Performance appraisal is a formal management system that provides for the evaluation of the quality of an individual’s performance in an organization.

Performance appraisals are a way to give feedback to staff regarding their performance. In organizations, performance appraisals are used to set measurable targets and objectives to continually spur performance improvement.

The appraisal can also be used to encourage good work as well as point out opportunities for improvement.

Performance appraisal is a tool for communicating the skills, knowledge and attitudes required for the different job roles. In these organizations, performance appraisal follows a four-phase model:- 

Phase 1: Performance planning

Performance planning is the first but most important phase of performance appraisals because at this time, the manager and his subordinate get together for the performance-planning meeting. They set the target, objectives and performance standards that the person will do in the job. They typically also discuss the individual’s development plans

Phase 2: Performance Execution

Over the course of the year the employee works to achieve the goals, objectives, and key responsibilities of the job. The manager provides coaching and feedback to the individual to increase the probability of success. He creates the conditions that motivate and resolves any performance problems that arise

Phase 3: Performance Assessment

During performance assessment, the manager/ reporting manager reflects on how well the subordinate/ team member had performed during the appraisal cycle/ period and assembles various forms / data to make the performance evaluation. The manager may also recommend career growth of his subordinate in the way of promotion, transfer, new role and compensation (at times), based on the quality performance delivery the completed assessment form is usually reviewed and approved by the appraiser’s boss.

Phase 4: Performance Review

This is the last but important phase of performance appraisal. In this phase, the manager/ reporting manager and the subordinate / reportee review the appraisal form that the manager has written and talk about how well the person performed during the appraisal period (the period cycle be half yearly or annual). They also initiate the discussion for next appraisal cycle performance-planning and setting up the targets.

Purpose of Performance Appraisal

Performance appraisal serves over a dozen different organizational purposes:

  • Providing feedback to employees about their performance
  • Setting and measuring goals
  • Counseling poor performers
  • Determining who gets promoted
  • Encouraging performance improvement
  • Encouraging coaching and mentoring
  • Facilitating layoff or downsizing decisions
  • Motivating superior performance
  • Determining compensation changes
  • Determining individual training and development needs
  • Determining organizational training and development needs
  • Supporting manpower planning or succession planning
  • Providing legal defensibility for personnel decisions
  • Confirming that good hiring decisions are being made
  • Improving overall organizational performance
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