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Definition of Performance Appraisal:

Performance appraisal is the regular evaluation of an employee’s job performance and contribution to the company goals and objectives. It gives space to understand the employee’s further growth and career development. Also called an annual appraisal or performance review, it is a place to give feedback to the employees, understand their problems and roadblocks, discuss and negotiate pay raise and bonus, and termination if need be. It can be conducted annually, half yearly, or quarterly, depending on the team managers and company. 

What are the objectives of performance appraisal?

Usually, performance appraisal is done for the following reasons; 

  • To provide feedback to the employee on their performance.
  • To assess if the employee has the potential for growth.
  • Helps understand the strengths and weaknesses of the employee.
  • Let's know if you have the right person for the job. 
  • To discuss and provide promotions, salary raises, training and so on. 

How does performance appraisal work?

When it comes to raises and bonuses, performance appraisal is a great way to allocate the funds. It is a rather fair method where the raises are based on the employee’s contribution to the company. It is also a place where managers can give additional responsibilities and training to the employees so that they are prepared for future roles. 

Usually, this happens quite frequently so that managers get an idea of the employee’s strengths and weaknesses, identify their roadblocks and course correct them if need be. It is a great way to build a mentorship and strong rapport with employees. 

What are the advantages of performance appraisals?

  • It is a great way to build a trusting relationship with your employees. Managers get clarity on the employees’ strengths and weaknesses and decide their course of action accordingly. Employees also get to speak about their roadblocks and get them resolved. This plays a crucial role in boosting employee morale and job satisfaction.
  • With performance appraisals, employees are motivated to do more. The incentives are attractive, and with well-defined goals, employees know what they are working for. 
  • It gives a chance for managers to discuss promotion and training activities to employees to help them in their career development. 
  • With performance appraisal, performance outweighs and has more importance than anything else. It is quite fair and based on merit. As a result, it becomes easy to allocate funds for raises, bonus, allowances and so on.