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Are You Conducting Performance Appraisals The Right Way?

October 15, 2020

performance appraisal
performance management software

Appraisals done right

Discover the best performance management software to make conducting appraisals easier than ever.

When it comes to managing employees, how do you go about boosting their productivity and improving their outcomes?

One of the most effective ways to do both, while also having a clear picture as to what is going well for all of your employees, is to conduct a performance appraisal a few times a year.

A performance appraisal, sometimes also called a performance review or performance evaluation, is how an employee’s job performance is documented and evaluated against the goals and projects they have been working toward. As part of a career development plan, they’re usually conducted by a manager or supervisor as a way to provide feedback and give support when necessary.

People often confuse a performance appraisal with performance management. It’s important to remember that while performance management includes all interactions between a supervisor and an employee, a performance appraisal is a regular sit-down that occurs where an employee is formally assessed by their supervisor.

Essentially, a performance appraisal is a small part of the performance management process.

performance management vs. performance appraisal

Why performance appraisals are important

Performance appraisals come in handy in a variety of ways. For starters, it helps an organization determine the value and productivity of each employee and what they contribute to their teams. Additionally, it allows the employee to further develop in their own roles while pinpointing what’s working and what’s not.

For the organization: Performance appraisals can make a difference in the performance of an organization.

They provide insight into how employees are contributing and enable companies of all sizes to:

  • Pinpoint areas where managers can improve in order to increase both productivity and the quality of work seen by employees.
  • Address behavioral issues before they impact productivity or a critical incident occurs. 
  • Encourage employees to contribute more as they recognize their various talents and skills.
  • Support employees as they grow and develop within their careers.
  • Build on strategic decision-making in situations that may result in layoffs, succession planning, or filling a role internally during a specific review period. 

For the employee: A performance appraisal is not just for the benefit of the company – it can be advantageous for employees as well. They can use the upcoming employee job performance appraisal to keep themselves from becoming passive in their work, take charge of their career trajectory, and be recognized for the incredible work that they have done.

Performance appraisals can be used to the advantage of an employee by:

  • Positioning themselves for a raise or promotion.
  • Asking to take on projects at a higher-level and work that they actually enjoy doing
  • Talking with their boss about their career path
  • Inquiring about continued education, training, or seminars
  • Addressing any concerns or questions about their role

Performance appraisal types

An employee performance review can be appraised using various methods. It’s going to depend on the type of organization, the role the employee holds, and how much your human resources department is involved. 


A traditional performance appraisal method is when a manager or supervisor sits down with an employee to discuss their performance from the previous time period, whether it’s the quarter, half, or full fiscal year.

The discussion centers around observations that the manager has had regarding the employee’s abilities and their performance to accomplish tasks within their job description. The performance is rated, and then any changes regarding compensation or merit pay are based on that rating. 

Employee-initiated review

Employee-initiated reviews are when an employee asks for a review from their manager. This is an on-demand type of performance appraisal that shouldn’t replace the conventional review process. Instead, it should be used to promote and encourage regular communication between employees and their managers. 

As a manager, remember that sometimes employees with confidence issues or quiet personalities may feel discouraged from doing this type of review. Give these types of employees the support they need, and remind them that employee-initiated reviews are welcome whenever they see fit.


As the name suggests, a self-appraisal within the performance appraisal process is when employees in all departments are encouraged to take responsibility for their performance and assess their achievements, failures, and areas of improvement. This also helps the employee prepare to discuss each point with their manager as self-appraisals are used in conjunction with other types of appraisals. 

While this method helps employees prepare for their own performance assessment and creates more dialogue in the official performance interview, it can also be rather subjective, and employees may struggle with either rating themselves too high or too low.

360-degree feedback

360-degree feedback makes the world go ‘round (see what I did there?).

This type of feedback in performance appraisals refers to feedback being given to an employee from their manager, employees in different departments, team members in the same department, and the employee themself.

360-degree feedback can be extremely useful because it provides a bigger picture of an employee’s performance. However, employees also run the risk of taking in broad generalizations from outside sources who may not know how to provide constructive feedback or know everything that is really on their plate. 

Peer assessment

A peer assessment is when an employee’s work and performance is rated by other people within their team or department. Coworkers often have a unique perspective on the employee’s performance, making this type of appraisal relevant within the process.

They can also help determine how well the employee is able to work with the team and be a reliable contributor to the departmental goals. However, friendship and any animosity between teammates can distort the end results.

Customer or client review

These types of performance appraisals are conducted by either a customer or client. These can include either internal customers, such as users of a product within a company, or external customers who aren’t part of the company but have regular interactions with the employee. 

Negotiated appraisal

A newer type of performance review is the negotiated appraisal, which is when a mediator is used to moderate the performance evaluation by allowing the subject to present first.

This type also makes it possible for the focus to be on what the employee is doing well first before any criticism is given. A negotiated appraisal is typically used when there is tension or conflict between a manager and their direct reports. 

