What Is Performance Appraisal?

Performance appraisal is a structured assessment of an employee’s individual performance over a given period of time, whose objective is to improve the company’s performance by improving employee performance. Performance appraisal is the culmination of a well-structured performance management cycle — and performance management is a systematic process of improving an organization’s performance by improving the performance of its teams and people.

But structuring an efficient performance review that produces the desired results (that is, that makes the company improve) is a journey full of forks and pitfalls.

The Relationship Between Performance Management And Performance Analysis

Performance management is a process that takes place in cycles: it begins with the establishment of performance expectations (which are goals, indicators, competencies and behaviors) and ends with the evaluation of that performance and the subsequent beginning of a new cycle.

The performance evaluation is the end of the performance management cycle, where it is intended to measure and evaluate the employee’s performance in relation to the expectations established at the beginning of the cycle.

The Context Of Performance Evaluation

The organizational/industrial psychology literature devotes much of its effort to the study of performance appraisal. Much of the literature is focused on how to structure performance appraisal questionnaires that:

increase satisfaction with the process;
improve the perception of fairness of the process;
increase the accuracy of the process.
Furthermore, traditional literature deals almost exclusively with performance as an individual. However, nowadays there are several occupations and areas of activity within organizations, in which the measurement of individual employee performance is much more difficult and even sometimes unwanted, as in the cases of companies that organize themselves in agile teams, such as Spotify .

“Performance” In performance Appraisal

The expressive majority of specialists divides the performance of a professional into two major dimensions:

results ( outcomes );
behaviors ( behaviours ).
An easy way to understand the difference between results and behaviors is to think that results are “what” the employee does (that is, the results he achieves) and behaviors are “how” the employee produces those results.

The two dimensions of performance are important because they form the backbone of the performance management cycle—which we’ll discuss later—and are how the vast majority of performance reviews are organized.

The performance management cycle consists of two phases: setting expectations and evaluating performance against set expectations.

The Performance Evaluation Has As Main Objectives:

measure employee performance for decision-making purposes;
provide inputs for the employee to develop, that is, improve their performance in the next cycle.

The Structure Of A Performance Review

Performance appraisal usually consists of a series of questionnaires. In them, there will be questions to be answered by one or several evaluators about an evaluated, dealing with aspects related to the two dimensions of performance that we discussed: behaviors (“how”) and results (“what”).

The History Of Behaviors In Performance Appraisal

The behaviors, which form one of the two dimensions of performance, are evaluated in a portion of the performance appraisal that is commonly called the “competence appraisal”.

The use of competencies and behaviors in performance management gained traction in the 1970s and 1980s, when companies came out of a few years of massive focus on using goals and objectives as a single measure of performance.

The use of goals (as we will see later) was born with the trend of Management by Objectives , or management by objectives. But at some point, organizational psychologists (the theorists) and human resources departments (the practitioners) felt a lack of some behavioral component that measured how well people had achieved the outcomes determined in the MBOs—in particular, whether the outcomes had been met. ethically, collaboratively and aligned with the company’s culture.

Thus was born the use of skills and behaviors, which were already widely used in the analysis of positions and occupations, for performance management purposes.

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