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Importance of Performance Appraisal


Performance appraisal is one of the core functions of the human resource (HR) department in an organization. It is a well-known fact that an effectual and constructive performance appraisal can go a long way in creating a positive and forward looking ecosystem in an organization. Timely, transparent and a two-way communication performance appraisal system can help in developing a harmonious work culture. It would enable the workforce to engage more actively and work cohesively while boasting the morale of the employees. It would also strengthen the employer-employee relationship impacting business encouragingly.

Sound performance appraisal software is much-needed in today’s time as it holds the key for retaining the talent. The most effective ways to make the appraisal system robust are regular review meetings and open channels of communication. Some of the other key features are mentioned below, which highlight the importance of employees’ performance appraisal:


Assess Performance

Employers are keen to assess the performance of their workforce to understand their strengths and weaknesses. Whereas, employees are eager to get appraised as it would enable them to comprehend their current standing amongst their teammates. It also allows them to chart the future course of their career and evaluate their worth. Today, firms are applying varied performance appraisal tools to gauge both the qualitative and quantitative contribution of employees. Employing such tools help in removing human bias from the system making it entirely transparent and reliable. Besides, performance appraisals recorded year after year enables the employers to evaluate the journey of the employees. It gives employers insights about what satisfies and motivates an employee.


Recognition and Rewards

New-age performance appraisal software enables in identifying criteria for evaluating employees and accordingly fixing their appraisal. Assessing employees and offering them apt growth opportunities and reward in terms of monetary benefits ensures that they feel valued. The employees are evaluated keeping in mind the goals of the company, which helps in according reward and recognize their efforts. While deciding the recognition and rewards for employees, employers must take into account the hierarchy, experience and factor in such aspects. This would enable in making the appraisal system customized making employees feel an integral part of the organization. It is also wise to appreciate and recognize outstanding performers by giving them added incentives. This would encourage them to perform better in the future while encouraging others to follow suit.


Set Goals and Objectives

Performance appraisal techniques offer a chance to employers and employees to discuss the common goals and pave the way forward. In the midst of hundreds of employees, it becomes a daunting task for employers to identify the most worthy players. Thus, the appraisal performance software records the employees’ capabilities for a specified period, which is the year gone by in most cases. Then the employees are evaluated and employers are able to predict their future contribution to the firm. It must be noted that when employers discuss the goals and expectations openly with employees a sense of belongingness emerges. Such deliberations enable employees to recognize the goals of the employers as they help in achieving them. It also becomes a great platform to discuss future growth prospects as well as challenges.


 Identify Training and Development Needs

Performance appraisal system offers a great opportunity to employers and employees to ascertain specific training and development requirements. It is a good way of creating customized training and development strategy for the workforce. The training could be based on varied factors such as preparing employees for a new role. It could be to help them train in new technology to achieve the goals of the company. Such a timely endeavor would allow the organization to stay ahead of its competitors. The management could also at this stage identify high performing employees and train them further for more sophisticated and complex roles.


Resolve Issues

Every firm has its issues and unique challenges. If not addressed at the right time, it could lead to long term dissatisfaction among employees impacting their performance. At the time of appraisal, employees can communicate their issues and escalate point of contentions for quick resolution by the management. A fair and non-bias hearing of issues would lead to greater trust and support from the staff. Management should also take this time to put forth their arguments and the need for certain policies and rules for the betterment of the firm. It would also enable in creating a healthier and conducive culture of openness and hope.


 Time for Promotions and Transfers

Everyone likes to hold the position of authority. But with authority comes responsibility. Performance appraisal software allows employers to evaluate each employee objectively and then decide whether they are ready to move up ladder. This process allows the management to take a call if there is a need to hire an external resource for a particular job or an internal promotion or transfer would suffice. As companies often spend substantial time and money for recruiting and training employees, it becomes viable to hire talent from within on most occasions.


Succession Planning

No one is indispensable. A time comes when the most talented of resources have to move out of the system owing to various reasons. At such junctures, it becomes crucial for HR and the top management to identify the next line of command.  The HR Software Solution can come in really handy at this hour. Potential employees can be identified and sought for higher up roles and trained accordingly. It could become a platform for employees to plan their future course of action in line with the goals of the company.


Innovate to Remain Relevant

All systems have scope of improvement. A process which was successful earlier may prove to be redundant after few years. It is essential to revamp the appraisal system continuously. Like employees have to skilled and re-skilled to suit the needs of the industry similarly, appraisal systems require improvement. Thus, to keep the employees’ performance appraisal software applicable and dependable, it is critical for organizations to adapt new norms seamlessly and suitably.