Top 5 Benefits of Employee Performance Appraisals

It’s that time of year: employee performance appraisals are around the corner at many companies. Whether your performance review cycle is monthly, quarterly, or twice a year, it’s nearly time to check in with your employees.

But performance appraisals can be stressful for everyone involved, and they don’t always have the desired outcome. Only 14% of employees say that performance reviews motivate them to improve. 95% of managers are not satisfied with how their company conducts reviews.

Before the next review cycle, refresh your knowledge of some of the top benefits of the employee performance appraisal. Then, you can approach this review period with optimism, ready to empower your employees.

1. Set New Goals And Aid Professional Development

We all know that employee performance appraisals are about reviewing performance since the last review cycle. It’s a useful exercise to see how employees have improved, goals they have met, or if their performance has declined. Performance reviews are also a good time to spot skills gaps or areas where additional training is needed.

It’s just as important to use employee performance appraisal time to address how they can improve going forward and set new goals. Your performance review system should enable managers to create professional development plans for employees who are ready for the next step in their careers. It’s an excellent time to talk to employees about skills they want to develop or set up a training schedule.

Using employee evaluations to set performance and development goals is not only useful — it’s necessary to stay competitive. 59% of companies say they plan to focus on their goal-setting process into the next year.

2. Strengthen Employee Engagement

An employee performance appraisal is a chance to both hear from management and for employees to offer their feedback, a key factor in engagement levels. Employee engagement is a key driver when it comes to productivity and retention. Engaged employees are 17% more productive and five times less likely to quit than disengaged employees.

The key to using performance evaluations to foster employee engagement is to do them right. Informal performance appraisals that take place more often can help with engagement since 96% of employees say they want more frequent feedback. Your formal performance review cycle can focus on long-term goals and professional development plans. Stay on top of day-to-day performance with weekly one-on-ones or daily check-ins.

3. Get Feedback From Peers, Management, And Individuals

Speaking of feedback, that’s another of the myriad benefits of the performance appraisal process. You might gather feedback with an anonymous employee survey. Then, management can address any concerns that seem widespread without singling anyone out. It also allows for more honest feedback from employees.

Many companies are now using 360-degree reviews. That means getting feedback for each employee from their peers, managers, and the employee themselves. This method creates a well-rounded picture of performance and makes employee performance reviews much more effective. A Gartner survey discovered that peer feedback improves the utility of performance management systems by 3.5% and increases performance by 14%.

Did you know? A Gartner survey discovered that peer feedback improves the utility of performance management systems by 3.5% and increases performance by 14%.

4. Builds A Performance Appraisal History For Every Employee

A huge benefit of employee appraisal systems is that they create a record of every employee’s performance history. These records are easy to create and become even more beneficial when you use performance management software. Performance management software creates records with much less effort on the part of your HR teams and managers. It also equips your organization with tools that strengthen your appraisal process.

The data gathered by performance management software enables you to create reports and see performance over time. Human resources and managers can spot what drives great performance and what might be holding employees back. Some questions that can be answered by robust appraisal records include:

  • Is this performance review radically different from past reviews?
  • What are the employee’s strengths and weaknesses?
  • Has this employee’s performance trended up or down?
  • Does this employee’s performance falter or improve around the same time each year (e.g. holidays, beginning of a new quarter, in the summer, etc.)
  • Did feedback from a previous appraisal affect employee performance negatively or positively?
  • Is this employee ready for a promotion or additional responsibilities?

5. Spot High-Performing And High-Potential Employees

We’re going to expand on that last question listed above since it’s a huge benefit of a performance appraisal system. Review records offer a comprehensive picture of recent performance and of performance dating back to the employee’s start date. That makes it easier to determine which employees are high-potential or high-performing. This information helps management make a strong case on the employee’s behalf for a promotion or for professional development opportunities.

It’s incredibly beneficial for organizations to be able to identify their outstanding employees. High performers are up to 400% more productive than the average employee. They are also more likely to stay with your organization long-term. This also gives managers the opportunity to advocate for their team and recognize their accomplishments, determining factors in engagement and retention levels.

The benefits of a performance appraisal system can’t be overstated. 360-degree feedback, encouraging employee development, and recognizing their accomplishments is sure to improve engagement, retention, and productivity. It can also help your HR and recruiting teams bring in top talent. Attract, engage, and retain top talent with an excellent performance review system.

Regardless of the types of performance appraisals you use, performance management software can power an efficient program. ClearCompany’s Performance Management tools enable your company to engage and retain top talent with useful, productive review cycles.

Whether you use 360-degree reviews, employee surveys, formal performance appraisals, or a combination of those, ClearCompany has the customizable tools you need for a successful performance management system. Get started today — sign up for a demo from the experts at ClearCompany.

This article was originally published on ClearCompany’s blog.

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As a Digital Marketing and Events Manager for ClearCompany, Meredith coordinates best-practice content and brand-awareness events with HR practitioners.

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Meredith Wholley

Meredith Wholley

As a Digital Marketing and Events Manager for ClearCompany, Meredith coordinates best-practice content and brand-awareness events with HR practitioners.

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