Performance appraisals, also known as performance evaluations, performance reviews, or employee appraisals, refer to whatever method is used by a manager, supervisor, or owner of a business to evaluate the employees that business. Performance appraisals are considered to be an essential aspect of career development and typically occur at regular times throughout the year, or on an annual basis, as determined by the employer.

Usually, performance appraisals are performed using some type of objective measure (although the measures themselves may still be dictated using subjective means within an objective, standardized format) and are designed, theoretically, to assess an individual employee's productivity and job performance. In addition to the employee's productivity at their specific job, they are also typically reviewed in relation to their ability to operate as a team, fit into the organizational culture, assess their own strengths and weaknesses, establish expectations for job performance in the future, and identify future potential within the business. When possible, there are several types of reviews that may be considered in determining a performance appraisal: judgmental evaluations that use varying levels of subjective assessment, personnel issues (as typically identified by Human Resources or direct supervisors), peer reviews, objective production (such as the number of cars sold, or number of objects produced), and more.

Historically, most organizations perform employee evaluations on an annual basis, as well as within the first 3 to 6 months of a new employee's tenure with the company. Some companies are moving toward shorter cycle appraisals to more rapidly identify areas of concern or potential problems with the employee or their job performance. Still others are getting rid of traditional performance appraisals altogether, due to the numerous flaws in the evaluation process.

Likewise, performance appraisals seem to be an excellent idea in concept - especially when they contain some level of feedback regarding the supervisors and managers, as well as lower-level employees. Of course, anyone being evaluated tends to feel anxious or nervous regarding the evaluation, but these are hardly the only reasons that some employees choose not to utilize performance appraisals. In general some people do not support the idea of performance appraisals, because they believe they are inherently flawed and incapable of measuring what they claim to measure, that they may be misused by management to get rid of an employee for reasons that may not be legitimate, or that they encourage managers and supervisors to wait to address issues, rather than solving problems as they arise. Essentially, for every positive aspect of performance appraisals, there can be a negative aspect, as well.

As an employer, if you want to learn about performance appraisals to ensure they are being used effectively in your place of business, or you are concerned that perhaps their current use is not without significant flaws, throughout this course you'll learn to evaluate not only your business as a whole, but also your management team and the rest of your staff. You'll also be asked to consider some of your own decisions, motivations, and capacity for change. Above all, it is important that you recognize that whatever measures you put your employees through, you should be willing to experience them, as well. Although you may be using a different kind of standard, and certainly your job description will be different, it is nevertheless important that you don't subject your employees to something you are unwilling to experience yourself.

As an employee, this article will help you better understand the perspective of management and give you some ideas as to how to handle difficult situations that arise in performance evaluations. Nevertheless, we can help you learn what to expect when it comes to your own performance appraisal, what you can do to encourage better performance appraisals within your company, how to effectively give feedback and constructive criticism as part of the appraisal process, and more.

There's a wide range of potential problems and benefits stemming from the use of some type of performance appraisal. Whether you are a top level executive, middle manager, or at the bottom of the company's food chain, understanding the pitfalls and potential upsides of performance reviews can help.

The typical goals of the appraisal system include the following:

• To improve an individual's productivity which, in turn, should improve the company's productivity

• To help managers and owners make informed personnel decisions regarding job changes, employee termination, promotions, raises, and so on

• To provide a framework to assess a job description, including goals and responsibilities of the job (independent of the employee)

• To evaluate a given individual in relation to their job description, overall company goals, ability to work within a team, etc.

• To help determine the strengths and weaknesses of each individual within the company in order to best use available resources

• To map out goals, and then a plan to achieve those goals, based on areas requiring improvement, as well as identified strengths

Of course, conducting evaluations that are actually aligned with, and able to accomplish, all of these goals requires an impressive amount of time and a true commitment to staff development. Unfortunately, many companies are unable or unwilling to devote precious resources to staff development to the level at which a performance appraisal is truly effective. Too often managers and supervisors also perform a number of activities that are unrelated to supervising and managing their staff; when this happens, proper management and performance appraisals tend to be eclipsed by other responsibilities. Although the reasons this may happen are all obvious and understandable, it nevertheless presents a number of problems when it comes to efficient and effective staff management. Being an effective manager does require an investment of time and training. Possibly the most problematic aspect of performance appraisals is when they are performed without sufficient time, thought, and training.

There are a number of other ways performance appraisals can provide a framework to address situations resulting from various alternative jobs structures, as well. The use of contract workers and freelancers is often completed on a per project basis; nevertheless, if you are using these workers regularly, it may be necessary and helpful to have a designated process to evaluate your ongoing relationship with them, as opposed to only ever addressing issues that exist with each individual project. Regular staff that telecommute are similar - it is likely that day to day issues will be addressed as they come up, but a more comprehensive evaluation may be tremendously helpful, as well.

