We all at some stage, used to view performance appraisals as routine, even dreaded, check-ins on an employee’s work. In some cases it may be like that if you are managing poor performance, but as a general rule, performance appraisals can be much more enjoyable and engaging.
Performance appraisals are so much more than just checking off a box.
They’re an opportunity to celebrate wins, align goals, share knowledge, micro train and set the stage for growth – both for your employees and your organisation. Being able to establish a performance review cycle including stages in that cycle to automate the workload allows HR to lead this enjoyment in more meaningful ways. If performance reviews are hard to administer, they start on the wrong footing.
In this guide, we’ll dive into what makes a great appraisal, why it’s crucial, and how to conduct evaluations that truly support your team’s success. ⬇️
The Lowdown on Performance Appraisals
What is a performance appraisal?
At its core, a performance appraisal is an in-depth evaluation of an employee’s work, often measured against clear goals, past feedback, or company standards.
But the real value lies in using this time to connect, review achievements, capture information and knowledge and set the course for future success. Think of it as a structured way to hit “pause,” check progress, and provide your team members with a roadmap for growth.
Use this time to discuss career paths, skills development, and any areas where your team members want to expand. This meeting is often a turning point for employees who may have been looking for the green light to take on more responsibility or hone new skills.
While it’s essential to have a formal appraisal annually or quarterly / bi-annually, remember that continuous feedback throughout the year can help prevent surprises and keep employees engaged. Consider implementing mini check-ins every quarter or even monthly, depending on your organisation’s pace. This will make the formal appraisal smoother, with fewer surprises and more actionable insights. A more dynamic approach also allows for the business to be more dynamic with information being shared and microlearning activities to be established.
Why are performance appraisals important?
Aligning goals
Appraisals help ensure that everyone is working toward the same goals. When discussing performance, relate each employee’s contributions to broader organisational objectives. This helps them see the impact they’re making and keeps them motivated.
Employee growth opportunities
Regular reviews create space for personal and professional development. Consider using each appraisal as an opportunity to talk about new learning experiences, internal projects, or training programmes. When employees feel like they’re growing, they’re more likely to stick around and contribute meaningfully.
Boosting engagement
Ongoing, constructive feedback helps employees feel connected to their work and the company. Keep the tone balanced – celebrate the wins and discuss areas for improvement in a supportive way.
Driving performance
Performance appraisals directly impact productivity. Setting clear, attainable goals and aligning them with the company’s objectives gives employees clarity and direction. Employees who know what they’re working toward are typically more focused, motivated, and productive.
Microlearning
Take advantage of real-time learning by allowing mentors and managers to training people in real-time as they see the need on a day to day basis.
Knowledge Management
Pass and share information about the business, projects, competitors, innovations more frequently to allow the business to be more agile and competitive. Track this information in a knowledgebase to maintain IP increase team performance.
How can your organisation benefit from performance appraisals?
Enhanced communication
Appraisals are the perfect time to have a two-way conversation. Encourage managers to ask open-ended questions and truly listen. This helps break down communication barriers and fosters a transparent, open culture.
Data-driven decision making
Appraisals provide critical data that can guide decisions around promotions, raises, or even team changes. Use the performance data to support these decisions, so they’re objective and rooted in measurable outcomes.
Reduced turnover
A good appraisal process addresses concerns head-on, which keeps morale high and employees happy. By showing your team that their contributions are valued and that you’re invested in their development, you create a culture of loyalty and support.
Identifying future leaders
Use performance appraisals to spot employees with potential for leadership. Are they showing initiative? Excelling in cross-functional projects? Once identified, you can start providing them with the mentorship or development opportunities they need to grow into future roles. Create simple success plans by building successor planning chart dynamically.
The 8 Best Performance Appraisal Methods
Selecting the right performance appraisal method can make a huge difference in how meaningful and impactful your review process becomes.
No single method will be ideal for every organization or even each department within a company, so think about integrating different techniques to meet your specific objectives and team dynamics. You might find that elements from each method can be adapted to suit your approach. Always utilise HR technology that enables you to modify your strategy easily and efficiently. What was appropriate a year ago may no longer be suitable due to evolving organizational structures and business environments.
