A performance appraisal is a formal evaluation of an employee’s job performance over a specific period, typically conducted annually or semi-annually.
It measures achievements, skills, and areas for improvement, providing the foundation for decisions on promotions, pay raises, training, and career development.

Performance appraisals are a key part of performance management, helping align individual contributions with organizational goals.

Why Performance Appraisals Matter

• Clarifies Expectations – Ensures employees understand their goals and responsibilities.
  
• Improves Performance – Provides constructive feedback and coaching.
  
• Supports Career Growth – Identifies training and development needs.
  
• Guides Compensation Decisions – Links pay raises and bonuses to performance.
  
• Strengthens Engagement – Shows employees their work is recognized and valued.
  

Common Performance Appraisal Methods

1. Rating Scales – Numerical or descriptive performance ratings.
   
2. 360-Degree Feedback – Input from managers, peers, and subordinates.
   
3. Management by Objectives (MBO) – Evaluation based on goal achievement.
   
4. Behaviorally Anchored Rating Scales (BARS) – Rates specific behaviors.
   
5. Self-Appraisal – Employees assess their own performance.
   

Best Practices for Performance Appraisals

• Set clear, measurable objectives at the start of the review period.
  
• Use multiple sources of feedback for a balanced evaluation.
  
• Focus on both achievements and opportunities for growth.
  
• Document performance consistently throughout the year.
  
• Follow up with actionable development plans.
  

FAQs: Performance Appraisal

Q1: How often should performance appraisals be done?
A: Most companies conduct them annually, with mid-year check-ins.

Q2: What’s the difference between a performance appraisal and performance management?
A: Appraisal is a single evaluation event; performance management is an ongoing process.

Q3: Should appraisals be linked to pay raises?
A: Often yes, but they can also focus solely on development.

Q4: How can bias be reduced in appraisals?
A: By using objective criteria, multiple reviewers, and structured evaluation forms.

Q5: Can employees challenge their appraisal results?
A: Many companies have procedures for employees to provide feedback or appeal decisions.