Performance appraisal – objectives and process

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What is performance appraisal?

‘Performance appraisal is the process whereby an individual’s performance is reviewed against previously agreed goals, and whereby new goals are agreed which will develop the individual and improve performance over the forthcoming review period’ (BPP Learning Media, 2010, p.166). It is a process which you can apply as a manager (and/or with performance appraisal responsibility) to carry out a systematic evaluation of the performance of your employees.

Objectives of performance appraisal

You may ask why organisations should carry out performance appraisals. Well, there are certainly many reasons as to why they should do it. Firstly, they can measure the performance of employees. This can help them improve the performance of employees and potentially increase their future prospects.

Secondly, performance appraisal offers organisations an opportunity to provide their employees with feedback concerning their performance. Thirdly, it helps organisations identify the strengths and weaknesses of employees which becomes a basis for future training and development programmes. Fourthly, it helps them develop a culture of adequate, timely, and appropriate performance measurement system.

Performance appraisal process

As mentioned above, performance appraisal is a systematic process. Usually, there are five stages in that process as follows:

Identification of specific performance appraisal goals

The process starts with an identification of specific performance appraisal goals. You need to identify specific appraisal goals. There are different types of goals that you can set, and of course, they must be in line with your company policy. To improve computer literacy, to improve communication skills, to improve product knowledge, and to improve productivity etc. are some examples of appraisal goals.

Establishing and communicating performance criteria

In this stage, you need to set up certain standards you are going to use to assess the actual performance of the employees. These criteria will help you determine whether the employees are successful or unsuccessful in meeting the goals that have been set. You must ensure that the criteria are clear and do not contain any ambiguity. Once the criteria are set, communicate them to all the employees of your organisation. This helps employees understand what they are going to be assessed against.

Measuring performance

This is the most difficult part of performance appraisal. Here in this stage, you need to assess the actual performance of the employees. It is important to ensure that the measurement is not influenced by any kind of bias. Another important issue is the selection of appraisal methods e.g. self-appraisal, upward appraisal, 360 degree appraisal etc. Appraisal policy of your company will determine the method of appraisal.

Appraising the results

To assess the results of appraisal, you need to compare the actual performance with the predetermined standards. This should help you to reveal the deviation between standard performance and actual performance. This leads you to the execution of the last stage of the process.

Discussing appraisal with employees

This is the last stage where you are to discuss the results of the appraisal with employees concerned. You need to ensure that the employees understand your feedback. You must handle this very carefully as performance feedback may occasionally lead to emotional outburst for some employees.

Performance appraisal in practice

Performance appraisal is a common practice in organisations. For example, McDonald’s conducts performance appraisal twice a year. The helps the company measure performance, set objectives and discuss the training and development needs of the employees. Performance appraisal in McDonald’s is in line with its overall company strategy and each individual’s job description (McDonald’s, 2014).

To conclude, performance appraisal is an important performance management tool. It helps organisations assess performance of employees and how they contribute to the achievement of organisational objectives.

We hope the article has been useful for you. You may also find ‘Employee training’ useful. If you liked this article, please share it by clicking on the icons below.

The article publication date: 28 October 2017

Further reading/references

BPP Learning Media (2010) Human Resource Management, 1st edition, London: BPP Learning Media Ltd

McDonald’s (2014) What makes McDonald’s? available from http://www.mcdonalds.co.uk/ukhome/whatmakesmcdonalds/questions/running-the-business/employees/i-would-like-to-know-about-the-performance-management-system-and-performance-appraisal-of-mcdonalds.html (Accessed 27 October 2017)

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Author: Joe David

Joe David has years of experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality and tourism management.