Employees, as well as managers, often question why organizations do employee performance appraisals.
Anyone who has ever been on the receiving end of a performance appraisal could argue why they perceive it to be ineffective and a complete waste of time.
Employees often feel unjustly assessed, and managers often go through a forced annual process to comply with job expectations. This doesn’t make it easy for either party.
So what exactly is a performance appraisal?
A performance appraisal is an evaluation done on an employee’s job performance over a specific period of time.
It is the equivalent of a report card on an employee and how their manager assessed their performance over the prior year.
Anyone who has worked in more than one department or at more than one organization can attest to the fact that not all performance appraisal processes are the same.
The varying systems and processes are all over the map.
Unfortunately, some are done so poorly that they are not only designed to fail, but also to create a negative experience for both the manager as well as the employee.
So why do organizations do performance appraisals?
There are many varying opinions on the subject of performance appraisals and why they are done.
Some organizations do performance appraisals because they feel obligated to do them – because everyone else does.
Other organizations do performance appraisals to make sure they have a piece of paper in the employee’s file – in case they ever need to do corrective action.
But successful organizations understand the importance of incorporating performance appraisals into their performance management process and strategy.
They use this tool to encourage, engage, and develop their talent pool.
Advantages of Performance Appraisals
Documentation: A PA provides a document of employee performance over a specific period of time. It’s a piece of paper that can be placed in an employee file.
Structure: This process creates a structure where a manager can meet and discuss performance with an employee. It forces the uncomfortable conversations that often need to happen.
Feedback: Employees crave feedback, and this process allows a manager the opportunity to provide the employee with feedback about their performance and discuss how well the employee goals were accomplished. It also provides an opportunity to discuss employee development opportunities.
Clarify Expectations: Employees need to understand what is expected of them and the PA process allows for a manager to clarify expectations and discuss issues with their employee.
Annual Planning: It provides a structure for thinking through and planning the upcoming year and developing employee goals.
Motivation: The process should motivate employees by rewarding them with a merit increase and as part of a comprehensive compensation strategy.
Disadvantages of Performance Appraisals
Creates Negative Experience: If not done right, the performance appraisal can create a negative experience for both the employee as well as the manager. Proper training on processes and techniques can help with this.
Time Consuming: Performance appraisals are very time consuming and can be overwhelming to managers with many employees. I’ve known managers who were responsible for doing an annual PA on hundreds of employees.
Natural Biases: Human assessment are subject to natural biases that result in rater errors. Managers need to understand these biases to eliminate them from the process.
Waste of Time: The entire process can be a waste of time if not done appropriately. Think about the time investment when the end result is negative. It is time wasted on all fronts.
Stressful Workplace: Performance appraisals can create stressful work environments for both employees and managers. Proper training can help to reduce the stress involved in the process.
Finally, performance appraisals are only as good as the performance management system it operates within.
Organizations that only do performance appraisals for the sake of doing them are wasting their time.
But organizations that incorporate performance appraisals into a comprehensive performance management system and use them to implement business goals have an advantage for accomplishing their goals and ultimately their strategic plan.
If you are interested in learning more about performance appraisals, you might find the book Performance Appraisal Source Book: A Collection of Practical Samples