Psychological appraisal

Another new type of performance appraisal and psychological appraisal is used to uncover the hidden potential of an employee. Instead of focusing on an employee’s past work within the organization, it analyzes their future performance.

These work by diving deeper into seven components of an employee’s performance:

  • Interpersonal skills
  • Intellectual traits
  • Cognitive abilities
  • Leadership skills
  • Personality traits
  • Emotional quotient
  • Other related skills

These are conducted by a certified psychologist and can be more time consuming so the employee can be evaluated effectively and thoroughly. Specific situations are evaluated while performing the psychological appraisal. For instance, the way an employee handles an aggressive customer can be used to appraise their persuasion skills, behavioral response, emotional response, and more.

How to conduct a performance appraisal

When looking to conduct a performance appraisal the right way, there are some key steps you can follow. Remember that the appraisal should be a formal event happening every six months or each year, but there should be several regular, informal conversations between manager and employee in between.

As you conduct various performance appraisals, keep in mind that the goals of conducting a successful performance appraisal are:

  • To improve the company’s productivity 
  • To make informed decisions regarding promotions, terminations, and job changes
  • To identify what is required to perform a job successfully (goals and responsibilities)
  • To assess how an employee is performing against these goals and responsibilities 

Once you’re ready to start the performance appraisal process, follow these steps.

Be prepared

It goes without saying that you should never walk into a performance appraisal blind. It’s crucial that you take the time to assess the employee's performance beforehand.

Create a list of projects that you think went well, as well as a list of ones that could have gone better. Prepare any appropriate questions and know which concerns you’ll be voicing. Keep in mind that it’s normal for both managers and employees to feel slightly uncomfortable, but going in with a clear outline of what you want to discuss can help.

Tip: Before you get too far in the performance appraisal process, check out these five performance review templates to help you along the way!

Utilize software

When conducting performance appraisals, make sure to streamline the process by using performance management software. These tools can help establish employee performance standards and evaluate an individual employee’s job performance. They can also be used to facilitate meaningful and ongoing discussions between managers and direct reports.

Create the right atmosphere

Performance appraisals can be informal, so the atmosphere should reflect that. Regardless, make sure to book a private conference room or schedule a video call for a time that works within both your schedule and the employee’s schedule. It’s also a good idea to start with a general and comfortable conversation before diving into any details.

Start with any bad news

While it can feel right to start an employee appraisal with good news so you can deliver the bad news and how an employee can improve, consider addressing the bad news early on in the appraisal.

That way, positive information regarding good performance is saved for the end and the discussion can then end on a positive note. It can also be comforting to know that anything negative is said early, so it’s over and done with, and both you and your employee can relax moving forward.

Strive for regular feedback

Once a year isn’t enough to drive successful performance from your employees. Ask your employee how often they’d like to receive feedback from you, and in what type of setting they prefer it in. As a manager, lean on technology to find different ways to touch base with employees. 

When performance feedback happens often, you can really hammer home exactly what the employee is doing well. This positive reinforcement can go a long way. Or if the employee is struggling, pinpointing exactly what isn’t working early on can make a big difference.

Give the employee time to speak

Appraising should never be one-sided, meaning it shouldn’t just be you speaking the entire time. When you turn the floor over to the employee, it enables them to get anything off their chest, as well as help them to feel that they are getting their thoughts and opinions heard.

You should also use open questions to encourage a conversation to ensure they get time to say their side of things.

Conduct a self-appraisal

At the end of the performance appraisal, give the employee time to provide you with feedback, too. This is where you’ll see how things look from their point of view and where they’ll let you know if there are any areas where you could provide them more support or do better as their supervisor. Remember to keep an open mind here and listen to any way that you could be missing the mark.

Agree on a plan of action

Once you end the employee performance appraisal on a positive note, be sure to come to a conclusion regarding how to move forward. Draw out a clear plan for any upcoming projects, overall company objectives, and how the employee will play a part.

Additionally, set a date for the next check-in, what you’ll discuss, and the goals they should have achieved by then. Remember to keep them more frequent than only conducting annual reviews. Effective communication can go a long way to support both the employee’s job performance and organizational goals. 

Document the outcomes

Finally, you’ll want to remember to keep adequate notes as you document the outcomes of all of the performance appraisals that you conduct. These notes will help both the appraiser and HR when making decisions regarding goal setting, promoting specific employees for their career development, and changes to compensation

Start empowering your employees

As a supervisor, performance appraisals are the tried and true method for getting to the bottom of what’s working, what isn’t, and understanding how you can better support your employees. Work with the HR team at your organization to share the results so you can better support the short and long term goals of the company.

In addition to merit pay, after a glowing performance appraisal, consider rewarding a high-performing teammate with an employee bonus.

performance management software

Appraisals done right

Discover the best performance management software to make conducting appraisals easier than ever.

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