Performance appraisals, commonly known as performance reviews, are systematic evaluations of employees’ job performance and contributions to their organizations.
These assessments are crucial for aligning individual achievements with company goals, identifying areas for improvement, and encouraging professional growth.
But what is a staff appraisal exactly, and what does evaluation mean at work?
This article provides an in-depth look at staff appraisals, exploring various types of performance reviews, their benefits and challenges, and future trends in employee evaluations.
We will also share practical tips for conducting performance evaluations and provide examples of positive feedback for different scenarios to motivate and inspire employees.
What is a performance appraisal?
A performance appraisal consists of structured assessments of an employee’s work.
These reviews, which typically occur quarterly or yearly, provide an opportunity for employees and managers to discuss job performance, achievements, satisfaction level, and areas for improvement.
Performance appraisals help companies track employee progress and make informed decisions about salary adjustments, promotions, and leadership development.
They also serve as a tool to identify employees who may benefit from additional training, paid education, or other professional growth opportunities.
During these reviews, managers assess the value employees bring to the company, discuss challenges they face in their roles, and explore career advancement options within the organization.
This process ensures that employees feel heard and supported while allowing companies to address concerns, boost morale, and enhance overall productivity.
By conducting regular performance appraisals, businesses can create a motivated and engaged workforce.
Lessons from research
According to SHRM, 93% of organizations carry out employee performance reviews, with 71% of them conducting yearly performance appraisals.
While the potential of performance reviews to enhance workplace productivity is undeniable, research reveals significant dissatisfaction surrounding them.
A survey conducted by Gartner in 2019 revealed that 95% of HR executives reported being unhappy with traditional performance reviews, and 77% of HR directors believe that performance evaluations fail to accurately reflect employee performance (source: LinkedIn Talent Blog, 2016).
Performance appraisals are intended to provide constructive feedback and motivate employees, but research suggests they may not be achieving this goal completely.
In fact, according to a 2017 study by Adobe, 47% of millennials began looking for a new job after receiving their performance review.
These findings highlight a growing concern about the effectiveness of traditional review methods but, despite widespread dissatisfaction with conventional performance reviews, employees still value regular feedback.
In fact, 76% of employees prefer receiving at least monthly performance reviews and feedback (source: TruQu), as regular feedback makes them nearly three times more likely to be engaged in their work (Gallup, 2019).
What should a performance appraisal evaluate?
Numerous aspects can be considered, such as strengths and weaknesses, but these may vary from one organization to another. However, some aspects should be part of any performance appraisal process:
- Future goals: There should always be a clear path forward for employees, focusing on evaluating while recognizing that the past is unchangeable, and the only aspect one can influence is future performance.
- Employee satisfaction: Evaluating an individual’s mood, personal-professional balance, and sense of value and appreciation within the company is crucial for future annual reviews.
- Realistic objectives: Assessing whether set objectives were realistic, especially when unmet, is essential to improve the process.
Performance appraisal methods
Throughout history, there have been various methodologies that have helped companies evaluate the performance of their employees. Some have survived to the present day: the so-called modern appraisal methodologies.
They can be combined, giving managers a much more comprehensive picture of an employee’s performance.
However, performance reviews are not always used to assess subordinates only. More often than not, companies ask employees to evaluate their direct managers too.
Moreover, employees may be asked to evaluate themselves or their peers. Additionally, companies can request feedback from customers.
Taking this into account, performance appraisals can be classified by hierarchy or degree. Let’s explore the different types of evaluations in more detail.
Hierarchy-based performance appraisals
While top-down appraisals are the most common performance evaluations, employees may be asked to evaluate their direct managers, their peers, or themselves.
Top-down appraisals
In this type of appraisal, Managers or HR team members assess an employee’s performance at specific intervals.
- Narrative appraisals: These are written performance reviews that provide personalized, qualitative feedback on an employee’s strengths, areas for improvement, and overall contributions.
- Ranking appraisals: These reviews involve comparing employees against each other, assigning rankings based on performance. They are controversial because they can create unhealthy competition and lower the employees´ morale.
- Behaviorally Anchored Rating Scales: BARS appraisals use specific behavioral examples to rate performance. Instead of using abstract or general criteria, it links performance levels with concrete behaviors.
- Management by Objectives: MBO involves setting clear, measurable goals for employees. It focuses on achieving specific outcomes, often using KPIs or OKRs to track progress and evaluate performance against established objectives.
