D4 Performance Appraisal
Performance appraisals are methods used to assess the performance of employees over time against predetermined targets. These include productivity, work ethic, attendance and skill development. Appraisals are typically conducted by managers or supervisors on an annual basis but timelines can vary from organisation to organisation.
Purpose of performance appraisal:
to set individual and group targets
to assess individual and group performance
to provide employee feedback
to identify training needs.
Types of Appraisal
Self-assessment is a method of an employee evaluating their own performance against expectations. They may identify their own strengths, weaknesses and areas for improvement. This is often done using a form or questionnaire. Self-assessment may be one stage of the appraisal process followed by a meeting with their manager
Ratings scales are methods of quantifying the level of skill, quality of work or performance of an employee as part of an appraisal process.
Management by objectives is a method of a manager and subordinate agreeing on targets to achieve in a specified time frame and meeting regularly to discuss whether these targets have been met. This method can inform discussions of training needs.
360° appraisal involves gathering feedback from the circle of people that an employees engages with in their job role. This may involves managers, subordinates, colleagues and clients or customers. An employee may also include a self-assessment as part of a 360 degree appraisal.
Benefits and Drawbacks of Appraisals
Benefits of Performance Appraisal
Improves performance: Managers and employees can work together to uncover strengths and weaknesses. This allows managers to set achievable goals and offer support in overcoming challenges the employee is facing.
Identifies training needs: Discussions about challenges a worker is facing in their work may uncover training needs. By providing training, the manager can address skill gaps, improve quality and boost the productivity of the organisation.
Motivation: The individual may feel more motivated as they feel listened to by their manager. It may also give the manager a chance to acknowledge the performance of members of their team which can improve self-esteem.
Reduces turnover: Improving motivation, and communication and offering opportunities for growth through appraisal create a more positive workplace culture contributing to reduced staff turnover.
Improved communication: Appraisals allow employees to communicate with management giving a clearer picture of the issues in different areas of the organisation and devise timely solutions.
Supports recognition of performance: Appraisal meetings provide opportunities for employees to share their successes with managers which may inform rewards such as bonuses, pay increases and promotions.
Drawbacks of Performance Appraisal
Stress and Anxiety: The anticipation of a discussion regarding performance with a manager can create stress and anxiety for the employee which can hinder productivity and performance.
Time-consuming processes: Multiple appraisal meetings and follow-up activities can be time-consuming for managers which can take them away from more productive work.
Potential for bias: Managers may hold underlying assumptions about employees which can affect their evaluation of their performance regardless of what is discussed invalidating the purpose of the process.
Can be demotivating: As performance appraisals address both the positive and negative aspects of an employee’s performance, it could be demotivating if the delivery of the negative is not managed well.
Cost of appraiser training: Due to the sensitive nature of appraisal conversations and their impact, appraiser training is important. This can be costly and time-consuming.
Performance Appraisals at DingDong Ltd (June 2022 exam)
Performance appraisals are methods used to assess the performance of employees over time against predetermined targets.
Sami and Mansoor can conduct performance appraisal meetings with their drivers. This would help them to improve the performance of their drivers by uncovering the reasons behind the rise in lost/damaged items from 1% to 12% and the reduction in parcels delivered on time from 95% to 76%. Discussions may identify training or support that can be offered to improve performance in these areas which may improve these metrics and support DingDong’s expansion goal.
Appraisal meetings would also provide an opportunity for more open communication between Sami, Mansoor and the drivers to discuss the employee satisfaction rate which has dropped from 93% to 76% along with the staff turnover rate increase from 4% to 29%. Appraisals may allow the managers to show their appreciation and offer solutions to issues they are facing which could improve morale and in turn reduce staff turnover. As DingDong Ltd is experiencing high recruitment costs, improving staff retention could reduce costs contributing to their goal of increasing profits per delivery.
