Doing an employee performance appraisal is not easy. If you have been working for a very long time, you must have had an employee appraisal at one point but now that the responsibility is on your shoulder, we bet you must be tensed and worried on how to go about it. Well, we can assure you one thing in that case! With this post, you might not have to worry anymore. In today’s article, we have discussed how to do a employee performance appraisal the right way and ways in which you can keep your employees happy with the results. Keep reading to find out!

how to do performance appraisal

What is Performance Appraisal?

Performance appraisal can be defined as the annual review of every employees overall contributions that have been made towards the company and their manager. The performance appraisal methods which is also called annual reviews have to evaluate the growth and achievements of the employee. The companies also use appraisals of the employee so that they can give some of them a bigger picture feedback on the work so that they can justify the bonus and the increases, along with decisions which have been terminated.

What is an Appraisal in a Business?

Appraisal at work is defined as an informal process using which any employee can discuss the training as well as development needs with the help of an appraiser. The process will enable a way of communication which is two way between the organization as well as the employee. It will also help you get a much better understanding of the needs inside the organization. Alongside you will also get a much better picture of the needs of every employee and what their requirements are.

How to Communicate Performance Appraisals the Right Way?

The procedure of performance appraisal system or doing an employee performance appraisal has to be done separately. You cannot do it in front of a bunch of people. Otherwise your employees will feel insulted. You don’t have to mark any common mails to everybody. If you really don’t like the idea of sending mails to people, you should create another common id where every individual may have to register by using their passwords, pulling out the form of appraisal. The employee evaluation form will have information about the designation of the employees, their grades, their level in the hierarchy and a few responsibilities.

It should be done in private:

All conversations with your employees must be kept private. Always remember that appraisals are very sensitive and must be handled in a graceful manner. You could call one of the employees in your cabin or inside the conference room to find out in case they require any guidance or help on your behalf. Calling them in a group would lead to confusion. They will never want to open up in that way. Once the appraisals have been completed, you have to say the same to the employees which could be a bigger challenge. Don’t ever send the peon to send the letters. It could be insulting. You have to call them one by one and talk about it.

They need to be motivated:

You should congratulate every person no matter what the salary is or what promotion or hike they need. You must also appreciate every person who is feeling consistent and most importantly, be loyal always towards people in your organization. You should appreciate people who are consistent and encourage those who can do better. You must not let people feel like they are left out. You have to sit with people, give them targets and guide them too, so that they can work better and perform even better in the future.

What is Employee Evaluation?

The following mentioned below are few employee performance evaluation done by employers.

1. Make sure to get everyone involved:

The first thing you must do is make sure more people are involved in the process. Every employee has to be evaluated on the basis of a performance plan which takes place quarterly. These plans have been developed collaboratively at the company meetings itself. This means that everyone will know about it and may also put some input on one another’s plans. They have been kept and shared in a file and are tied to the company’s scorecard so that everyone can keep each other accountable. The staff has complete transparency and have full directions regarding the performance. They will be assessed as they can help in creation of new targets as well as regular discussions with the mentor as well as the manager.

2. Coin theory:

The coin theory is actually quite popular and has been sued by several experts from around the world. If you use this as well, we bet you can benefit from it majorly. When we speak to the term coin, we are basically saying that you should measure both sides of the coin. If you happen to be working in a sales environment, it would also mean that you are measuring the revenue as well as the profit margins. Alongside you will be handling customer service where you have to measure the calls as well as see if there is enough customer satisfaction. The key here is to find a good mix whether the key has been balanced by a metric.

3. Seeing core values:

One of our experts recently told us that the company they work in has recently used the entrepreneurial operating system which helped them understand that the scorecard method they are using is not valuable. Internally, they have also scored the staff in a monthly way and how they can live outside the core values. Annually, the colleagues will also score one another and how they can demonstrate such values. You also have to share them with other clients and see if they can be scored or how good can they show off their core values. The method will also help you maintain the culture of the company at ease.

