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Employee performance appraisal is when the performance of the employee is

assessed and discussed in thorough detail, with the manager communicating the
weaknesses and strengths observed in the employee and also identifying
opportunities for the employee to develop professionally.
Documenting performance provides a basis for pay increases and promotions.
Appraisals are also important to help staff members improve their performance and
as an avenue by which they can be rewarded or recognized for a job well done. In
most instances, a performance appraisal is completed quarterly or annually.

Human resources plays an important role in performance evaluations by ensuring
that the process is fair, accurate and managed appropriately.
Ensure a Fair Performance System. Human resource personnel are in charge of
ensuring that performance reviews are executed in a non-discriminatory fashion.
This can be done by calculating the percentage of employees that receive top
rankings by gender, age and any other applicable criteria.
Train Managers on Performance System. Human resources conducts
performance system training for every manager in the company. This ensures that
each manager is utilizing the system in the same way and is rating each employee
based on the same standards.
Manage Relationship Between Employee and Manager. Human resources
serves as a manager and mediator of any troubled relationships. After performance
reviews, human resources can check in with employees and managers and allow
them to voice any concerns that they have, then discuss the relationship and
provide feedback during meetings.
Record and Store Performance Reviews. Performance evaluation records
should be stored in a secure location or a digital database. Previous performance
reviews can then be used as a scorecard for employee progress and can be
accessed to assess promotions.

The main objective of performance appraisals is to measure and improve the
performance of employees and increase their future potential and value to the
company. Other objectives include providing feedback, improving communication,

understanding training needs, clarifying roles and responsibilities and determining

how to allocate rewards.
Providing Feedback. Providing feedback is the most common justication for an
organization to have a performance appraisal system. Through its performance
appraisal process, the employee learns exactly how well he/she did during the
previous twelve months and can then use that information to improve his/her
performance in the future.
Facilitating Promotion Decisions. Performance appraisal makes it easier for the
organization to make good decisions about making sure that the most important
positions are lled by the most capable individuals.
Facilitating Layoff or Downsizing Decisions. When economic realities force an
organization to downsize, performance appraisal helps make sure that the most
talented individuals are retained and to identify poor performers who effects the
productivity of the organization.
Encouraging Performance Improvement. A good performance appraisal points
out areas where individuals need to improve their performance.
Motivating Superior Performance. Performance appraisal helps motivate
people to deliver superior performance in several ways. First, the appraisal process
helps them learn just what it is that the organization considers to be superior.
Second, since most people want to be seen as superior performers, a performance
appraisal process provides them with a means to demonstrate that they actually
are. Finally, performance appraisal encourages employees to avoid being
stigmatized as inferior performers (or, often worse, as merely average).
Setting and Measuring Goals. The performance appraisal process is commonly
used to make sure that every member of the organization sets and achieves
effective goals.
Counseling Poor Performers. Not everyone meets the organizations standards.
Performance appraisal forces managers to confront those whose performance is not
meeting the companys expectations.
Determining Compensation Changes. Almost every organization believes in
pay for performance. Performance appraisal provides the mechanism to make sure
that those who do better work receive more pay.
Encouraging Coaching and Mentoring. Managers are expected to be good
coaches to their team members and mentors to their proteges. Performance

appraisal identies the areas where coaching is necessary, and encourages

managers to take an active coaching role.
Supporting Manpower Planning. Well-managed organizations regularly assess
their bench strength and identify the departments that are rich with talent and the
ones that are suffering a talent drought. Performance appraisal gives companies the
tool they need to make sure they have the intellectual horsepower required for the
Determining Individual/Organizational Training and Development
Needs. Through performance appraisal, individuals can make good decisions about
the skills and competencies they need to acquire to make a greater contribution to
the company. Also, by reviewing the data from performance appraisals, training and
development professionals can make good decisions about where the organization
should concentrate company-wide training efforts.
Providing Legal Defensibility for Personnel Decisions. Almost any personnel
decisiontermination, denial of a promotion, transfer to another departmentcan
be subjected to legal scrutiny. If one of these is challenged, the company must be
able to demonstrate that the decision it made was not based on the individuals
race or handicap or any other protected aspect. A solid record of performance
appraisals greatly facilitates legal defensibility when a complaint about
discrimination is made.
Improving Overall Organizational Performance. This is the most important
reason for an organization to have a performance appraisal system. A performance
appraisal procedure allows the organization to communicate performance
expectations to every member of the team and assess exactly how well each person
is doing. When everyone is clear on the expectations and knows exactly how he is
performing against them, this will result in an overall improvement in organizational


To create a performance evaluation system in your practice, follow these ve steps:
1. Develop an evaluation form. One way to ensure consistency is to use
a standard evaluation form for each evaluation. The form you use should
focus only on the essential job performance areas. Limiting these areas
of focus makes the assessment more meaningful and relevant and allows
you and the employee to address the issues that matter most.

