The term “performance appraisal” refers to the regular review of an employee’s job performance and overall contribution to a company. Also known as an annual review, employee appraisal, performance review or evaluation, a performance appraisal evaluates an employee’s skills, achievements, and growth, or lack thereof.

Companies use performance appraisals to give employees big-picture feedback on their work and to justify pay increases and bonuses. They can be conducted at any given time but tend to be annual, semiannual, or quarterly.

The Purpose of Performance Appraisals?
Performance appraisals are usually designed by human resources (HR) departments as a way for employees to develop in their careers. They provide individuals with feedback on their job performance, ensuring that employees are managing and meeting the goals expected of them and giving them guidance on how to reach those goals if they fall short.

Performance appraisals also help employees and their managers create a plan for employee development through additional training and increased responsibilities, as well as to identify ways that the employee can improve and move forward in their career.

Types of Performance Appraisals

Most performance appraisals are top-down, meaning that supervisors evaluate their staff with no input from the subject. But there are other types:

Self-assessment: Individuals rate their job performance and behavior.

Peer assessment: An individual’s work group or co-workers rate their performance.

360-degree feedback assessment: Includes input from an individual, supervisor, and peers.

Negotiated appraisal: This newer trend utilizes a mediator and attempts to moderate the adversarial nature of performance evaluations by allowing the subject to present first. It also focuses on what the individual is doing right before any criticism is given. This structure tends to be useful during conflicts between subordinates and supervisors.

Some Criticisms of Performance Appraisals?

1. Performance appraisals are designed to motivate employees to reach and/or exceed their goals. But they do come with a lot of criticism.

2. Distrust of the appraisal can lead to issues between subordinates and supervisors or a situation in which employees merely tailor their input to please their employer.

3. Performance appraisals can lead to the adoption of unreasonable goals that demoralize workers or incentivize them to engage in unethical practices.

4. Some labor experts believe that the use of performance appraisals has led to lower use of merit- and performance-based compensation.

5. Performance appraisals may lead to unfair evaluations in which employees are judged not by their accomplishments but by their likability.

Benefits of a Performance Appraisal?

1. When executed correctly, performance appraisals can pay off significantly. Among other things, they are capable of boosting employee morale and engagement, clarifying expectations, helping to get the best out of staff, and incentivizing hard work and dedication.

2. It’s not just companies that benefit, either. Open lines of communication make it easier for employees to raise concerns, express themselves, find their right path, feel appreciated, and be rewarded when they do a good job.