Performance Appraisal | Everything you must know about effective performance appraisal systems in 2021!

Performance appraisals are important for an organization to track and motivate employees to remain productive. Learn everything about performance appraisals and how to set them up. Read on!

Performance appraisal

The performance appraisal process is the periodic evaluation of an employee’s job performance and overall contribution to the company. It is a measure of skills, achievements, growth in a given duration of time. The performance review process majorly focuses on the outcome of the efforts of an employee.

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What is performance evaluation?

Performance evaluation is another term for performance appraisal, defined as the measure of an employee’s work and results based on their job roles. The results of the performance evaluation process help in determining the appraisal, bonus, improvement areas, strengths, and promotion of an employee. 

Performance appraisal definition 

What is performance appraisal? The performance appraisal definition states that this is a systematic method of assessing an individual’s job performance. Based on the evaluation, the manager provides feedback to an employee that includes steps to improve in order to enhance the productivity of the team.

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Objectives of employment performance appraisal 

1. The employee appraisal helps in identifying the strengths and weaknesses of employees – Performance appraisal consists of different steps that help an employee in identifying their strengths and weaknesses. It is the responsibility of the manager to assign work based on employee’s strengths.
2. Motivate high performing employees through employee performance appraisal – The purpose of performance evaluation is not only to identify problem areas but also to appreciate the hard work done by the employees during the given duration.
3. Determine overall training needs through the employment performance appraisal – Effective performance appraisals of employees help in determining the training and learning needs of the team.
4. Employee appraisals are useful to set goals for the employees – Job performance appraisals are held to set goals and objectives for the employee in line with the company’s annual targets.
5. Conducting performance appraisals help in determining compensation – Manager performance appraisals help in deciding factors such as pay, bonus, etc.

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Benefits of performance appraisals 

Here are the benefits of the employee performance appraisal process,

1. Performance appraisals help in determining the strengths and weaknesses of each employee in an organization.
2. Motivate employees to work better through a merit-based compensation system. Compensation can be in the form of pay raise, bonus, etc.
3. Help in identifying low-performing employees who need further improvement to meet the job standards. 
4. Help in identifying the areas for training and workshops.
5. Results are a major factor in making decisions such as promotion, transfers, and rewards of the employees. 

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5 steps in the performance management process

Let us look into the 5 steps in the performance management process,

1. Planning – The planning stage of the performance management appraisal includes determining the goals and standards of an employee. Both managers and employees are involved in this process. The employee’s job description must align with the company’s goals and objectives.
2. Monitoring – The second stage of the employment performance management process is to continuously monitor the results achieved by an employee. Both employee and manager track the progress and development of the aforementioned goals and objectives.
3. Reviewing – In the third step, the employer and the employee review the results and accomplishments of the employee. They determine if there is a need for any additional training to further improve employee performance.
4. Improvement – The fourth and most important step of the performance management evaluations is to understand the reason behind the lack of performance of an employee. Managers should discuss with their employees to identify the issues.
5. Measurement – Performance measurement is a process of collecting data that helps managers in taking important decisions. Performance measurement helps in determining the factors to increase the organization’s productivity. Performance measurement results should be used responsibly by the managers.

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Performance appraisal methods 

Different performance appraisal methods are, 

1. Management by Objectives – Management by objectives is a performance appraisal method in which managers and employees together identify and organize objectives and goals to focus on during the set appraisal period.
2. 360-degree-feedback – A 360-degree feedback method is a multidimensional performance appraisal method in which an employee’s performance is evaluated based on the feedback collected from the employee’s circle namely peers, managers, clients, direct reports, etc.
3. Assessment Centre Method – The assessment center method involves employees taking part in social simulation exercises to not only assess the current performance but also predict future job performance. 
4. Behaviorally Anchored Rating Scale – The behaviorally anchored rating scale is known to bring both qualitative and quantitative benefits to a performance appraisal method. The employee performance is compared with specific behavioral examples that are tied to different numerical ratings.
5. Psychological Appraisals – Psychological evaluations are particularly handy in determining the hidden potential of an employee. The major focus of this kind of performance appraisal method is the future performance rather than the past work of an employee.
6. Human-Resource (cost) accounting method – The human resource accounting method assesses an employee’s performance based on their contribution towards the monetary benefits of a company.

