Encouraging Performance Improvement.
How can anyone improve if he doesn’t know how he’s doing right now? A good performance appraisal points out areas where individuals need to improve their performance.
Motivating Superior Performance.
This is another classic reason for having a performance appraisal system. Performance appraisal helps motivate people to deliver superior performance in several ways. First, the appraisal process helps them learn just what it is that the organization considers to be ‘‘superior.’’ Second, since most people want to be seen as superior performers, a performance appraisal process provides them with a means to demonstrate that they actually are. Finally, performance appraisal encourages employees to avoid being stigmatized as inferior performers (or, often worse, as merely ‘‘average’’).
Setting and Measuring Goals.
Goal setting has consistently been demonstrated as a management process that generates superior performance. The performance appraisal process is commonly used to make sure that every member of the organization sets and achieves effective goals.
Counselling Poor Performers.
Not everyone meets the organization’s standards. Performance appraisal forces managers to confront those whose performance is not meeting the company’s expectations.
Determining Compensation Changes.
This is another classic use of performance appraisal. Almost every organization believes in pay for performance. But how can pay decisions be made if there is no measure of performance? Performance appraisal provides the mechanism to make sure that those who do better work receive more pay.
Encouraging Coaching and Mentoring.
Managers are expected to be good coaches to their team members and mentors to their proteges. Performance appraisal identifies the areas where coaching is necessary and encourages managers to take an active coaching role.
Supporting Manpower Planning.
Well-managed organizations regularly assess their bench strength to make sure that they have the talent in their ranks that they will need for the future. Companies need to determine who and where their most talented members are. They need to identify the departments that are rich with talent and the ones that are suffering a talent drought. Performance appraisal gives companies the tool they need to make sure they have the intellectual horsepower required for the future.
Determining Individual Training and Development Needs.
If the performance appraisal procedure includes a requirement that individual development plans be determined and discussed, individuals can then make good decisions about the skills and competencies they need to acquire to make a greater contribution to the company. As a result, they increase their chances of promotion and lower their odds of layoff.
Determining Organizational Training and Development Needs.
Would the organization be better off sending all of its managers and professionals through a customer service training program or one on effective decision making? By reviewing the data from performance appraisals, training and development professionals can make good decisions about where the organization should concentrate company-wide training efforts.
Validating Hiring Decisions.
Is the company hiring stars, or is it filling itself with trolls? Only when the performance of newly hired individuals is assessed can the company learn whether it is hiring the right people.
Providing Legal Defensibility for Personnel Decisions.
Almost any personnel decision—termination, denial of a promotion, transfer to another department—can be subjected to legal scrutiny. If one of these is challenged, the company must be able to demonstrate that the decision it made was not based on the individual’s race or handicap or any other protected aspect. A solid record of performance appraisals greatly facilitates legal defensibility when a complaint about discrimination is made.
Improving Overall Organizational Performance.
This is the most important reason for an organization to have a performance appraisal system. A performance appraisal procedure allows the organization to communicate performance expectations to every member of the team and assess exactly how well each person is doing. When everyone is clear on the expectations and knows exactly how he is performing against them, this will result in an overall improvement in organizational success.
Need for employee training
These appraisals also identify the necessary training and development needs to employees to close the gap between current performance and desired performance.
When it comes to organizational performance and employee growth, you simply can't afford to ignore performance appraisals. However, there is one major mistake that most leaders make. They conduct massive and rapid appraisal processes without knowing the objectives of performance appraisal.
However, we know it can be difficult to decide or pinpoint the precise goals that should guide your appraisals. Thus, in this article, we'll review some key points to consider when determining your appraisal goals.
But first:
What Is Performance Appraisal?
Performance appraisal is the periodic evaluation of employees based on the quality and quantity of their job performance.
The performance appraisal process is also popularly referred to as:
- Performance evaluation
- Performance review
- Merit rating
- Employee assessment
Introducing a performance appraisal process helps highlight employees' skills and competencies while aiding their development. It is also critical to assess an employee's contributions to the team.
Similarly, knowing the objectives of performance appraisal will give you a better idea of how a successful performance appraisal process should be carried out.
9 Top Objectives Of Performance Appraisal For Evaluating Employee Development
Listed below are the top 9 objectives of performance appraisal applicable not only for performance reviews but also for any formal meetings with your employees:
Objective 1: Goal Setting Is Integral To Systematic Evaluation
If you want to build a superior performance appraisal system, it's important to create a baseline. Creating a baseline means noting down what goals you expect to achieve.
You do this so that later— after the appraisals are done— you can review the goals and gauge if you managed to tick them off the list.
That is why goal-setting should be a non-negotiable part of your performance evaluation process. Whatever you want to accomplish with your performance appraisal system, goal setting is the first step.
