The importance of employee appraisals

The employee appraisal is used across the business world as a key element of performance management plansc

First published on Thursday, Jun 04, 2020

Last updated on Thursday, May 25, 2023

What exactly are the benefits of performance appraisals? How would you justify the use of employee appraisals in your workplace if they are not currently part of the rewards and remuneration process?

Employee appraisals have many benefits ranging from the identification of employee shortcomings and training needs, to the identification of your organisation’s top performers. The benefits of the employee appraisal are multifaceted.

The appraisal is a vital tool in the assessment and reward of performance

The obvious benefit of employee appraisals is the time it affords you to assess your employees’ performance. Your organisation benefits from periodic assessments for various reasons such as: -

  • ensuring employees are meeting the standards expected of them
  • assessing the performance of your team and rewarding top performers with bonuses, promotions or other relevant rewards
  • taking corrective action if any employees are not meeting the required standards.

Continuous improvement  

It is important to monitor your employees’ performance. The employee appraisal provides a valuable opportunity for your HR function to review past performance and set future development goals. Personal development plans (PDPs) are used by many organisations as part of the performance appraisal. The PDP will establish development goals that each employee will strive to achieve before their next appraisal.

The appraisal is equally important from the point of view of identifying employees who are not meeting the standards expected of them. If an employee is underperforming, the appraisal is a perfect time to discuss any skills gap which exist and training needs that would improve performance.

Talent identification

The importance of appraisals is two-fold. While identifying below par employees who need assistance is one useful outcome from the appraisal process, the flip side is that appraisals provide a window to take some time with your best performers and to consider their career development. Top performers will benefit even more from specific training and the performance appraisal provides an opening to settle on a fast track promotion path.

The identification and management of talent is the key benefit of the performance appraisal process. In the absence of a well-run appraisal system you run the risk of letting talented employees slip through your fingers. Identifying, retaining and developing star employees is only possible by implementing an effective appraisal process. The future success of your organisation depends on it.

The appraisal as a tool in change management  

As your organisation evolves so too will the roles your employees fill. Improvements in technology, the opening of new markets or a change in direction for your organisation will impact on both individual employees and the number of employees under your control. Clear communication will be required to help employees understand the impact of any such changes and how their role will be affected. Using appraisals as part of the management of organisational change highlight the importance of an effective appraisal process. Appraisals afford employers a chance to: -

  • explain any new duties and obligations the change entails
  • establish goals or KPI’s associated new duties
  • provide details of training or courses that need to completed.

The appraisal as a tool to boost performance

In addition to setting personal development goals for employees the appraisal is a good time to set challenging goals and targets linked to the performance of your organisation. If a team of employees improve their work performance, your organisation should enjoy a boost in productivity.

Setting goals that are specific, realistic and achievable will ensure that the targets do not inadvertently demotivate employees. Aim to support your performance feedback with relevant data. If an employee has fallen below previously recorded performance levels, this will serve as useful information around which to discuss their performance.

Give your employee the floor

Employees should be made aware of the significance of appraisals to their career development. The appraisal also represents a chance for employees to provide you with feedback on your performance! Encourage your employees to vocalise their concerns, worries or areas they feel the organisation could improve upon.

The value of listening to your employees is incalculable. When management listen to employees and take action to resolve employee concerns, employees will in turn be happier and more motivated. This will be reflected in organisational benefits such as improved productivity and team performance. As you can see, the importance of appraisals should not be underestimated.

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