Performance appraisals can sound intimidating and negative. But while most managers aren’t fond of them (and employees even less so), they are crucial to guiding personal progression and business growth—and something to encourage.
They might feel like an obligatory tick-box exercise, but appraisals are an opportunity to guide performance and improve morale. This makes them beneficial for everyone—from individual employees and managers to your entire organisation.
Let’s look at the importance of appraisals and how to carry them out effectively for an instructive and positive experience for everyone involved. First, let’s look at why they matter.
Why do performance appraisals matter?
Performance appraisals have different benefits for both your organisation and your employee themselves, including:
- Employee growth: Performance appraisals help to identify career advancement opportunities within the company and the pathways to reach them.
- Engagement and retention: By showing your people that you care about their progression, you help to boost morale and engagement. It will improve talent retention, too.
- Improving communication: Appraisals create a routine cycle for discussion between manager and employee, making sure everyone is on the same page when it comes to performance and expectations.
- Accountability: By creating a formal process to set and review targets, you keep your team accountable for their performance towards their targets and the business’s wider goals.
- Fairness: A well-structured performance appraisal process provides a standardised approach to evaluating performance, which can support fair decision-making and reduce bias.
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Different types of performance appraisals
A performance appraisal is a great way to evaluate your team’s individual performance. Let’s dig a little deeper into the different methods for appraisals:
Rating scales
Rating scales are a common method of performance appraisal. They’re straightforward to use and can quickly and clearly show employees who are excelling and those not doing so well against a set of pre-determined criteria. This method is useful for providing a consistent framework to evaluate different employees and can make it easier to compare performance across a team.
It’s a great way to collect feedback from multiple people at a time. As for picking what kinds of scales to use, that’s up to you. However, we recommend using a numbered scale. A 0-10 scale allows for more granular tracking, so you get a true indication of where the employee sits.
360-degree feedback
360-degree feedback is a popular tool for appraising performance. Its beauty lies in the fact that multiple people within the organisation can give constructive feedback about a team member’s performance (with the option of anonymity depending on how you want to approach it). This method offers a fuller picture of an employee’s skills and behaviours by incorporating perspectives beyond managers, making feedback more balanced and comprehensive.
This can include their colleagues, supervisors, managers, and even customers; basically, the people who work with them the most and have done for at least 6 months.
It can give your team members open, honest insights into how they’re performing and offer them opportunities for growth, strengthening collaboration within teams and removing any biases that can cloud people’s perceptions.
Self-assessment
As the name suggests, self-appraisals are when your team evaluates their own performance, behaviour, and areas for development before you do so. This type of assessment encourages ownership of their work, taking the time to reflect on their own achievements, and acknowledging areas for improvement.
Management by objectives
This type of assessment involves setting out a range of attainable performance goals with each member of your team and a realistic time frame to reach them. This creates a good foundation for your next appraisal, where you can discuss progress and new goals or additional support.
Management by objectives is a great approach as it allows your employees to play a part in the targets they are set, creating a dialogue between you and them that makes it easier to measure their progress, both in terms of individual projects and their career progression as a whole.
The challenges with performance appraisals
There are plenty of challenges when it comes to effective performance appraisals:
Personal biases
Unfortunately, personal bias can get in the way of performance appraisals. Manager biases or reliance on subjective input from colleagues can distort the process.
On the other hand, managers may cause an inaccurate view of things by deliberately giving low scores to encourage motivation, or give an undue high score based on one instance of good performance, despite shortcomings in other areas.
Large gaps between appraisals
Your people aren’t going to be able to gauge their progress if you’re not committed to regular feedback in between appraisals. This can lead to confusion, frustration, and resentment because your team doesn’t know how they’re doing and how to improve.
Using performance management software can help to automate the appraisal process with automated cycles to keep the feedback process flowing all year round, not an occasional tick-box activity.
Lack of recognition
It can be tempting to focus on areas where your people are falling short at work, as it’s this that prevents progress. The result of this can leave your team feeling unappreciated.
The recent Good Work Index proves that respect and recognition go a long way. 92% of employees who state that their manager recognises that they have done a good job say they achieve their objectives, compared with 76% of employees who disagree that their manager recognises their good work.
It’s just as important to make sure you recognise their strengths and achievements at work, as well as providing constructive feedback for areas of improvement.
How to create a good performance appraisal process
For performance appraisals to achieve their goal, they need to be conducted effectively. While no business will hold appraisals the same, here’s a good structure to follow to make sure that the appraisal process is fair and well-documented:
- Establish an appraisal method: Depending on the individual and how long they have been at your business, you need to choose the correct appraisal method for them. For example, a management by objectives appraisal might only be necessary quarterly, whereas you might benefit from monthly employee self-assessments.
- Measure performance against previous goals: Compare their performance against the targets you set previously. Have they met the deadlines set? Performance management software can make this step of the process easier, keeping all your people metrics in one spot so you can see clearly how your team is progressing.
- Draft competencies and job standards for each employee: Building on how your team has performed against their previous goals, plan new targets for them to follow. These should align with both individual growth but also the company’s overall targets.
- Schedule a one-on-one interview to discuss the review: Arrange time for an open, two-way conversation where feedback can be shared constructively. Use the time to agree on the clear, achievable objectives for the next appraisal period, using the ones you have drafted as a guide. This is an opportunity for both the manager and employee to discuss progress, challenges, and development opportunities in a supportive setting.
- Document ready for HR: Once both parties are satisfied, ensure the review is formally signed and stored securely—either digitally or in print. This creates a clear record of discussions, agreed goals, and accountability for future performance cycles.
Streamline the performance appraisal process with Cintra
Performance appraisals are more than just an HR necessity. By sticking to a clear and fair structure where goals are discussed openly and constructively, appraisals can be your golden ticket to unlocking morale across your team.
With the right performance management software, it can make the process even easier. And, luckily for you, we have just the thing. With Cintra, you have a piece of software that automates review cycles and keeps performance progress in one place, from performance appraisal checklists to built-in analytics.
Cintra People HR Software
HR software that brings HRIS, payroll, performance, and engagement together—helping you see what’s really happening in your workforce, solve challenges quickly, and make work better for everyone.
