Performance appraisal – why bother?

Not everyone likes the idea of implementing a regular performance appraisal system in their business. After all, as an employer, you believe you’ve hired the right person for the job and things seem to be getting done at work so why should you bother?

Here are five reasons you should consider implementing regular performance appraisals

1. Your bottom line

Performance appraisals are often linked to increases and bonuses – the better an employee performs, the more money they get each year. So, performance equals compensation. But what about the money you’re spending now? Not many employers stop to think about whether they’re getting their money’s worth from their employees. Ask yourself – are you getting what you’re paying for? Are your staff performing as expected? And, if not, why is this the case?

2. It’s about more than money

Beyond monthly pay packets and increases, performance appraisals allow employers to evaluate the strengths and weaknesses of each employee in a systematic and measurable way. This can help when allocating new roles or planning project teams, as well as identifying employees ready for promotion or further training. Or employees who are not coping in the roles they’re in (cases which might have legal implications down the line). A successful business depends on satisfied employees who are growing in their roles, engaged in a process of learning that will benefit both themselves and the business. And all employers need a way to identify where their employees are at in this process.

3. Objective measurement

A formal appraisal system, with mesureable objectives and evaluation criteria, means a fair system for all involved. So, while employees may be evaluated by their employer or manager, appraisal criteria that are established upfront ensure that all involved in the process are treated in a fair and objective way. If the appraisal system is linked to reward, for example, it will naturally lead to a fair system for rewarding superior performance, rather than one based on subjective criteria.

4. Communication opportunity

Performance appraisal sessions allow managers to give structured, documented feedback to employees – to tell them where they stand in relation to the business’ expectations. Executed correctly, with the proper guidance if necessary, they also give employees the chance to discuss areas of concern or opportunity with their managers. Setting aside time for a formal appraisal session and implementing a business-specific performance appraisal system removes the risk of feedback being missed if delivered during ‘work time’.

5. Building a strong company culture

Performance appraisals don’t have to be a negative part of work, with management ‘checking up’ on employees. Rather, they can be a signal to your employees that you value their work and contribution to your business. And that you want to maximise that value, not just for the business but for the sake of the individual.

Regular performance appraisals can help to reassure and motivate employees in their daily work life. If approached correctly, they become a collaborative process, leading to feedback, reward, or if necessary, the identification of potential problem areas for the individual and the business.