2. Identify performance measures. Standard performance measures,

which allow you to evaluate an employees job performance objectively,
can cut down on the amount of time and stress involved in lling out the
evaluation form. Standard performance measures can also objectively
measure some of the more subjective job performance areas, such as
work habits.
3. Set guidelines for feedback. Feedback is what performance
evaluations are all about. So before you implement your performance
evaluation system, make sure that everyone who will be conducting
evaluations knows what kind of feedback to give, how to give it and how
to get it from the employee in return.
4. Create disciplinary and termination procedures. In some cases,
even after a thorough performance evaluation and a discussion of
expected improvements, an employee will continue to perform poorly.
You need to be prepared to handle such a situation by having welldened, written disciplinary and termination procedures in place.
5. Set an evaluation schedule. Once youve built your performance
evaluation system, you need to decide when to conduct the performance
evaluations. owever you decide to schedule the evaluations, ensure that
each appraiser consistently meets the deadline. Ignoring employees
overdue evaluations will make them feel devalued and may hurt morale
and performance.


It is important as a human resources professional to learn how to administer an
effective employee evaluation process. The following are the steps on how to
administer a performance appraisal system:
Step 1. Announce when the performance appraisal process will begin at least 30
days in advance.
Step 2. Distribute a self-evaluation to employees at the 30-day point. Tell
employees that they need to complete their self-evaluations and give them to their
managers at least 14 days prior to their evaluation meeting. Encourage employees
to make a copy of their self-evaluation and bring it with them to their manager

Step 3. Require all managers to have their written evaluations, including the
analysis of the employee self-evaluation, completed seven days prior to the
employee evaluation meeting.
Step 4. Review each manager's completed employee evaluation to ensure that it
does not violate any company policies, or state and federal employment laws. If you
nd something inappropriate, schedule a meeting with that manager prior to the
employee evaluation to discuss the issue and make appropriate changes.
Step 5. Analyze the completed appraisal after the managers have their one-on-one
meetings with their employees and determine if the managers' recommendations
are appropriate. If a manager has suggested a pay raise, determine if the raise is
within the company budget and if it would apply to the employee based on the


Performance management programs must consist of methods that enable fair and
accurate assessments of employee performance. Some methods of performance
appraisal are the use of graphic rating scales, management by objectives, 360degree evaluation, and forced ranking.
Graphic Rating Scales. Graphic rating scales are ideal for production-oriented
work environments, as well as for other workplaces that move at a fast pace, such
as those found in the food and beverage industry. A rating scale consists of a list of
job duties, performance standards and a scale usually from 1 to 5 for rating
employee performance. There is typically a minimum required grade an employee
must receive in order for the performance appraisal to be considered a success.
Those that do not make the grade are often put on a performance improvement
Management by Objectives. Management by objectives, or MBOs, are useful for
measuring the performance of employees in supervisory or managerial positions.
Workers and managers work together to create a list of objectives for the worker to
attain during the review period. The objectives must be specic, measurable,
attainable, realistic and time based to meet the management by objectives criteria
for goals and objectives. The employee's performance is measured by how many of
her goals she accomplished within the designated time frame.
360-degree Evaluation. In this scenario, whoever conducts the appraisal, such as
a human resources manager, interviews an employees supervisor, peers and any
direct reports. This technique allows an appraiser to gain a complete prole of the

employee. In addition to gauging the workers job performance and technical skill
set, an appraiser receives in-depth feedback on the employees behavior. Measuring
areas of subjectivity, such as character and leadership skills, allows an employer to
manage an employees development.
Forced Ranking. Forced ranking measures employees' achievements against
those of their peers, instead of comparing the employee's current evaluation period
against the employee's own past performance. For this reason, forced ranking lends
itself to creating a very competitive work environment.


