5 Reasons Why Performance Appraisal Is Essential

Regular performance appraisals help create a corporate culture that promotes personal success, along with collaboration.  Individual employees need the reinforcement of knowing that their contributions are valued by upper management.  The appraisal process offers several benefits organizationally, generating an atmosphere of excellence.  Performance appraisals allow management personnel to establish guidelines for compensation increases; track employee strengths and weaknesses; identify the best candidates for promotion; offer feedback for improvements; and promote training programs.

1. Establishing compensation guidelines

Employee compensation should be directly tied to performance.  Employees that go above and beyond the call of duty normally receive higher annual increases than employees that do the bare minimum.  Compensation is the single best way to reward exemplary job performance.  The only way to consistently track exception performance is through an appraisal process.  Regular, one-on-one, discussions about an employees execution of job responsibilities helps when assessing the year for those in different raise brackets.

2. Track strengths and weaknesses

No one person determines an organizations success.  Different workers bring their experience and strengths to the table, allowing projects to succeed with minimal delays.  Identifying the right candidates for the right teams is a crucial part of successful management.  The best way to ensure the right workers come together is to track individual strength and weaknesses.  Consistent performance appraisals make that information easily accessible when it is time to hand out new assignments.

3. Identifying promotion candidates

Hiring from within an organization keeps organizational memory strong, allowing for continuity of management styles.  Unfortunately, not every applicant has the skill set needed to make the transition to a higher position.  Quarterly, or even annual, appraisals allow hiring managers to look back over the applicant’s entire work history and find the best internal candidates for a promotion.

4. Offer feedback

Constructive criticism provides employees with the necessary information to improve their on-the-job performance.  Good managers give feedback that motivates employees to strive for improvement.  Employees informed about performance expectations are better able to meet the challenges of excellence.  By giving employees feedback about their performance on a regular basis, managers open up the lines of communication, enabling a good working relationship and encouraging a spirit of collaboration.  Employees and managers work together to tackle the roadblocks to success.

5. Introducing training programs

Performance reviews offer an excellent time to discuss additional training and continuing education requirements.  Professionals need to stay up-to-date on industry best practices.  The only way to ensure this happens, is to track training and offer programs internally.  Not only do training programs help keep employees current on new policies and procedures, they also help keep employees on the cutting edge of technology.  Office software, project management solutions and even management philosophies change as businesses adapt to changes in the marketplace.  The success of an organization depends on every member, making training an integral part of continued success.

The give and take of a formalized performance review system allows employees to feel comfortable during their daily work activities.  They receive positive reinforcement for a job well done and corrections when necessary to correct bad work habits.  It is important for employees to know where they stand in their workplace.  Work environments bring enough stress, without the added worry about performance.  Communication forms the foundation for all lucrative business interactions.  Formalized policies detailing how an employee’s performance is graded lower stress levels, allowing employees to reach their full potential.  The summarized information gathered during reviews also helps streamline many management activities.  Hiring, firing, compensation determinations and training schedules all become part of the review process, minimizing the necessary oversight for these tasks.  Implement regular performance reviews and see immediate benefits to productivity and job satisfaction.