What you should know about performance appraisals
As its name states, a performance appraisal is used to review employee performance in their role. In the section below, we define what a performance appraisal is and highlight why these employee evaluation systems are in place. We also provide insight into the benefits it brings to both employees and employers.
What is a performance appraisal?
Performance appraisals are tools that are used to regularly evaluate employees’ performance. The appraisal is structured and assesses the achievement of goals. Managers and human resources teams use this tool to understand employees’ accomplishments in their roles. It aims at providing them guidance on any development opportunity, unsatisfactory performance or the identification of talents. Performance appraisals tend to be annual or bi-annual. They deliver essential feedback to employees and employers.
Feedback for employers
Performance appraisals are essential for managers who get to assess their teams, identify areas that need development and even spot talent for promotions.
Feedback for employees
Employees should use the performance appraisal to demonstrate their value to the business. They can use the feedback provided to continuously develop by understanding their strengths and weaknesses.
The core benefits of performance appraisal
As seen above, performance appraisals are essential to both employers and employees. By providing a formal structure to the assessment, it can provide the benefits below.
Enhancing the performance of employees
By setting clear goals and delivering feedback, performance appraisals provide valuable insight to employees on both the business’s expectations and how they can develop. Through the formal structure that the appraisal provides, leaders are able to assess and support their team members. On the other hand, employees gain awareness of their potential and in areas where they need to improve. The process directly impacts employees’ performance and the business’s long-term performance.
Ensuring that the business and the employee agree on goal-setting
When employees have been in their role for more than a year, there’s a risk that their goals may become unclear, particularly if their progression curve is steep. The fact that performance appraisals are structured and occur every year or twice a year brings some necessary reflection on the employees’ achievements in their role. Both the leader and the employee can reflect on what the employee’s goals should be in order to support their career development.
Creating a space for feedback and opening a dialogue
In a way, performance appraisal forces managers and employees to take a step back from the day-to-day job. They sit down together and review objectives, discuss performance, deliver feedback and much more. The process opens communication and creates a dialogue.
Planning for employee development
Most employees want to develop and seek promotions. To achieve their career plans, they need to know where they need to improve. The performance appraisal gives them just that: clear visibility of their strengths, weaknesses and areas of development to focus on to achieve their career goals. Managers could also provide them with the feedback and guidance they need to support their goals.
Supplying key insight for talent management
Talent is often identified through performance appraisals. The process gives HR teams the visibility that they need to find high performers. Doing so allows them to create promotion plans, identify potential future leaders and, more generally, plan for growth.
How to create a performance appraisal form
Some thought and planning need to go into performance appraisals. There are some key principles that you could follow to make your appraisal more effective and not counterproductive. HR teams and managers may benefit from using the correct method to organise the appraisal and from using templates and communicating with employees beforehand. This section offers some examples of the types of appraisals that are available, with a template.
Three examples of appraisal types for managers
The type of appraisal to use depends on the nature of the job as well as the company culture. Let’s have a look at the types of performance appraisal with some examples.
Management by objectives
Also referred to as MBO, the management-by-objectives appraisal method brings together managers and employees to discuss, plan and evaluate the employee’s objectives. It is focused on results.
360-degree feedback
360-degree feedback, as its name implies, looks at the employee’s performance from many angles. It collects feedback from leaders, customers and colleagues. The process increases the employee’s awareness of their performance and how they are perceived by others.
Human resource cost method
This type of appraisal is often conducted by human resources teams. It aims at gaining an understanding of the value of the employee to the business from a financial standpoint. This type of appraisal is necessary for small businesses that need to have awareness of the monetary value that their employees bring.
The appraisal will also vary depending on the type of work. The ACAS website provides performance appraisal examples templates with:
- Appraisals based on job objectives
- Appraisals for manual workers
- Assessing potential for promotion
- Self-appraisal
- Appraisal scheme review questionnaire
Check the ACAS Appraisal templates page for more.
Template for performance appraisals based on job objectives
The section below provides you with a template for performance appraisals based on objectives. Leaders can adjust this template, but it helps to maintain a similar structure from one appraisal to the next for consistency.
Employee’s name:
Department/Business unit:
Job title:
Date of the appraisal:
Manager’s name:
Current performance
Objective 1:
Key objectives of the job should be recorded one by one here. Track discussions for each objective and highlight how they were or were not achieved, how the employee overcame hurdles or how they succeeded in delivering on the task.
Objective 2:
Objective 3:
Development opportunities:
In this section, the manager may mark areas of development. For example, this could be a skill gap that the employee will need training for. This section is also an opportunity to highlight where the employee is excelling and, therefore, where they should continue to enhance their skills.
Development and training plan:
Here, focus on the training plan that will lead the employee to overcome any of their skill gaps. Managers may suggest training, different types of projects or collaborative work with more senior colleagues.
Other comments:
Any other comments from the employee or the leader could be highlighted here. It is essential that they are tracked, as they may influence the results of other sections.
Assessment:
The assessment section is the result of the appraisal. Here, the leader will gauge the overall performance of the employee against their objectives.
Option 1: Outstanding performance (applies when objectives are exceeded)
Option 2: Performance meets expectations
Option 3: Expectations partially met (applies when some objectives are achieved but others aren’t)
Option 4: Expectations not met or unsatisfactory performance (high need for development and improvement is required by the employee)
Employee’s signature:
Manager’s signature:
Date:
The manager and the employee should each have a copy of the appraisal. Sometimes, it is also shared with HR to ensure consistency through leadership changes.
Performance appraisals are valuable tools for both the business and its employees. Having structured templates in place may help leaders assess their teams whilst giving employees goals to aim for and development opportunities. For more on performance management, have a look at our content below:
