Importance of Performance Appraisals and How to Conduct them Effectively

The Importance of Performance Appraisals

People work in organizations for monetary and nonmonetary reasons. While monetarily, employees look forward to increasing pay and perks, they also look for job satisfaction and fulfillment in their jobs. Thus, the motivators that determine whether a particular employee would stick to the job or leave the organization are based on the monetary and nonmonetary incentives.

For instance, monetarily, they might be expecting a pay rise every year in addition to healthy bonuses. In the same manner, they expect recognition for their work as well as job satisfaction through challenging assignments. As all these aspects are determined during the appraisal process where not only the pay and perks but also the chances for promotion and being given more fulfilling work are decided.

Thus, it is clear that performance appraisals must be taken seriously in addition to being accorded the importance they deserve. Indeed, performance appraisals can be thought of the most important time in an employee’s stint with the organization and hence, they must also be conducted with care and caution.

In addition, given the fact that managers also share feedback, performance appraisals can be occasions for letting the employee know where they are doing well and which aspects they need to improve their performance.

Why Performance Appraisals Must be Conducted with Care and Caution

Given these reasons and factors that deem how important performance appraisals are, most organizations have well-defined processes in place to conduct and review employee performance. While some organizations conduct performance appraisals every six months, the others do an annual review of performance.

Apart from this, the performance appraisals also involve multiple levels of employees wherein the immediate manager and the manager’s manager usually take part in the reviews along with the concerned employee.

Further, some organizations also require the Human Resources Manager to take part in the reviews in addition to the designated people manager for that particular project.

Indeed, while this is not the norm in all organizations, the presence of the HR manager is required when the employees have to be told about placing them on performance improvement plans and other enhancing initiatives so that such programs can be reviewed and their work monitored for compliance or noncompliance.

Apart from this, performance appraisals usually entail multiple rounds of discussion wherein the concerned employee first uploads his or her perceptions about how well he or she did on the HR portal and then, the manager and the manager’s manager share their feedback which is followed by face to face discussions and the final closure is given after all parties agree to the contents of the review.

Indeed, most multinational organizations have a policy of requiring the consent of the employee with regards to the rating and the feedback, and this is the reason, the presence of the HR manager helps in cases where the employee refuses to give his or her consent.

Moreover, performance appraisals are usually tied to the financial or the operational year so that pay and bonuses, as well as promotions, can be linked to these timelines. Indeed, many multinational organizations conduct performance appraisals in the calendar year-end whereas Indian firms usually conduct such reviews in the financial year-end.

Apart from this, the other reason why performance appraisals are so important is that the recognition of employee performance and the subsequent rewards and incentives system follows the review wherein the top performers usually are given awards during the organizational In-House and Town Hall gatherings.

In other words, the review and the ratings are followed by such rewards for the top performers in addition to placing them on the premium or fast-track career paths that are usually confidential between the HR manager and the line manager.

How to Conduct Performance Appraisals Professionally

Given these aspects, performance appraisals must be conducted with care and caution. While good reviews and top performers usually have a pleasant discussion with their managers, it is the middle ranked employees who often lead to the most intense and difficult discussions.

Indeed, while those at the bottom would have been expecting such reviews or have resigned themselves to their fates (literally as well as figuratively), it is the employees who expect their reviews to reflect their performance in the top bracket but, instead are rated near the top or in the middle who often pose challenges for the managers and the HR managers.

This is the reason why managers often budget quite some time for such reviews where they need to convince the employees ranked near the top or in the middle that their ratings are warranted and justified.

Indeed, such reviews often stretch into multiple rounds because the concerned employees need much persuasion and convincing to make them agree and consent to the final rating.

Also, sometimes, such reviews often turn bitter and personal, and this is the reason why some HR managers often make it a point to be present during such reviews to avoid unpleasant situations from developing.

Above all, our advice to both the employees and their managers is to ensure that such discussions do not become bitter or personal and it is better to keep such meetings professional and pleasant irrespective of whether the employees and the managers are “on the same page” in terms of the contents of the reviews as well as the ratings.

To conclude, performance appraisals form a crucial and critical part of the employee experience and hence, it is better to conduct them as professionally and as diligently as possible.

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