Why Performance Appraisal is Important in an Organization

Performance appraisal is the process of evaluating, identifying, and developing the work performance of an employee. It assists the organization in achieving its objectives and goals. Businesses often use this process to provide feedback to their employees and provide other additional perks.

Today, we will discuss why performance appraisal is important in an organization. Keep an eye for knowing to the full extent.

Reasons to Implement Performance Appraisal

Any company can use performance appraisals to identify the best candidates for promotion and set guidelines for compensation. Performance appraisal is an integral part of employee recognition. With performance appraisals in place, it is possible to identify the strengths and weaknesses of an employee. Let’s discuss them in detail:

Measure and Reward the Performance of an Employee

Performance appraisals are an amazing way to track the performance of an employee. It can show which employee is going above and beyond to perform a task. According to this procedure, the company can determine which employees deserve to receive performance bonuses and higher paychecks.

There are several ways to track and measure the performance of an employee. The management can have one-on-one discussions, 360-degree evaluations, or formal KPIs-based evaluations. The company should collect data based on certain periods of time like monthly, half-yearly, or yearly. This will provide enough information to the managers to review the employees.

Improve Employee Development

Performance appraisal provides data to the employees to where they are doing well and what can be improved. The underperforming employees can easily know where their shortcomings are and can improve them accordingly.

With a clear understanding of where the employees require improvement, the management can suggest training programs or courses. Also, the company may provide personal development plans as a part of performance appraisal. It will allow the employees to set development goals and enhance their performance over time.

Identifying the Employee Potential

While conducting performance appraisals, the management has the opportunity to talk one-on-one with the employee. Therefore, they can have the opportunity to learn about their values and future plans.

With this information, the management can map out a path of success for the employee. It may involve developing skills and enhancing their performance further. In a nutshell, performance appraisal allows the company to identify the employee’s talents and nurture them further for the good of the organization.

Management of Changing Roles

The workplace is always changing. These changes occur either from environmental issues or the implication of the latest technology. Also, the organization may grow and offer new services.

Performance appraisal can give a way to share such information with your employee. You can address their concerns and how these changes will affect their performance.

Managers can explain the changing goals and schedule training for the employees to cope up and thrive in changing situations.

Enhancing Employee Performance

A performance appraisal not only encourages employees to develop their skills but also challenges them to improve their performance. The managers can set higher goals for employees to reach. As a result, they can enhance their productivity and performance efficiently.

However, while setting goals, the manager shouldn’t set the bar too high. The goals should be achievable and contain enough time to reach. Otherwise, the employees can lose motivation, and productivity may suffer.

Gives Employees Voice to Raise Concerns and Ideas

In some instances, the employee may feel like they are not heard enough. It may discourage employee motivation and strike productivity.

For an organization to grow and function flawlessly, it is crucial to assure the employees of their worth in the organization. Listening to their ideas and concerns is the best way to provide them this assurance.

For a large organization, it is often hard to address all the ideas and concerns of each employee. However, performance appraisal allows the management to hear the employees.

While performing performance reviews, the management can encourage the employee to ask questions and input their unique ideas. Also, the management can ask them what can make their performance better.

Often the performance appraisal is done one-on-one. Most employees may feel comfortable discussing their concerns in such a setting. However, if the management is really keen to improve the condition, it must provide the employees a feeling of safety while doing performance appraisals.

Help in Future Recruitment

Another perk of performance appraisals is, it allows the management with the recruitment process. The administration can gather data of the present employees. This enables HR to revise its recruitment process and strategize future hiring.

Bottom Line

Motivated workers are an asset to an organization. However, the motivation of an employee depends on the behavior of the organization. Performance appraisal arms the organization with proper ways to enhance performance and motivate employees.

When employees feel valued in an organization, they give their best for the betterment of it. Therefore, if your organization is yet to adopt performance appraisal, it is high time to do it.

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