Knowing the advantages and disadvantages of performance appraisal will allow you to choose the best method for your company. By integrating these evaluations into your company’s strategic plan, you help improve your teams’ competencies and encourage your employees’ self-development in line with your organization’s objectives.
In this article, we share valuable information that will help you choose the type of performance evaluation that best suits your business so that you can start investing in human capital today.
Advantages of performance appraisal
Performance appraisal is a system that allows you to measure how a person’s work develops in a specific period.
Its result facilitates the implementation of some actions such as retribution, salary increase, change of position, change of role within the team, corrective measures, and training plans.
Performance appraisal can be very beneficial for your company because of its possibilities for both the employee and the organization itself.
For the employee
Some of the benefits of performance evaluation for the employee are:
- It increases their motivation.
- It enhances their security by knowing the aspects of behavior and performance most valued by the company.
- Improves communication with superiors, subordinates, and colleagues.
- It detects errors in job design and interaction with other professionals.
- It favors self-criticism and self-evaluation.
The results obtained in these evaluations help you to draw up an action plan and training programs to manage talent.
For the company
As we have already mentioned, the advantages of performance evaluations for the company are numerous:
- They limit subjectivity.
- They improve team productivity and efficiency.
- They help to plan and organize work better.
- They detect competencies and skills that might go unnoticed.
- They support the design and execution of talent retention strategies.
- Facilitate decision-making on promotions, remuneration, etc.
- They allow establishing professional career plans.
Giving performance evaluations a place in your organization also improves your company’s image by promoting talent attraction.
If, in addition to the above classification, if we categorize performance appraisals by degrees, we would find the following advantages.
90-degree performance appraisal
In this method, the person in charge of an area or direct supervisor evaluates his subordinate, focusing on conduct and behavior values.
This exchange favors communication between the actors and makes it possible to detect problems in defining objectives or training needs in specific competencies.
180-degree performance appraisal
In the 180-degree evaluation, the supervisor evaluates a subordinate, who is assessed by his peers, i.e., his colleagues. The feedback promotes communication between departments and improves performance.
270-degree performance appraisal
This evaluation is carried out by three different evaluators: the direct manager, the colleagues, and the subordinates.
The fact that the manager can be evaluated makes it possible to detect possible errors in leadership or the definition of objectives.
360-degree performance evaluation
This procedure seeks to design global development programs because the information is gathered from all perspectives: the superior, the colleagues, the subordinates or collaborators, and the customers.
The advantage lies in this feedback from different angles, which allows evaluation based on other professional skills and abilities.
Disadvantages of performance appraisal
The disadvantages of performance evaluation are linked to not choosing the ideal method for the strategy or not having the necessary training or resources.
If you see the fact of having to allocate resources to develop these evaluations as a disadvantage, consider that betting on human capital will result in cost savings in the medium and long term.
There are different methodologies for implementing performance evaluations. Specifically, you can choose between 90, 180, 270, or 360-degree assessments.
Remember that selecting the right system is one of the critical steps in a successful appraisal process.
90-degree performance evaluation
Its primary disadvantage is that the results can be subjective because they are not contrasted with the opinion of other people.
In addition, negative comments may make the parties uncomfortable if there is not a good relationship between the participants.
180-degree performance evaluation
The most relevant disadvantage arises because not all areas of the employee’s activity are evaluated, and the test result may be somewhat subjective.
Performance evaluation 270 degrees
The main disadvantage may be that it does not count on the evaluation of the clients, and in some profiles, this feedback is highly recommended.
360-degree performance evaluation
If we look at the disadvantages, the first is the system’s complexity. By retrieving a multitude of data that must be converted into value, it needs adequate resources to be successful.
The best way to manage all the data extracted from the performance evaluation is with a software program that monitors the test and collects the parameters and reports that you can then transform into wealth for your company thanks to the care of human capital.