HRIS Strategy

How an appraisal system can improve employee performance

5 mn 13 Jan 2020

Have you been searching for a way to improve employee performance within your business that actually works? Employee performance management is crucial, and yet is very rarely used effectively. So what are performance appraisal systems, why are they important and how can they improve employee performance? With this guide, you’ll be able to gauge the answer to all these questions and discover while appraisal system best suits your business. 


What is an appraisal system? 

An appraisal system is a process whereby employee performance is measured based on previously set goals. During this process, a manager and employee will also set future goals for the employee and the manager should offer guidance in relation to development and training. 


Why are performance appraisal systems important? 

The performance appraisal process ensures that a manager can make it clear where an employee is excelling but also where they may be falling down. This is important because a member of staff can be supported in areas they may need to improve and also be rewarded where it’s warranted. 

Performance appraisal systems are important for a number of reasons, including: 

  • Identifying potential 
  • Assisting employee development 
  • Measure and reward performance 
  • Developing/changing a job description 
  • Allows an employee to voice their thoughts 

Looking at different appraisal systems 

There are a number of appraisal systems to use for your employees. If you’re looking for the perfect fit for your business, we’ve outlined the most popular and effective systems to help you select the perfect one for you.  

  • 360-degree feedback 

The process of 360-degree feedback requires all employees in a business to appraise their colleagues, managers, clients/customers and also carry out a self-evaluation. What this method does well is to assist all employees to stay motivated and gives them detailed feedback from different perspectives and challenge them to be self-reflective.

  • Management by Objectives (MBO) 

This is where an employee and manager work together to create goals. This is more of a facts-based system as it measures exactly what the employee has achieved against the goals that have been set. This system is great for measuring what has been achieved in terms of visible work but information such as commitment to the job or teamwork could be missed. 

This system is more focused on tangible achievements so it may be used in conjunction with a trait-focused checklist. This deals with the personality, characteristics and personal qualities of the employee, meaning things such as time-keeping, teamwork and reliability can be measured. 

  • Self-evaluation 

With self-evaluation, pre-agreed measurements are put in place and an employee is then required to honestly and openly assess their own performance with this method. As an employee may not always be able to correctly assess their performance as accurately as they would like, this often needs managerial guidance. However, what this system does well is put responsibility with the employee to truly think about their performance and assess themselves in an honest way. 

Many businesses use systems of appraising whereby they combine some of the above methods to find a system that works perfectly for them. 

The great thing about HR software is that these appraisal systems can be automated, making them more streamlined. Having software available enables an employee to engage in an ongoing conversation with a manager, creating a collaborative effort.  

A positive of tracking performance using software means that once an employee has achieved something, they can log it, creating more of a continuous process. Without this, employees have to remember to note their achievements, objections and queries down. They then somehow need to remember to keep hold of that piece of paper for their review meeting or simply recall something they did months ago. 

How can an appraisal system improve performance? 

There are some clear reasons why performance appraisal systems fail. These failures can shape how to create a successful structure which works for you, your business and your employees.  

Why do appraisal systems fail ?

  • No recognition or reward 
  • Incorrect goal setting, or no goals at all
  • Lack of structure  
  • Poor communication 
  • Too infrequent (annually) 

Being able to see what makes an appraisal system fail is invaluable for helping a HR department create an effective procedure.  

How to create a successful appraisal system ?

  • Reward employees appropriately for meeting, or exceeding their targets 
  • Set challenging, but achievable goals 
  • Create an appraisal structure that makes sense 
  • Communicate clearly and regularly  
  • Ensure appraisal reviews occur more regularly than an annual occurrence 

Now we’ve identified what an appraisal system is, how important it can be for your workforce and the different types of system available, which one will you choose for your business? If there’s no one size that will fit the values of your company, a great option is to amalgamate more than one system to create something ideal for you. Bring that together with HR software and your business will have the perfect appraisal system recipe. 


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