7 Crtical Purposes of Performance Appraisal in Human Resource Management
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7 Critical Purposes of Performance Appraisal in Human Resource Management

7 Crtical Purposes of Performance Appraisal in Human Resource Management

The purpose of performance appraisal feels obvious to some businesses: to make sure that employees are meeting the standard set forth for the position they were hired for. Are employees meeting their goals? Are they working well with others? Is the quality of their work high enough to warrant a raise? And yes, employee appraisals should seek to answer the questions, but overall, the purpose of performance appraisals can be bigger than that, including making sure that management is working well in managing employee expectations and career paths, as well as their progress on projects and team fit.

While a performance appraisal is only one part of an employee performance management system, it’s an important part with a distinct purpose. Here’s what your employee performance appraisals should seek to accomplish.

Goals of your employee performance appraisal

1. Ensure employees feel valued

In order to be productive and really at the top of their performance, it’s important to regularly check in with them to give feedback that both express your appreciation for their work and helps them understand the impact of their work on the business, which in turn makes them more likely to stay engaged and continue performing well. While performance appraisals do give you the opportunity to offer constructive criticism and address any shortcomings, it also gives you a great opportunity to recognize the hard work of your employees. Some businesses believe that a paycheck and benefits is enough to promote better performance and that employees don’t need to be praised for doing the jobs they were hired for, but employees are increasingly becoming more concerned with the quality of their work environment – including relationships with managers and coworkers – with a lower (although still important) focus on achieving a certain salary.

2. Establishing goals

Part of your performance appraisal objectives is to track progress against past goals and give direction for the future. Setting new target goals for your employees during a review helps to motivate your employees towards what’s next, as well as help them align on the current strategic goals of the business, particularly if those have changed since the last review. It keeps employers and employees on the same page about expectations; employees also benefit from the confidence they feel when meeting these new objectives.

3. Resolve problems

Whether an employee has a problem with their workload, a teammate, or a project, a formal review gives you the opportunity to work on solving these issues and retaining your team members. It’s also a key opportunity to share any grievances you have with their performance or progress.

4. Maintain positive managerial relationships

The best teams are those with the best relationships with their coworkers and managers. A relationship doesn’t necessarily mean friendship, but health respect and open communication between parties can go a long way towards enhancing productivity, creativity, and more.

5. Current project and day to day task check-in

Managers don’t always get the chance to have regular one-on-one meetings with employees and have oversight on current projects or the problems and successes that employees face along the way. A performance appraisal is the minimum amount of time that a manager should be receiving employee feedback and considering how to address complaints or work good employee suggestions into a strategy.

6. Assess opportunities for promotion, advancement, and raises

A formal employee appraisal gives managers a dedicated space on their calendar to consider a holistic list of employee contributions, strengths, and weaknesses and assess opportunities for advancement is there’s a need in the organization that needs filling. Promoting from within not only can save a company on hiring costs but can also greatly increase overall employee morale. It also gives businesses an opportunity to consider additional compensation for a job well done and an incentive for continued performance.

7. Understand training needs

Conversely, employee performance appraisals should give you an understanding of where employees can benefit from more formal feedback or training. This helps you develop employees into stronger business assets rather than dismiss them outright. Not only is hiring and retaining an employee often less cost-effective than investing in current staff, offering training to develop skills can help boost the job performance of someone who’s already a good team and culture fit. It’s much harder to train for soft skills and culture fit than most other business skills.

One of the most important things to understand about performance appraisals is that once a year reviews aren’t really satisfactory in helping you understand the performance of your employees. Performance management systems are meant to help you create more communication and feedback with your employees to benefit both the employer and the individuals. Ultimately, performance management is key in achieving the management responsibility of guiding employees towards the success that adds to the success of the business.

Marianne Chrisos
Marianne Chrisos
Born in Salem, Massachusetts, growing up outside of Chicago, Illinois, and currently living near Dallas, Texas, Marianne is a content writer at a company near Dallas and contributing writer around the internet. She earned her master's degree in Writing and Publishing from DePaul University in Chicago and has worked in publishing, advertising, digital marketing, and content strategy.
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