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What is 'performance appraisal'?

Performance appraisal is the systematic documentation and evaluation of employee performance. It is typically done periodically by organizations to understand the abilities of a person for further growth and development. Performance appraisal may also be referred to as employee appraisal, performance review, or performance evaluation.

Why evaluate employee performance?

Evaluating your employees gives them a clear picture of their role in the company. Their performance is discussed in detail with them, giving them motivation, a sense of accomplishment, and purpose. Employers also benefit when it comes to assigning employee compensation. A periodic performance report shows where resources can best be applied. Employers can also validate and tweak existing recruitment processes with a quantitative understanding of the employee's performance in the organization.

Appraisals also help build better communication and a sense of trust within the organization. Managers understand the skill set of each employee, while employees get a better picture of what is expected of them. This helps both manage expectations build a trusting relationship with each other. In effect, appraisal systems can help your organization attain positive results through helping employers understand employees better and driving the organization-wide vision.

The Potential Disadvantages
  • Many organizations that use a purely subjective method of appraisal, like 360 degree appraisal, have seen an increase in complaints and dissatisfaction among employees. These complaints largely stem from the fact that managers often tend to evaluate employees on 'likability', rather than any objective measure. Every performance appraisal is measurable to a degree. A fair and repeatable methodology must be applied and documented every time it is performed.

  • Employees also tend to complain that appraisals can be stressful and distracting. This scenario often crops up when there is a severe lack of trust between the employee and the employer. This leads employees to believe that there is nothing to gain from the system due to poorly conducted appraisals.

  • In organizations that face losses in the market, there tends to be a push towards higher and more unreasonable goals for employees. The same principles are reflected in performance appraisals, where more employees tend to fail rather than succeed. This results in an unnecessary lowering of morale and satisfaction throughout the organization.

Conducting a Performance AppraisalThe management of a company starts with the 'organization-wide goals'. These goals are then translated into favorable and unfavorable metrics that vary widely for each organization. Each employee is then rated on each of these metrics by their supervisors. A rating scale is then devised (usually on the scale of 0-10) for the employees to be placed upon. The management then decides the compensation for each point on the scale.Each organization has a different set of priorities. Which means that the appraisal metrics tend to vary widely between organizations, even when they are in the same field.

The best performance appraisals, despite the organization's field of expertise, have 4 key features.


Most evaluations typically occur on an annual or semi-annual basis. More stress and resources are involved with shorter periods. On the other hand, employees tend to feel a lack of direction or feedback if the period is too long. Evaluations must be complemented with regular, off-the-record feedback from supervisors to mold employees to the organizational


The evaluation process must be easily repeatable for every member of the organization. Failing to do so makes the evaluation unfair for many. The methods of evaluation should be openly available for every employee. Clarity in the process helps employees better understand what is expected of them, creating trust with the organization.


Every appraisal must be free of any personal biases. To put it simply, an employee evaluated by two different supervisors for the work done during a year should not rate her differently. A positive or negative result should be based only upon the output gleaned from the employee during the time period in question.


Finally, the most important of all features, the appraisal must be 'complete'. It should take into account all the information available on the employee. An evaluation must not only cover the basics, such as actual output from the employee, but also highlight the training that needs to be givenself and peer evaluation of performance, job satisfaction, and other factors. By doing so, the employee and employer gain a complete understanding of the employee's strengths and weaknesses.Positive, motivated, and properly appreciated employees perform much better. They tend to go above and beyond what is expected of them. Use Zoho Surveys to develop a fair system and lay the groundwork for future improvement.

Zoho Survey also has a few related templates that could help you.