Here’s an overview of some popular methods, each with unique strengths, that can be used individually or in combination based on your organisation’s needs ⬇️
360-degree feedback
By gathering input from a range of sources – managers, peers, and sometimes customers – 360-degree feedback provides a well-rounded perspective on employee performance. This method works particularly well when you want insight into collaborative or cross-functional roles.
Management by objectives (MBO)
This approach is goal-oriented, involving agreed-upon objectives set by both managers and employees. MBO is especially effective when goals are specific and measurable, making it suitable for teams with quarterly or annual targets that need alignment with broader company strategies.
Behaviorally anchored rating scale (BARS)
BARS blends quantitative data with behavioural insights, rating employees on defined behaviours relevant to their role. It’s particularly valuable when the “how” of performance – like customer service skills or leadership – is as important as the “what.”
Graphic rating scale
This straightforward approach scores employees on a scale for various performance categories. Graphic rating scales work well for roles with clearly defined, objective performance metrics, such as punctuality or task completion, and are often combined with other methods for added depth.
Peer review
Having colleagues assess each other’s work can foster accountability and teamwork. Peer reviews offer unique insights, especially valuable in collaborative environments, and can be paired with 360-degree feedback to further enrich the review.
Self-assessment
Self-assessments empower employees to reflect on their achievements, challenges, and areas for improvement. This method is an excellent way to engage employees in their own development and often uncovers insights that might not emerge otherwise.
Human-resource (cost) accounting
A more specialised approach, this method assesses an employee’s financial impact on the organisation. While less common, it can be useful in roles that significantly impact revenue or cost savings and is often combined with other, more people-centred approaches.
Objectives and key results (OKRs)
OKRs are designed for dynamic, growth-driven environments, helping employees set ambitious, measurable goals that align with company objectives. This method is valuable in fast-paced, goal-oriented teams and works well alongside MBO or self-assessments.
How to Prepare for a Performance Appraisal
Make notes well in advance
Start preparing well before the appraisal meeting for a balanced and insightful conversation. Review the employee’s performance data, including any key achievements, challenges, and feedback they’ve received throughout the appraisal period.
Document specific examples of successes and areas for improvement, noting relevant metrics or results that demonstrate their impact. Look at previous appraisals to track progress on past goals, and identify any recurring strengths or areas needing development. When you gather these data points in advance, it helps ground the appraisal in facts, creating a more objective and constructive discussion.
Give your team enough notice
Surprising employees with an appraisal meeting rarely goes well. Instead, give them at least a week’s notice to review their work, gather examples of their accomplishments, and think about their career goals.
Consider sharing a meeting agenda to outline what the conversation will cover – such as recent projects, key skills, and areas for growth – so they can feel prepared and confident. Clear communication upfront not only sets expectations but also puts the employee at ease, helping them come ready to engage actively in the discussion.
Provide employees with self-assessment forms
A self-assessment can be one of the most valuable tools in an appraisal process, as it encourages employees to reflect on their own performance.
Provide a structured form or set of questions that prompts employees to evaluate their accomplishments, identify challenges, and think about where they’d like to develop. This exercise often uncovers insights into how they perceive their own progress and growth, offering valuable perspectives to compare with the manager’s assessment.
Additionally, self-assessments can highlight any discrepancies between how employees view their contributions versus how managers see them, helping you approach these points constructively.
Find a suitable environment
The setting of an appraisal can significantly influence its tone. Choose a private, neutral space – away from high-traffic or common areas – that allows both you and the employee to speak openly without distractions.
Creating a comfortable, professional atmosphere signals to the employee that their feedback is valued and that this is a safe space for an honest exchange. If you’re conducting appraisals remotely, make sure both you and the employee are familiar with any tech requirements and have a stable connection to avoid interruptions, which can detract from the flow of the conversation.
Block out enough time
Rushing through an appraisal can make the employee feel undervalued and the feedback process incomplete. Avoid back-to-back meetings and allow for enough time to have a meaningful conversation – typically, 45-60 minutes is a good benchmark.