4. Having more lunch meetings:

Lunch meetings are quite essential if you didn’t know. I have used this process with success in the past couple of years and it has worked wonderfully. Both the CEO and myself would take lunch with the other employees to understand the account of the company. If we notice that an employee is being managed by some other direct manager, they will still attend but they will also be discouraged from speaking. We will also come up with a few questions which are ahead of time and will also discuss few more during lunch. All you really have to do is act on the information that is given.

What are the Various Performance Appraisal Methods?

1. The Ranking Method:

The method of ranking is actually quite simple. It lets the employees get ranked on the basis of their performance, also it makes ranking much simpler and easy. In this method, the rater will have to rank people who are working under him so that the overall performance can be checked on. For this, you have to simply put one person according to the rank that they deserve. The position of these employees shall be tested on the basis of its numerical ranks. It could also be done by ranking someone on the basis of his job performance against someone who belongs to the group. However, there are a few limitations that also come with the ranking method, Firstly, no proper method or procedure as such is used for ranking people inside the organization. The ranking will not however eliminate the chances of giving away such judgements. Secondly, the method talks only of the position and where the person stands and not how well they have done or how good they can do in the future. Also ranking people become difficult when there are plenty of employees.

2. The method of forced distribution:

A second method that can be used for performance appraisal is popularly called forced distribution. Here the raters will be expected to allocate a few rates in terms of percentage to a few categories. It could be superior, average and above average. These numbers as well as percentage of the employees have to be allotted to all the categories and must function as a performance design appraisal. People who have performed outstandingly will be given first position. The rest could come as 30% good, 40% superb and 20% fair. There are several advantages that come with the method of forced distribution. First of all, it will easily remove all biasses of raters. Secondly, one will be able to avoid the problem of using different raters as well as different scales. A few limitations also come with the method. Firstly, it could cause very low morale, poor productivity levels as well as high absenteeism. Second, if anyone thinks they could be productive, they actually might find themselves in a bad position as a result of which they will feel bad and frustrated and over time they may not want to work.

3. The critical incident method:

In this method, the recruiting manager or the rater will come up with a proper list which consists of statements. They will have all kinds of statements, both which are effective and ineffective. The incidents of these events will represent the poor behaviour of these employees or how they have scored/progressed this far. The manager will now maintain the logs of all employees so that the incidents of every workers behaviour can be assessed easily. Towards the end, the incidents which have been used for evaluation will decide how the person has scored this far.

Advantages and disadvantages:

With the critical incident method, you have to provide an objective basis for having a proper and thorough discussion of performance employees. Secondly, the method also avoids all kinds of biasedness, The disadvantages include the rise of negative incidents and how they will become more conspicuous as compared to the positive incidents. Secondly, it could cause some close supervision which might not be liked by a certain employee. Third, recording of such incidents that could be a chore for the management that is concerned could be so busy that he forgets to check. Finally, most supervisors might unload all of their complaints regarding the incidents for the review sessions.

4. Checklists method and technique:

In such a system, a huge chunk of the statements which describe the job properly have been given. Each of them have been given a value or a scale that is attached to it. When you are rating the employee, the checks of these statements happen to describe the behaviour of such individuals under the assessment itself. The rating sheet has to be scored by checking the weights of all these statements which are not checked by raters. The checklist has to be constructed for every job by having people who are familiar with such jobs. These statements then have to be categorized by those who are judging. The statements will then be given according to value which has been attached.

Advantages and disadvantages:

With this method, you can easily evaluate the performance of the employee. However the method happens to be very time consuming and expensive. Secondly, the rater tends to become very biased. He could come up with both positive and negative questions. Third, it becomes hard for the managers to analyze and weigh the statements or even the characteristics as well as behaviour and contributions.

This brings the post to an end. I hope you have learnt enough about employee performance appraisal and will now be able to do it on your own easily. All of the methods enlisted above have their pros and cons. You need to check and scan them all thoroughly before you pick one for your employees. Also if you have some feedback for us regarding the post, let us know about it in the comment box below. We would love to hear more about your work updates. On that note, good luck !

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