As many employees look at performance appraisals with fear and distrust, it can potentially be damaging to a company to engage in appraisals that are more critical than constructive. By establishing a dialogue between supervisors and employees where everyone understands that the purpose is to strengthen the entire team, employers can help minimize some of the anxiety that comes with performance appraisal territory.

One of the many benefits of performance appraisals is they do provide documentation that is often necessary when promoting or terminating (or even rehiring) an employee. Most companies must choose who receives promotions, raises, or bonuses selectively; it is within a company's best legal interests to have sufficient documentation to justify whatever decision it makes regarding these issues. Performance appraisals are an excellent way to demonstrate the reasons a particular person is chosen to receive a promotion, an increase in pay, or a new job title. Likewise, it may be necessary for a company to have sufficient documentation to justify termination of an employee or refusal to rehire a past employee. While many of these decisions are realistically going to be made based on day-to-day performance and ongoing challenges or successes, formal evaluations help provide supporting documentation to ensure decisions are made consistent with company policy, and adherence to any pertinent laws.

Another benefit of formal performance appraisals rests with the psychological effects of an employee participating not only in their own performance appraisal, but also in the goals and plans for their improvement. When an employee feels their concerns and opinions have been heard and are being responded to appropriately, they are far more likely to willingly acknowledge their flaws and work to overcome them. By participating in the appraisal process, and in the goal setting and planning stages of the appraisal, employees experience some level of mental and/or emotional ownership of the plan, making it far more likely to be effective.

Unfortunately, there are also numerous problems with performance appraisals. Just as the documentation of an employee's behavior can help support decisions you make regarding hiring, firing, promoting, and so on, you run the risk of having those performance appraisals justify a different decision from the one you make. Imagine that an employee forgets an important meeting with a client and the client becomes angry and agitated, demanding that you fire your employee. In fact, imagine that you yourself are very upset with that employee because of this issue, so you fire them. If you have always fired employees who miss meetings with clients, then you're probably within your legal right to terminate their employment based on the single event. However, if this is not in keeping with your normal staff management, your decision to terminate this person's employment may, or may not, be considered reasonable based on their overall job performance. In this scenario, if this individual has otherwise been a model employee, you may face legal action as a consequence of firing them.

Obviously, a common issue with performance evaluations is how seriously your staff does (or doesn't) take them, as well as how much time those who are performing the evaluations have available to them. If your managers have insufficient time to thoroughly assess their employees, the evaluations are likely to be deeply flawed. The larger your organization or business is, the more problematic this will be when it comes time to use the performance appraisals to make decisions.

Of course, another challenge to the validity of performance appraisals is, quite simply, personality conflicts between management and their subordinates. While we certainly all want to live in a world where people know how to be professional at work, unfortunately we have all had experiences with bosses and/or subordinates who were unable, or unwilling, to act like professional adults. When these personality conflicts bleed over into performance appraisals, the best-case scenario is an inaccurate evaluation that doesn't do justice to a good employee. Likewise, the worst-case scenarios can lead to employee turnover, legal action, and more headaches than any owner or CEO wants to handle.

Other issues that exist with performance appraisals, in general, include both matters of inconvenience to the supervisor or rater, as well as the quality of performance measures against which the employee is being evaluated. When an evaluation takes place, the vast majority of managers and supervisors rate the employee based on the most recent information (which is easiest to recall). Unfortunately, this may not always be an accurate representation of the individual's job performance throughout the year. Documenting real performance measures takes time, follow-up, and accountability on behalf of the supervisor; thus, it is much easier and faster to simply rate an employee on opinions, rather than actual success. Many times employers may not even be aware of just how subjectively they are performing evaluations, believing that their opinion is genuinely based on the employee's performance, rather than recent impressions.

Comparisons between two different supervisors can often show a disconnect in how to determine certain performance measures, such as adherence to the dress code. Imagine if the dress code indicates employees cannot wear accessories that are distracting; one manager may have an entirely different interpretation than another manager. Such measures that are extremely subjective often produce inconsistent and inaccurate reports.

When it comes to the performance standards being evaluated, another pitfall many organizations fall prey to is using one set of performance measures for the entirety of their staff. Using the same form for every employee may sound as though it provides consistency but in reality, many employees will have radically different job descriptions, and one form for everyone may be blatantly unfair. For example, a marketing associate may justifiably be ranked or rated according to his or her willingness and ability to creatively problem-solve. In the same company, a company gofer, whose job consists of shredding documents, filing, and emptying trash cans, simply doesn't have the same opportunity to problem-solve as the marketing associate. With a manager rating an individual lower because of this issue, the company gofer may appear as though they're not doing their job as well as the marketing associate which, of course, may not be true.