Performance appraisals are meant to find out if your employees’ goals and values are aligned with those of your organization, says Michelle Ann Santos, human resources practitioner. She goes on to add that the better the alignment, the more motivated and productive are the employees, and the more profitable the company becomes. For the employees, performance appraisals are tools to help them know themselves more so they can work towards achieving their potential.
A performance appraisal involves a process of evaluating the employees’ activities, outputs, attributes, and behaviors. Ritchelle Cordero, human resources and quality management officer, says appraisals “determine the possibility for retention, promotion, salary increases, or termination in the organization.”
Santos notes that for the process to be credible and justifiable, the criteria for the evaluation must have strategic congruence (supportive of the organization’s short-, but mostly long-term goals); validity (relevance to the employees’ performance); reliability (consistency to avoid random errors); acceptability (among users); and specificity (detailed guide for improving on previous performance).
The process must be periodic (annual or semi-annual), formal, and has a structured two-way feedback mechanism (manager to employee and vice versa) and goal-setting process, where expectations are set and job specifications are clarified.
There are three approaches to evaluating an employee’s performance. The first is the stand-alone approach, where appraisals focus on a particular aspect, such as an individual’s attributes. The second is the comparative approach, where an employee’s performance is assessed against that of his or her office mate. The third is the behavioral approach, which assesses employee behavior while completing a job.
The Graphic Rating Scale Method falls under the stand-alone approach, as it rates an employee according to a predefined list of competencies or traits, such as communication skills, work quality, teamwork, and initiative, among others. The comparative approach counts several methods, including the Ranking Method, where employees are ranked according to how poorly or how superbly they performed; the Forced Distribution Method, which ranks employees using a predetermined performance percentage (top five percent, upper 15 percent, middle 30 percent, etc.); and the Paired Comparison Method, which compares employees working in the same group. The behavioral approach counts the Critical Incident Method, which requires managers to keep a log of incidents when an employee performs well or not; the Behaviorally Anchored Rating Scale (BARS) Method, which develops behavioral examples of different levels of performance in a particular competency or trait; and the Organizational Behavior Modification method, which deals with a formal system of behavioral feedback and reinforcement. The last one takes longer to complete.
It would do well for the owner of a small organization to know the importance of having a performance evaluation mechanism in place because his bottom line will only be as good as the quality of the people working for his company.