Performance Appraisal Process - Definition & Importance

Published in Human Resources Terms by MBA Skool Team

What is Performance Appraisal Process?

Performance Appraisal Process is defined as the series of steps which are undertaken in an organization (or Employer) to evaluate an employee on a set of pre-defined performance goals. Performance appraisal usually starts with goal setting which is initiated by the employee to set benchmarks or clear objectives on which he/she would like to contribute in the coming appraisal cycle. The performance goals can also be set by the employer in addition to the employee defined goals.

After the approval by the managers, these goals would be used to evaluate the employee at the end of appraisal cycle. After the cycle ends or in the middle of the cycle, employer can evaluate the employee on these set goals or objectives on basis of ratings objectively or even it can be done subjectively/qualitatively. The latter form is usually reserved for senior employees.

The evaluation compares the ratings with the goals set in the beginning and evaluation is mostly done through self ratings called Self Appraisal or done only by the supervisor. The ratings are calculated mostly on the degree to which the employee met the expectations.

The scores are calculated and compared in the similar band or job grade. The final results are communicated to the employee through formal feedback sessions. The most important thing to be kept in mind for a successful appraisal process is that it should be open and transparent for the stakeholders.

The image below summarizes the basic steps in the performance appraisal process:

Importance of Performance Appraisal Process

The performance appraisal process is very important in terms of employee ratings and growth. The performance of each employee is used to decide the career development in the organization. Salary raise and promotions are usually directly related to the process. Higher the ratings means better the performance, hence better growth in the company.

Also the company can know which employees are working as per expectations and which employees need further help to improve in the next cycle.

Advantages of Performance Appraisal Process

1. Employees can be evaluated properly on their performance

2. Comparative ratings can help reward better employees

3. Goals and Objectives keep the employee focused

4. Good employees can be found out through the process and better planning can be done for them.

Hence, this concludes the definition of Performance Appraisal Process along with its overview.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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