Every employee in an organization is different. Their working methods, patterns, ideas, and skills vary from each other. So, to know about these factors of an employee, performance appraisal is done in an organization.
In simple words, performance appraisal is a review of the job performance of the employees. It is also known as an annual review, performance review, performance evaluation, or employee appraisal. A performance appraisal evaluates the contribution of an employee towards the company. Also, it reviews the skills and achievements of the employees. Moreover, performance appraisal is helpful to know about the growth or downfall of employees.
Performance appraisal can happen at any suitable time. It can be annually, semi-annually, or quarterly. Performance appraisal makes the work easy for a company. It helps the company to give a big-picture feedback to the employees. Similarly, performance appraisal also makes it easy to justify bonuses, promotion, termination, pay raise, and so on.
TYPES OF PERFORMANCE APPRAISAL
- Straight ranking appraisals
Straight ranking appraisal is a type of evaluation that ranks employees from best to worst. It compares all the employees of an organization. This type of review is easy to pick the best and the worst performer. But there are many average employees as well. So it might not be much productive for those.
Grading is a subjective method. It allows managers to find out the level of an employee in a particular skill. For instance, it finds out the level of an employee in teamwork, communication, attention, discipline, punctuality, and so on. The grades can be either A to F, or 1 to 5, or unacceptable to excellent.
- Management by objective
It is a type of performance appraisal that focuses more on a joint process than evaluation. In management by objective, both employees and managers set goals. They should achieve the goals in a particular time frame. This type of performance appraisal is about planning and being proactive. It has its perks. Some are:
- It avoids subjective bias. Therefore, it is considered a fair appraisal.
- It is not costly and time-consuming, compared to other types.
- It encourages self-awareness of employees.
- It improves employees’ ability. Hence, they perform better.
- Trait and behavior-based appraisals
Characteristics like creativity, extroversion, and confidence tells about an employee’s personality. Trait-based evaluations evaluate such features. It is necessary while dealing with outsiders and customers.
Behavior-based appraisals evaluate employee’s competence. It reviews the ability of an employee to carry out some specific task.
- Behaviorally anchored rating scale
Behaviorally anchored rating scale is a half-way between trait and behavior-based appraisals. This type of performance appraisal tries to combine the traits and behaviors of employees. It is useful for employees who need to be caring and confident, as well as the need to perform detailed tasks.
- 360-degree appraisal
360-degree appraisal is another type of performance appraisal. It includes every possible member who has contact with the employees. It reviews feedback from colleagues, clients, customers, and so on. Also, 360-degree appraisal provides a well-rounded view of the employees.
ADVANTAGES OF PERFORMANCE APPRAISAL
- A performance appraisal provides a proper documentation on employee performance over a specific time frame. The document is crucial for the employee file.
- Performance appraisal initiates the conversation between managers and employees. Discussing about the skills, abilities, or level of an employee can be awkward. But it is needed to be done. So, performance appraisal provides the opportunity.
- Feedback is very crucial for every employee. And performance appraisal gives all the necessary feedback to the employees. Also, it tells about their growth or downfall. Moreover, a performance appraisal also allows discussing the ways to achieve organizational goals.
- A performance appraisal clarifies the expectation of the organization to the employees. So, employees can know better about their roles. This way, it increases productivity as well.
- A performance appraisal helps to plan and make better decisions.
- The process motivates employees as well. A performance appraisal clarifies about the promotion and bonuses. So, employees are motivated.
DISADVANTAGES OF PERFORMANCE APPRAISAL
- Performance appraisal cannot work well without proper training and techniques. If the evaluation is not correct, it can create a negative experience among the managers and employees.
- A performance appraisal consumes a lot of time. Also, it can be overwhelming for managers.
- If the appraisal process is improper, the entire review can be a waste of time, energy, and money.
- Sometimes, performance appraisal can create a stressful work environment. It can also degrade the relationship between managers and employees.