Be prepared to extend the time slightly if the conversation is particularly productive or if the employee needs more time to discuss their feedback or goals. Showing that you’ve set aside ample time underscores the importance of the appraisal and sends a message that you are fully present for the conversation.
Plan and structure the meeting
A structured meeting flow is essential for keeping the appraisal on track and ensuring all key areas are covered. Start with a quick recap of the meeting’s purpose and the topics you’ll be covering.
Then, begin by reviewing past goals to see where progress has been made, acknowledging areas of improvement and any setbacks constructively. From there, move into discussing current performance, focusing on strengths, areas needing improvement, and specific examples.
Conclude by setting new goals for the coming period, using SMART criteria (Specific, Measurable, Achievable, Relevant, and Time-bound) to provide clarity and direction. Ending with actionable goals helps employees leave with a clear understanding of expectations and growth areas, making the appraisal process feel purposeful and motivating.
The 12 Best Tips for Successful Performance Appraisals
Create a clear outline for performance appraisal meetings
Start each appraisal with a consistent outline to make sure everyone knows what to expect. Jot down key topics: recent achievements, any challenges, overall performance, and future goals.
A structured flow – beginning with an intro, moving into the main evaluation, and wrapping up with next steps – helps keep things on track. This way, the employee feels the process is organised and fair, plus you’ll avoid forgetting important points.
Use the right tools
A great HR tool makes the entire appraisal process smoother and more effective. Look for software that keeps everything in one place – templates, self-assessments, and performance tracking. When you have all the relevant data in front of you, it’s so much easier to give specific, helpful feedback that’s rooted in real performance.
💡 SubscribeHR offers intuitive tools that support every step of the performance review cycle – from goal-setting to ongoing feedback and growth tracking.
Encourage employees to share
Appraisals should be a two-way street. Kick things off with open-ended questions like, “What are some highlights from this past period?” or “Is there anything specific you’d like to discuss today?”
Creating a safe space for employees to speak up makes them feel valued and encourages them to engage actively. Listening to their perspectives can also uncover insights you might not have realised, strengthening your understanding of their role.
Put employees at ease
Performance reviews can be nerve-wracking, so start the meeting with a casual conversation or a bit of positive feedback. This small gesture helps break the ice and makes employees feel more comfortable.
Select a comfortable, private space, and maintain empathetic body language. Setting a positive tone early helps employees feel more at ease, making them more open to feedback and discussion.
Involve employees in goal-setting
Appraisals are a fantastic time to talk about the future. Rather than setting goals unilaterally, invite the employee to weigh in. Ask questions like, “What goals would you like to work on next?” or “What skills would you like to develop?” Not only does this give them ownership of their goals, but it also shows that you value their input.
Discuss strengths and weaknesses
Be sure to give a balanced view by starting with strengths. Recognising what they do well builds confidence and keeps the tone positive. Then, gently transition to areas for improvement. Frame weaknesses as growth opportunities.
For example, “I’d like to explore ways we can improve time management together.” This constructive approach keeps morale high and sets a tone of support.
Talk about development opportunities
Use this time to explore career paths, PDP - training needs, knowledge and IP Capture and future aspirations. Ask questions like, “Where do you see yourself in a few years?” or “What skills would you like to develop?”
Not only does this make employees feel invested in, but it also opens up conversations about specific projects, workshops, or mentorship programs that align with their career goals. Showing interest in their growth is one of the best ways to boost morale and retain talent.
Adapt your communication style
Feedback isn’t one-size-fits-all. Some people appreciate direct, clear-cut feedback, while others respond better to a gentler approach.
Pay attention to each employee’s reactions and adapt accordingly. Taking the time to communicate in a way that resonates with each person shows that you respect their individuality and want your feedback to be as constructive as possible.
To help managers refine this skill, consider offering training focused on recognising different communication preferences and adapting feedback styles. Workshops or role-playing exercises can help managers understand the nuances of body language, tone, and word choice. Training can also emphasise active listening skills, encouraging managers to pick up on cues that show whether an employee is feeling comfortable or needs a gentler approach.