Rater errors are errors in judgment that occur in a systematic manner when an
individual observes and evaluates another. Human errors are common when writing
performance appraisals and evaluating employee behaviors. We all have biases we
are unaware of and they are often reflected in the employee appraisal process. This
can be unfair to the employee or to others in their peer group.
What makes these errors so difficult to correct is that the observer is usually
unaware that she or he is making them. Here are 7 common rater errors:
Halo Effect. Halo effect is when an employee is rated the same across all
performance dimensions due to a positive or negative rater impression. This
typically is when the rater either likes or dislikes the employee and allows those
feelings to influence their performance rating of them.
Leniency Error. This is the tendency to evaluate all people as outstanding and to
give inflated ratings rather than true assessments of performance.
Central Tendency Errors. This is the tendency to evaluate every person as
average regardless of differences in performance. Managers who are uncomfortable
with making "extreme" judges of performance tend to rate their employees in the
middle of the scale.
Strictness. The tendency to rate all people at the low end of the scale and are
overly critical of performance.
Contrast Effect. This is the tendency for a rater to evaluate a person relative to
other individuals rather than on-the-job requirements.

First Impression Error. This is the tendency for a manger to make an initial
favorable or unfavorable judgment about someone, and then ignore subsequent
information that does not support this impression.
Similar-to-me Errors. The tendency to more favorably judge those people
perceived as similar to the leader. Managers who are biased toward employees who
are similar to themselves make this similar-to-me rater error.


Employees on the receiving end of appraisals do not always look forward to them.
Here are some reasons for their dislike:
Rating Bias. Employees dislike performance appraisal because managers do not
always rate them on objective criteria. Rating bias occurs with the contamination of
appraisal ratings by non-performance related factors. When managers include
nonperformance factors like race, gender, hair color, etc. into an appraisal, the
contaminated appraisal ratings produce fruit of perceived and genuine unfairness in
the rating process and its outcomes.
Hypocrisy. When managers do not follow stated policies and procedures when
they dont practice what is preached in the organization the visible contradiction
generates disappointment, distrust and cynicism among their subordinates. It
reduces the employee motivation and organizational citizenship behaviors that
contribute to vibrant, productive and healthy work environments. Followers must
respect and trust the veracity of their leaders.
Poor Informal Feedback. In general, employees like to receive feedback; they
want to know how they are doing! Quality performance feedback on an ongoing
basis is the lifeblood of the performance appraisal process. Employees can be
aggravated when feedback sessions are supercial, rushed or even interrupted.
Employees seek direct feedback, not the sandwich approach managers try to hide
the negative feedback in between a couple of slices of general compliments.
Rater Errors. Discussed earlier.

Firing an employee may be a necessary act but it has the potential to be a legal
mineeld. Terminations can lead to legal claims based on a variety of potential

allegations, including discrimination, retaliation, wrongful discharge, wage and hour

liability, defamation, and so on. Mishandle ring an employee, or terminate
someone in the heat of an argument without paving the groundwork, and your
business and its employees could be paying for it for years to come.
In business, it's important to make sure that you prepare well before ring an
employee and that you follow the law and your own company procedures. The
following pages outline steps to lay the groundwork for ring an employee, holding
a termination meeting, and following up after termination.
Preparation. A ring should never be a surprise. The rst step is to make sure you
have documented your efforts with the following:

The company's employment application

An employee handbook describing unacceptable employee behaviors

Policies describing the company's right to discipline and terminate employees

Job descriptions or other documentations that specify performance


Performance appraisals

Records of disciplinary counseling and formal disciplinary action

Written documentation of the ndings of any internal investigation related to

the termination
Since these documents will be legally discoverable in the event a former employee
sues the company, it is critical they be clearly written, accurate, and do not contain
'inflammatory' statements about the individual.
Hold a Termination Meeting. A termination meeting should be carefully planned
in order to minimize potential legal liability, protect employees and company
property, and reduce emotional distress to the employee being discharged.
A termination meeting should be held face-to-face. Generally, at least two company
representatives should be present. The employee should not be permitted to bring a
lawyer, co-worker, or family member to a termination meeting. It is best to conduct
the meeting in a private, neutral location, such as a conference room.
A script should be prepared before the meeting so that the meeting can be kept
short, not more than 5 to 10 minutes. Keep it factual. Make sure to address how the
employee's nal paycheck will be delivered, how company property should be
returned, and how long benets will be continued.
Follow up after firing. Employee discharges don't end with the termination
meeting. Several tasks have to be effectively managed after the termination,

Informing remaining employees on a need-to-know basis about the

Handling reference requests appropriately, consistently, and in a way that will
reduce the potential for lawsuits

Dealing with claims for unemployment insurance benets or other benets so

as not to trigger further problems for the organization