Performance Appraisals

Performance Appraisals Guide for Employee and HR – A Definitive Guide

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Performance appraisal is a formal standardized process to evaluate and analyze an employee’s job performance and contribution made to the company in pursuit of its financial and other goals. Performance appraisals illuminate the strengths and weaknesses of the employees and provide feedback on the areas of improvement.

These are periodic practices carried out by the managers and other stakeholders of a company. The appraisal is usually carried out based on specific employee performance expectations, and the assessment is done relative to those goals. 

Performance Appraisals Guide

What is the need for performance appraisals?

Performance appraisals are used for selecting candidates for financial rewards or other types of compensation over above salaries and wages, promotions, assignments to important projects, and even warnings and terminations. 

The role of every employee in the company is made clear by the performance appraisals. Each employee can understand his/her responsibilities and job duties without any doubt. Performance appraisals clarify questions regarding any area of their duties. 

Performance appraisal works as a feedback mechanism for the employees. An employee can clearly identify his merits and drawbacks from their performance appraisal. The employee also becomes aware of the performance standards expected from him/her. Consequently, the employee is motivated to improve their skill sets and knowledge to improve performance.

Companies help in the professional development of the employees for future career growth. To this end, performance appraisals are widely used to identify areas of improvement. Moreover, performance appraisals play a crucial role in identifying and grooming the company’s future leadership. 

Companies use performance appraisals to assess the quality of their workforce. The ability of the company to attract and retain talented employees is also assessed based on performance appraisals. 

What is the timeline for giving appraisals?

Monthly performance appraisals are useful for new employees during the onboarding process and for new projects so that the employees working on such projects maintain momentum in achieving the goals. Companies also use monthly performance appraisals for contract employees and hiring freelancers.

Quarterly performance appraisal means the employees are assessed each quarter. In this kind of appraisal, each employee is assessed based on goals and targets set for that particular quarter. A business year is divided into 4 quarters of 3 months each. 

Annual performance appraisal reviews the employee’s performance based on the information collated over 12 months. The feedback is on the basis of goals and targets achieved in the 12 months. 

What is the meaning of appraisal ratings?

Performance appraisals rate the employees based on a plethora of characteristics such as quality and quantity of work, leadership skills, communication skills, emotional stability, ability to make decisions, and other criteria as deemed fit by the organization.

The employees are rated on a scale such as 1-10. A particular rating is given for each criterion on the basis of the extent to which the employee fulfills the said criteria. An average of all the ratings gives the total score of the employee. 

It is important to define each characteristic to avoid disputes clearly.

How do appraisal ratings influence an increase in merit?

A merit increase means a raise in salary due to good performance. An employee who has met or exceeded the goals set by the company is rewarded in the form of a merit increase. A merit increase is different from pay raise. While pay raise is spread across the board in a company, a merit increase is specific to an employee based on performance.

The pay for performance rule means the greater the appraisal rating, the higher the percentage of a merit increase. However, the manager can choose to give the same percentage increase in merit for any performance appraisal rating which meets or exceeds the set criteria regardless of the magnitude of the rating.

How are annual appraisals handled for probationary staff?

Annual performance appraisals are not applicable for probationary employees with less than 6 months of probation period. However, for probationary staff, performance appraisals can be carried out at 2 months, 4 months, and 6 months from the commencement of the probation period.

How are annual appraisals handled for recent transfers?

Annual performance appraisals for recent transfers are based on the responsibilities of the employees in their current roles. However, the manager can seek information about the past performance of the new employee from the said employee’s former manager and use it for making the appraisal.

How are annual appraisals handled when the manager has left?

In case the previous manager has left the company, the new manager is required to make the performance appraisals of the employees under him/her. The new manager is required to review the previous appraisals of the employees as well while assessing their most recent performances.

What is the role of HR in the process?

The HR team is the link between the supervisors/managers and the employees. The process of making performance appraisals is designed and guided by the company’s HR team. The HR team needs to know the responsibilities of every employee to create a system with properly aligned rating criteria. 

The HR team must also work with the supervisors and managers to ensure fair appraisals. Feedback regarding behavior, punctuality, relations with fellow workers, and discipline of any employee can be sought from HR. 

What is the role of employees in this process?

The employees must self-evaluate and put their achievements or misses in the appraisal form. The key is, to be honest, and take responsibility in case of unsatisfactory performance. Employees should be in touch with their respective managers to ensure they conform to the required work standards and track their progress.

Who can assist staff with questions about appraisals?

The inputs to make performance appraisals are sought by the managers. The HR professionals of the company assist the managers in getting the input.

What if an employee disagrees with the rating and/or content of an appraisal?

In case an employee disagrees with his/her performance appraisal, the company can allow the said employee to write a rebuttal. The rebuttal can be addressed to the manager or HR. A follow-up meeting is usually called to tackle the concerns of the employee.

After the appraisal is delivered and finalized, then what?

Performance appraisals result in either positive feedback acknowledging that the employee in question is matching or exceeding performance expectations or corrective feedback if the performance does not match expectations. 


Performance appraisals should have clearly defined criteria for evaluation, use realistic standards of performance as per each employee’s role and experience, and be driven by hard data.

You may also be interested in 8 Employee Benefits Trends of 2022 for The Betterment of Staff


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