However, it's easier said than done. Most managers and supervisors tend to set over-optimistic goals that become really hard to accomplish. Cue lower morale, higher stress levels, and lingering tension between managers and employees.
That is why, when setting goals, keep the following pointers in mind:
- Clear Expectations: Setting goals makes it simpler to establish the expected performance standards. However, employees need to understand what you're expecting from them. You must be clear about the criteria used to evaluate job performance when setting goals.
- Involve Your Employees While Setting Goals: Subsequently, allow employees to have a say in the goal-setting process. Discuss how much time, resources, and guidance the employee will need to achieve their set goals.
- Utilize A Goal-Setting Framework: The key to effective goal-setting is to prioritize quality over quantity. Use a goal-setting framework such as SMART to ensure that you are setting high-quality goals.
Objective 2: Provide Frequent Feedback For Increased Job Performance
There's no way to get better at something you only hear about once a year.
~ Daniel Pink
The performance review should, ideally, not be the first time an employee hears about their job performance.
Throughout the year, employees should receive constructive feedback from their manager on their performance and what they can do to improve. The annual review should serve as a summary meeting in which the employee is judged on how well they received and acted on feedback.
72% of respondents thought their performance would improve if their managers provided corrective feedback.
~ HBR
Employees, both good and bad, require timely feedback to reach their full potential. The amount and quality of feedback given vastly enhance the performance appraisal process. With frequent and meaningful feedback, an employee:
- Receives regular updates on their work performances. Thus, the employee gets a chance to look at and improve on their strengths and weaknesses.
- Positive feedback motivates employees to improve their performance.
- Regular feedback makes it easier to assess the data later during the performance evaluation.
To get the most out of a feedback process, invest in something more meaningful than the traditional feedback process. According to SHRM:
29% of organizations that use peer review feedback reported it had the most positive effect when it was ongoing rather than given just at certain times of the year.
360-degree feedback is a more modern and systematic approach to feedback analysis. Feedback is gathered not only from the manager but also from those who interact and work with the employee. This ensures that the data received is more accurate and up-to-date.
A big part of performance appraisal is to give employees what they need the most. And that happens to be career development.
Your employee expects at least something out of their annual reviews. For some, it's to get promoted. For others, it's being given a pay raise. A select few also demand extras like switching teams, changing job roles, or landing a managerial position.
The inability to give employees what they want can end up in employees leaving the company.
47% of millennials started looking for a different job after receiving their performance review.
~ Adobe
As a manager, you definitely don't want that to happen.
You ought to be able to balance the company's and your employees' interests during annual reviews. This is how to do it:
- Have regular 1:1 discussions with the employee. Employees will not design new expectations during the day of their performance review. Most likely, it is something that they have already been thinking about. Holding informal discussions with your employees allows you to understand where their demands are coming from. So, when the day of the annual review dawns, you know what to do.
- Lay the groundwork. A month before the official review, ask your employees to jot down the points that they want to discuss during the review. Compare these expectations with the notes you have kept of the employee over the year. If you think employees' expectations are realistic, you can design a plan to fast-track the decision. If not, you can look for other alternatives you can offer them during the review.
Objective 4: Encourage Higher Levels Of Work Quality And Quantity.
An effective performance appraisal system helps companies communicate performance standards and what behaviors are reward-worthy. Here's how it's done:
An effective performance appraisal process establishes a clear standard for the level of work expected of the employee. That, in turn, becomes a roadmap for employees to follow.
For employees who want to further their career development, the performance appraisal process motivates them to perform at the top of their game.
Employees gain insight into their strengths and weaknesses when they receive a thorough report of their work performance.
Performance reviews serve as a wake-up call for underachievers, motivating them to step up and work harder towards their goals.
Objective 5: Counsel Poor Performing Employees
The harsh reality is that not everyone will meet your company's standards. However, telling an underachiever that they did not meet the performance evaluation standards is a hard task for the manager.
Most managers make a mistake here by focusing only on the negative aspects. Discussing only the negatives of someone's work performance may make the employee resent you.
Nearly half of millennials (47%)— after receiving their performance reviews— felt like they couldn't do anything right.
~ TriNet
Poor performers are often aware that their job performance is subpar. Instead of being mocked (as they might expect), a manager should instead counsel the underperformers.
Notice how I used the word "counsel" here. That's because you don't need to reprimand your employees for making them see their shortcomings.
Counseling in itself is a two-way process. The manager needs to work with the employee to understand the cause of the unsatisfactory quality and quantity of work.
Balancing strengths and weaknesses is the key to delivering an actionable performance review for an underachiever.
Objective 6: Determining Training And Development Needs
Many managers and supervisors believe that once the review is done and dusted, they don't have to worry about it for another year. Such a limiting mindset is not helping your company or your employees in the long term.
