedback process as part of the employee evaluation process.

Management by Objectives In this evaluation method, managers and employees set goals together. When employees get involved in goal setting, they’re more likely to get energized and motivated to hit their goals. The performance discussion between manager and employee is aimed at providing constructive feedback. So, this feedback process becomes a positive one overall. However, interim, and regular check-ins will ensure that employees get timely mentoring and are not surprised with the feedback at the end of the appraisal period.

Main Features to Look for in a Performance Appraisal System

Goal Setting and Management An employee’s career aspirations need to be in line with the larger organizational picture. That’s the best way to boost a firm’s growth. It’s also excellent to foster and encourage employees to perform better. While ensuring that the right resources are put in the right jobs. It is extremely important that clear expectations are set and communicated right at the beginning of the year. There are multiple objectives that need to be covered in the goal setting process such as financial, customer centric, developmental etc. so that there is holistic growth at an individual and combined organizational level.

Periodic Performance Discussions A big miss that HR teams can make is to restrict the review process to the appraisal season only. By doing so, they’re missing out on all employee achievements that precede the time. While some proactive employees might still get their due, many might forget the milestones they’ve achieved. Similarly, interim check-ins could enable employees to showcase their plans, talk about challenges and seek guidance. Thankfully, periodic performance reviews can solve this problem.

Recognition process Organizations need to motivate employees to do their best continuously. The best way to encourage and build a high-performance work culture is through recognition. Recognizing performance achievement, methods adopted, and right behaviors will not only motivate the achievers but give the confidence to others that they can also achieve if the right method, and behaviors are applied.

Final Thoughts

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