Performance appraisal refers to evaluation of employee performance to understand their abilities for future growth. To achieve success in your career, it’s important that you know, right from the beginning, how good you are at a particular job or activity. Performance appraisal aims at providing a feedback about yoHur performance and capabilities and also helps you understand what should be done for improvement. However, there are contradicting opinions about performance appraisals among managers and employees. Some of them consider it as a significant practice that not only helps in eliminating work and behavior related issues but also helps in motivating employees to perform better and contribute more. But there are others who consider it as ineffective and utter waste of time. Let us explore why performance appraisals make an important management tool:
Acknowledging and appreciating good work is an important part of performance appraisal. Evaluating the areas of improvement isn’t easy but performance appraisals give the managers an opportunity to highlight good work and areas that need improvement. Providing specific suggestions with realistic examples can help employees in lot many ways to improve their performance. Appreciating them and highlighting ways to improve is an excellent way of showing the employees that the management cares about them. This automatically induces loyalty and satisfaction in work.
2. Better Communication
Often there is a communication gap between employees and management that makes the co-functioning of the two rocky. Such issues can be resolved with performance appraisal which gives both an opportunity to communicate better. The management uses a systematic approach to assess the performance of the employees and the latter get some meaningful insights on how to improve their performance. This assessment is also supported by relevant examples to help employees gain a better understanding.
3. Career Development
Performance appraisal also gives employees an opportunity to refine their career development plans. In addition to getting motivated to contribute more, employees also feel valued and appreciated for their work. And, this helps them to think more clearly about their career objectives and ways to achieve them. Better understanding of career development also boosts employee loyalty which ultimately positively impacts the bottom line of the organization.
4. Better Decision Making
Evaluating the performance of every employee helps the organization in making better business decisions. Management also gets an opportunity to fill out open position with existing employees by analyzing their strengths and weaknesses. This, in turn, promotes loyalty. Performance appraisals make assigning of projects easier based on the capabilities of employees. It also helps in making decisions about layoffs. However, if the organization faces any lawsuit for the same, it can support its claims with performance appraisals. Thus the tool also helps the organization perform better with increased efficiency.
5. Employee Promotion
Promotion is something that every employee looks for in an organization. Performance appraisal helps a great deal in deciding which employee deserves to be promoted. It helps the firm to figure out which employee would be able to contribute significantly in terms of business growth. Promotion encourages employees to work better and it helps employers in assigning work to appropriate employees in order to get favorable results.
For employees that understand the benefits, performance appraisal is a much awaited event. It’s an event they look forward to and when their hard work pays off. For employers it is a time when they can make important decisions and rethink their business strategies to make a greater impact to the bottom line.