- Performance review grids: The most popular one is the 9-Box Talent Matrix, used in employee evaluations to assess and categorize performance across various criteria, including leadership skills.
- Competency assessments: These evaluations are used to determine an employee’s skills, knowledge, and abilities. To ensure integrity and fairness in these assessments, companies can use proctoring tools.
Bottom-up appraisals
This is the reverse of the previous method, where managers receive evaluations from their employees.
After all, organizations want to determine if the designated managers are meeting expectations, so the more information they gather, the better.
For example, a company may want to evaluate where a manager stands in relation to the 5 levels of leadership. For this purpose, employees may be asked for their feedback.
The bottom-up appraisals help companies identify common issues and address them effectively.
Peer-to-peer appraisals
In this type of review, employees assess their colleagues, providing valuable insights about those they work closely with.
Self-evaluations
Employees are often asked to assess their own performance to later discuss their perspective with their manager.
When asked to evaluate themselves, many individuals wonder what to say in a performance review as an employee.
Since performance appraisals provide a chance to connect with team leads or HR, employees should prepare in advance by listing the personal achievements and contributions that management might not be aware of, for example.
It is also important for them to discuss the challenges they have faced to achieve their goals.
Attending these sessions with an open mind is essential, as constructive feedback fosters both personal growth and contributes to the company’s success.
As you have seen, organizations aim to gather as much information as possible to make well-informed decisions. To achieve this, they often seek input from various sources, including clients.
To gain a more thorough understanding, organizations can combine different sources of information, leading to degree-based performance reviews.
Degree-based performance appraisals
There are different methodologies for implementing performance evaluations. Specifically, companies can choose between 90, 180, 270, or 360-degree assessments.
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.
180-degree performance appraisal
In the 180-degree evaluation, the supervisor evaluates a subordinate, who is assessed by his peers.
270-degree performance appraisal
This evaluation is carried out by three different evaluators: the direct manager, the colleagues, and the subordinates.
360-degree performance appraisal
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.
Benefits of performance appraisals vs. challenges
Knowing the advantages and disadvantages of performance appraisals will allow companies to choose the best method for evaluating employees.
By integrating these evaluations into their strategic plan, businesses help improve their teams’ competencies and encourage self-development in line with the organization’s objectives.
Benefits of performance appraisals
Performance appraisals allow companies to measure how a person’s work develops in a specific period.
Their 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 appraisals, as well as performance based learning, can be very beneficial for a company because of the possibilities they offer for both the employee and the organization itself.
For the employee
Some of the benefits of performance evaluation for the employees 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 organizations 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.
- They facilitate decision-making on promotions, remuneration, etc.
- They allow establishing professional career plans.
Giving performance evaluations a place in an organization also improves a company’s image by promoting talent attraction.
Disadvantages of performance appraisals
These are the most common challenges that performance evaluations present:
For the employee
- Biases: Biases, such as cultural factors, can lead to unfair assessments. It’s crucial for organizations to train evaluators to minimize personal biases and focus on objective criteria.
- Extended periods: Due to the extended time periods between reviews, employees don´t receive regular feedback, which serves as a guide to improve their performance.
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For the company
- Methods: Choosing the right evaluation method can be challenging, as various approaches may produce different results. Organizations must carefully select methods that align with their goals and ensure consistency across assessments.
- Resistance: Employees may resist performance evaluations due to fear of negative feedback or lack of trust in the process. Clear communication and transparency about the purpose and benefits of evaluations can help mitigate it.
- Budget: Some companies may not have the resources that performance appraisals and training require. However, investing in human capital will lead to cost savings in the medium and long term.
- Technology: Not all organizations have the right software to collect and process data, yet performance management programs are essential for making informed decisions.
What is performance management software?
Performance management software are programs used by organizations that help track, evaluate, and improve employee productivity and development.
These solutions produce reports that companies can use to drive revenue and growth.
Some examples of these programs are goal setting and tracking software, employee engagement and development platforms, and learning and development software.
More pros than cons
By this point, it is clear that the benefits of performance appraisals outweigh the drawbacks.
However, as highlighted by the studies mentioned earlier, there is considerable room for improvement, which is where technology plays a key role.
Technology in performance appraisals
Advancements in technology, particularly artificial intelligence, offer promising solutions with regards to performance appraisals.
AI can reduce bias, ensuring more objective and fair reviews by analyzing performance data without human prejudices.