An effective performance appraisal system doesn't stop at the review. It delivers an action plan for what happens after the review.
Performance reviews are not just about praising the best workers or criticizing the underachievers. The goal is to enable underperformers to overcome their weaknesses while assisting top performers in capitalizing on their strengths.
Did you know that:
74% of millennials feel "in the dark" about their work performance and how they could improve.
~ TriNet
It shows how most employees are unaware of how to improve their performance, even after a performance evaluation. That does kind of defeat the purpose, doesn't it?
That is why it is critical for managers to:
- Assess the training and development needs during the performance review.
- Design a training and development program to help your people enhance their skills and competencies.
After the performance evaluation, managers can better spot areas where employees are falling behind. This, in turn, helps managers decide the type and frequency of training required on a company-wide basis.
Objective 7: Creating A Plan To Improve The Performance Of The Employees
A performance appraisal is a great base to start identifying the areas of strengths and weaknesses of your workforce. These evaluations make it simpler for managers to express their expectations clearly.
But don't just stop there.
The next step is to build an action plan that builds on your employees' strengths and gets rid of their weaknesses.
However, for that to happen, the action plan needs to:
- Clearly state your expectations to the employees. Transparency is the key here. Unless employees know what is expected of them, they will not be able to work towards the relevant goals.
- Issue a deadline. A deadline makes it easier for employees to stay on track and map their progress over time.
- Introduce a PMS (performance management software). Manually keeping track of your employees' progress is unfeasible and confusing. Especially if you are dealing with a large workforce. A PMS will solve all of these problems and more.
These action plans might include further training and development, additional mentoring, or more efficient goal-setting. The manager should make sure that the employee is kept in the loop with continuous feedback.
Objective 8: Impact-Driven And Meaningful Recognition
69% of employees say they would work harder if they felt their efforts were better recognized.
~ HBR
It's incredible to be recognized. But it is especially powerful when you expect your manager to share only negative reviews, i.e., performance reviews.
Appreciating your people during their annual reviews says:
I see what you've done over the years and believe you're an indispensable asset to the company.
A formal performance appraisal process makes it easier for managers to reward and recognize the company's top performers. Rewards can be in the form of bonuses, salary hikes, or even monetary incentives.
However, rewards can also be non-monetary compensation, such as company awards, promotional opportunities, and more exciting projects. In the long term, you'll need to modernize your process to make it more effective and productive for the company.
Objective 9: Transparency Behind How Performance Is Evaluated
50% of employees were surprised by their ratings. Out of those, 87% were negatively surprised.
~ Inside HR
Unless the performance appraisal process is completely transparent, your workforce will be confused as to how their performance is being evaluated. An untransparent review process also makes it easier for biases, favoritism, and discrimination to creep in.
Here's what human resources managers can do to ensure that transparency is not an afterthought but rather a pre-requisite to the performance evaluation process:
- Start during the onboarding process. Right during induction, make your new hires aware of how the performance evaluation process works. It becomes much easier for new hires to perform at a certain level when they know what to expect.
- Train your managers on how to be transparent while reviewing the employees.
- Have a performance review handbook. It should include a section for both managers and employees on how to get the best of the performance reviews.
FAQs: Objectives Of Performance Appraisal
1. What is performance appraisal?
Performance appraisal is a systematic evaluation of an employee's performance over a specified period of time.
2. What are the two main purposes of performance appraisals?
When it comes to performance appraisals, there are two main purposes:
- Evaluative: Its goal is to inform your employees about where they stand in terms of performance. Performance data is used to reward top performers and identify underachievers.
- Developmental: It is meant to find the root causes of why employees fail to meet their goals. The performance data is then used to provide employees with the necessary training and development.
3. How frequently should you conduct performance appraisals?
Previously, the trend was to conduct annual reviews. However, a year is a long time in which many things can change. That is why, when it comes to measuring performance, it is not a reliable period of time to wait. Most businesses now conduct performance reviews every 3-6 months.
Companies use the following tools when conducting performance appraisals:
- Ranking
- Paired Comparison
- Forced Distribution
- Confidential Report
- Essay Evaluation
- Critical Incident
- Checklists
- Graphic Rating Scale
- BARS
- Forced Choice Method
- MBO
- Field Review Technique
- Performance Test
5. Who should undertake the performance appraisal or evaluation?
The employee's managers and supervisors typically lead the appraisal process. Some companies also use 360-degree feedback and involve others, such as the human resources manager, coworkers, and customers.
Summing It Up
When you know the objectives of performance appraisal, you automatically gain a competitive edge over others.
That's because you start making more rational decisions regarding how to boost organizational development.
Meanwhile, your employees are happier and less likely to move to other greener pastures.
It's certainly a win-win situation, isn't it?