Don't raise any concerns out of the blue
One of the biggest mistakes is surprising employees with new criticisms during the appraisal. If you notice issues throughout the year, address them as they arise instead of saving them for review day. This way, the formal appraisal can focus on overall progress and future goals, keeping the tone positive and forward-looking.
Set 'SMART' goals
Goals that are Specific, Measurable, Achievable, Relevant, and Time-bound (SMART) make it easier for employees to stay focused and on track.
Take the time to work together to define clear goals with milestones, so they know exactly what success looks like. Breaking down big objectives into smaller, manageable tasks is a great way to create momentum and ensure steady progress.
Discuss salary when relevant
If salary or compensation is on the table, be transparent and connect it directly to performance outcomes. Talk about how specific achievements have contributed to the conversation and any expectations for growth that could impact future reviews. Even if a raise isn’t on the horizon yet, discussing how performance ties into pay can help employees feel more motivated and in control of their career path.
Meticulously document the appraisal session
After the meeting, make a record of key discussion points, goals, and any agreed-upon action steps. A consistent documentation format is helpful, as it creates a reliable reference point for tracking progress over time.
Share the summary with the employee so you’re both on the same page and can revisit these points as needed. Documentation ensures that everyone’s clear on what was discussed and makes future appraisals smoother.
What to do after a performance appraisal
Summarise the appraisal
Before wrapping up the meeting, take a moment to go over the main highlights. Recap the key topics you discussed – like big achievements, progress on past goals, and any new action items.
This quick summary ensures that both you and the employee leave with a clear understanding of what was covered. It also gives them a chance to ask any last-minute questions or clarify anything they’re unsure about.
Share written feedback
After the meeting, share a written summary that they can refer back to. This isn’t just a formality; written feedback reinforces the positive points and provides a roadmap for areas they can improve on. Having it all in writing makes it easier for them to stay on track and revisit the key takeaways as needed. Plus, it shows that you’re committed to helping them succeed!
Discuss the next steps
Take a few minutes to outline what comes next. Whether it’s signing up for a training program, jumping into a new project, or setting a timeline for their next goal, giving a clear plan for follow-up actions keeps the momentum going. This also signals that you’re invested in their growth and looking forward to seeing their continued progress.
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FAQs – Frequently asked questions
What exactly is a performance appraisal?
A performance appraisal is a formal evaluation of an employee’s work over a specific period. It’s an opportunity to highlight achievements, discuss areas for improvement, and set goals for future growth. Think of it as a structured way to connect, provide feedback, and plan next steps that support both the employee and the company.
What’s the difference between a performance appraisal and an employee performance review?
They’re often used interchangeably, but generally, a performance appraisal is the formal process itself, while a performance review can be any regular feedback session between a manager and employee. The appraisal is usually more structured, involving specific criteria and official documentation.
What are some common performance appraisal methods?
There are several popular methods, and the best one for your team depends on your goals and work culture. Here are a few examples:
- 360-Degree Feedback: Collects input from the employee’s peers, managers, and sometimes even clients
- Management by Objectives (MBO): Focuses on specific, measurable goals that are agreed upon by the manager and employee
- Behaviourally Anchored Rating Scale (BARS): Rates specific behaviours tied to job performance
- Graphic Rating Scale: Uses a straightforward scale to rate different performance categories.
- Peer Review: Allows team members to provide feedback on each other’s work
What are SMART objectives, and why are they useful in performance reviews?
SMART objectives are Specific, Measurable, Achievable, Relevant, and Time-bound. These goals provide a clear, actionable roadmap, making it easier for employees to understand what’s expected of them and for managers to measure progress. They’re especially helpful in performance appraisals because they take vague goals and turn them into something tangible and trackable.
How can employees best prepare for a performance review?
Preparation is key to making the most of a performance review. Employees can prepare by:
- Reflecting on recent accomplishments and any challenges they’ve faced
- Reviewing previous goals and gathering examples of their work to show progress
- Completing a self-assessment, if provided, to align their perspective with their manager’s
- Preparing questions or talking points to make the review a two-way conversation
How should managers prepare for a performance review meeting?