Artificial intelligence can also predict employee behavior, identifying patterns that may signal potential for leadership roles or the risk of employees leaving the company, also known as flight risk.
Additionally, proctoring tools powered by AI can ensure assessments are more evidence-based and accurate.
While technological advancements undoubtedly improve performance appraisals, organizations should avoid overreliance on employee evaluation software.
The most effective performance reviews are built on clear communication, fair evaluation criteria, continuous feedback, and employee development.
The principles outlined below remain essential for successful performance appraisals.
Tips for conducting performance appraisals
Conducting effective performance evaluations is crucial for employee growth and organizational success. Here are five tips to help you carry out performance reviews:
- Be specific: Establish clear performance criteria to ensure unbiased reviews. Define performance standards and communicate them to employees, so expectations are clear.
- Be fair: Measure performance objectively using KPIs or OKRs. Compare individual achievements against established benchmarks to ensure consistency and fairness in assessments.
- Use actionable language: Ensure the evaluation is easy to understand. Use clear, concise language that employees can act upon to improve their performance.
- Balance feedback: Offer both positive and constructive feedback. Encourage open dialogues that allow employees to ask questions and clarify areas for improvement.
- Offer guidance: Give employees direction, highlighting practical steps to overcome challenges and develop their skills.
By following these tips, employees will feel fairly evaluated, and the constructive feedback, along with positive reinforcement, will motivate them to continue growing based on their professional development plan.
Positiveness is crucial in performance reviews, as employees are more likely to act on feedback when delivered in a constructive manner.
Performance appraisals: examples of phrases
Here are 9 examples of positive feedback that, instead of generating dread, will inspire employees to grow and improve.
Attendance
Instead of saying, “You repeatedly fail to show up on time and it’s not a professional behavior,” try saying: “It would be helpful if you could arrive earlier, allowing you to start tasks sooner and make the most of your day.”
Time management
Instead of saying, “Your time management is poor, and you’re not meeting deadlines,” try saying: “I’ve noticed there are times when deadlines are challenging to meet. With a bit more focus on prioritizing tasks, I believe you can manage your time more effectively and consistently hit your deadlines.”
Adaptivity
Instead of saying, “You struggle to adapt to changes, and it’s causing delays,” try saying: “I’ve noticed that adapting to changes can be challenging sometimes. By staying flexible and embracing new approaches, I’m confident you’ll find it easier to adjust and keep projects on track.”
Communication
Instead of saying, “You don’t communicate well, and it’s causing confusion,” try saying: “I’ve noticed there are times when clearer communication could help prevent misunderstandings. By being more proactive in sharing updates and asking questions, you’ll improve clarity and keep everyone aligned.”
Creativity and innovation
Instead of saying, “You’re not coming up with new ideas, and it’s holding back progress,” try saying: “I’ve noticed that you tend to stick to familiar approaches. Embracing more creative solutions and exploring new ideas could really drive innovation and add value to our projects.”
Productivity
Instead of saying, “You’re not meeting your targets, and it’s affecting the business,” try saying: “I’ve noticed that some tasks are taking longer than expected. Let’s work together to identify any obstacles so you can achieve your goals more efficiently.”
Problem-solving
Instead of saying, “You struggle with problem-solving and often need assistance,” try saying: “I’ve noticed that when faced with challenges, you tend to seek help quickly. With more practice in analyzing situations independently and exploring different solutions, you’ll enhance your problem-solving skills.”
Interpersonal skills
Instead of saying, “You don’t get along well with your colleagues and it’s affecting teamwork,” try saying: “I’ve noticed that building stronger connections with your teammates could enhance collaboration. Focusing on active listening and being open to different perspectives will help improve your interpersonal relationships and teamwork.”
Leadership
Instead of saying, “You’re not leading the team effectively,” try saying: “I’ve noticed there are times when you could step up more in leading the team. By taking more initiative and offering guidance, you’ll strengthen your leadership skills and inspire your team to perform at their best.”
Technology: the hope for more effective performance appraisals
Appraisals are crucial for evaluating employee performance across all industries worldwide.
While they offer more benefits than drawbacks, there is still potential for improvement, with high expectations placed on technological advancements.
AI-powered tools like proctoring solutions can facilitate the process of evaluating employees, helping businesses make data-driven decisions.
We invite you to get to know our proctoring plans. Our solution generates customized reports to help you with your evaluations. Request a free demo here.