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Performance review examples and comments

Conducting performance appraisal reviews is not an easy task. Here are few performance review examples with one positive and one negative comment each, 

1. Attendance – Punctuality is a desirable trait in an employee.
   • You meet the company standards of attendance and punctuality
   • You repeatedly exceed your tea/coffee breaks which have been observed to interfere with your work productivity.
2. Leadership – Managers and team leaders must have leadership qualities to treat their team fairly and equally.
   • You treat your employees fairly without any personal prejudices.
   • You fail at delegating tasks to your team fairly based on their competency.
3. Communication skills – Team members are required to communicate with each other honestly and clearly.
   • You are adept at communicating messages skillfully to your peers and clients.
   • You interrupt other employees in between meetings and discussions.
4. Teamwork – Employees should collaborate with each other to attain results faster.
   • Your peers find you very reliable.
   • You have been known to take credit for others’ work.
5. Problem Solving – Employees with high authority should be more skilled in problem-solving.
   • You come up with simple and practical solutions for complicated problems
   • You do not contribute to the team to come up with a solution.

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Performance Rating Scale

The performance rating scale is a sliding scale to measure an employee’s performance during a specific time duration. Few common examples are, 

1. The 5 point performance rating scale – 5 point rating scale method is the most commonly used performance rating method in companies worldwide. The employee is rated from 1-5 based on their performance, 1 being the least productive and 5 is an exceptional performance.
2. The three-point performance rating scale – 3 point rating scale is not that common but is a more easy and quick way to evaluate employees. It has one negative rating, one neutral, and one positive rating.
3. The four-point performance rating scale – 4 point scale is another important rating scale method that contains only 1 negative rating number. It aims at providing more ratings for performing employees and fewer ratings for employees who fail to meet expectations.
4. The 10-point performance rating scale – The 10 point rating scale is a more elaborative and time-consuming method to evaluate employee’s performance. As the name suggests, there are 10 different options to rate each employee.
5. Likert performance review rating scale – Likert rating scale uses five options same as the five-point performance rating scale but the options are written out instead of numeric.

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Employee performance management best practices

10 employee performance management best practices that managers should follow to increase productivity at the workplace,

1. Identify the purpose of employee performance management beforehand.
2. Set the goals of your employees through employee performance management. Also, tell them what is expected of them and what they can do to achieve them.
3. Proper training should be provided to the reviewers for conducting employee performance management.
4. Recognize the efforts of your employees during performance appraisal and reward them appropriately through bonuses, promotions, etc.
5. Identify the sources that might be the reason for ineffective performance.
6. Create an appropriate action plan based on the results obtained from employee performance management to increase the company’s productivity.
7. Continuously monitor your employee’s progress towards performance targets. If there are any interventions necessary due to a change in plans, ensure that they are done early.
8. Management should give actionable feedback in a constructive manner. Managers should focus on the future success of the employees.
9. Keep an open mind while discussing problems. The issues might be part of the management system instead of being employee-based.
10. Ensure that the entire employee performance management is professionally dealt with. Personal biases should not come in between the performance management process. 

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How to use unremot for a management performance review? 

unremot virtual watercooler is an online platform used to connect with peers and managers located remotely. It allows employees to connect socially with one another for official and unofficial discussions. The unremot virtual watercooler allows users to create different platforms dedicated to a specific purpose.

Managers can use this platform to hold management performance reviews and performance appraisals for their employees. Schedule 1-1 meeting with the employees to discuss the annual goals and objectives. Regular discussions with employees to track their progress by evaluating employee performance based on the accomplishments and results.

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