Managers can set themselves up for a productive review by:
- Reviewing the employee’s past goals, accomplishments, and any feedback given
- Gathering specific examples to make feedback more impactful
- Creating a structured outline with space for achievements, growth areas, and next steps
- Using tools like HR software to keep data organised and ensure a consistent approach
What are some tips for giving effective feedback in performance appraisals?
Effective feedback should be clear, specific, and balanced. Start by acknowledging what the employee does well to build confidence, then discuss areas for improvement in a supportive way. Focus on behaviours and actions, not personal traits. Offering constructive, actionable steps also makes feedback more meaningful.
What’s the “360-degree feedback” method, and when is it best to use?
360-degree feedback gathers input from various people the employee interacts with – like managers, peers, and sometimes even clients. It’s ideal for roles that rely heavily on teamwork or client interaction, as it gives a more comprehensive view of an employee’s performance and impact across different perspectives.
Can you explain the behaviourally anchored rating scale (BARS)?
BARS is a performance evaluation tool that combines qualitative and quantitative insights. It uses specific behaviours as benchmarks, rating employees on key actions or competencies rather than broad qualities. This method is especially effective for roles where the “how” of performance is as important as the results, like customer service or leadership.
What are the benefits of a performance appraisal for employee development?
Performance appraisals help identify strengths, areas for growth, and potential career paths. They offer a structured way to set development goals and discuss resources—like training, mentorship, or new project opportunities—that align with both the employee’s career aspirations and the organisation’s needs. Regular appraisals can lead to better retention, engagement, and skill development.
What are the guidelines for an effective performance appraisal process?
For an appraisal to be effective, follow these key guidelines:
- Keep the appraisal process consistent across the organisation
- Prepare thoroughly with data and examples
- Make it a two-way conversation with space for employee input
- Set SMART objectives to create clear, achievable goals
- Follow up after the appraisal to reinforce goals and track progress
How does self-assessment fit into the performance appraisal process?
Self-assessments allow employees to reflect on their performance and highlight their own achievements. This practice can uncover valuable insights, showing where employees see their own strengths and areas for growth. Managers can use self-assessments to compare perspectives and make the discussion more balanced and engaging.
What are the four P’s of performance appraisal?
The four P’s typically refer to Purpose, Process, Productivity, and People. Together, they help structure an effective appraisal by focusing on why the appraisal is conducted, how it’s carried out, how it relates to performance and productivity, and how it impacts employee engagement and development.
What are the 7 steps of the performance appraisal process?
While every organisation may have its own version, a typical 7-step performance appraisal process might include:
- Setting clear performance standards.
- Communicating those standards to employees.
- Measuring actual performance.
- Comparing results with standards.
- Discussing the results with the employee.
- Creating a development plan.
- Following up regularly.
What’s the purpose of a peer review in performance appraisals?
Peer reviews provide feedback from colleagues who work closely with the employee. It’s especially helpful for understanding team dynamics and gaining insights into collaborative skills. Peer feedback can complement manager feedback, offering a more well-rounded view of an employee’s performance.
What should I include in a performance appraisal form?
A comprehensive performance appraisal form typically includes sections for achievements, questionnaires, areas for improvement, goals, and feedback from both the manager and employee. Adding a self-assessment section and space for comments from other reviewers (like peers or clients) can also enhance the form. These items make up steps in the overall cycle.
What are post-performance review actions?
After a performance review, follow-up actions are essential. These might include:
- Sending a written summary of the meeting.
- Outlining specific next steps or training opportunities.
- Setting follow-up dates to check on progress.
- Offering resources, like additional feedback sessions or skill development workshops, to support the employee’s growth.
How can managers make performance appraisals more successful?
Managers can improve the success of appraisals by:
- Preparing with detailed examples and structured goals.
- Using a friendly, supportive tone to make feedback easier to receive.
- Listening actively to the employee’s input.
- Setting SMART goals that give clear direction.
- Following up to provide continued support and encouragement.
