What Does Performance Appraisal Mean?

5 minute read

Performance Appraisal refers to the evaluation or review of the job performance of an employee by the organization. Companies deploy evaluation methods like graphic rating scales, 360-degree feedback, Behaviorally Anchored Rating Scales (BARS), and Management by Objectives (MBO) to review employee performance. These methods can be used individually or in combination, depending on the organization’s goals, culture, and the nature of the work being performed. Usage of these methods is important for several reasons, including providing employees with feedback on their work, setting future performance goals, determining compensation adjustments, and making decisions regarding promotions or career development opportunities.

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What is a Performance Appraisal?

Performance appraisal, often referred to as performance review or evaluation, is a structured process used by organisations to assess and evaluate the job performance of their employees. It typically involves a formal discussion between an employee and their supervisor or manager, where the employee’s performance, accomplishments, strengths, and areas for improvement are discussed.

During a performance review, specific goals and objectives set for the employee are reviewed, and feedback is provided based on their performance against these targets. This process helps in identifying areas where the employee excels and where they may need additional support or development.

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Types of Performance Appraisals

There are certain types of Performance Appraisals:

  • Self-assessment: Individuals rate themselves on their job performance as well as their behaviour.
  • Peer assessment: An employee’s peer group provide assessment of his/her performance.
  • 360-degree feedback assessment: This includes input from an individual, the supervisor, and the peers too.
  • Negotiated appraisal: in this method, a mediator plays a role attempting to moderate the adversarial nature of performance evaluation which is done by allowing the employee to put forth his achievements and learning first. This focuses on the great contributions that the employee is making before getting any critical feedback. This structure is helpful in resolving conflicts between subordinates and supervisors.

Purpose of Performance Appraisal

The purpose of performance review serves several important functions within an organisation:

  • Feedback and Communication: It provides a structured platform for managers to give employees feedback on their performance. This helps employees understand how well they are meeting expectations and what areas they can improve upon.
  • Goal Setting and Alignment: Also, performance evaluation is used to set clear performance goals and expectations for employees. This aligns individual efforts with the overall goals and objectives of the organisation.
  • Performance Improvement: Further, performance appraisal identifies areas where an employee may need additional training, support, or development. This helps in addressing performance gaps and enhancing the employee’s skills and capabilities.
  • Recognition and Reward: Moreover, effective performance review systems can be used as a basis for recognising and rewarding employees who consistently meet or exceed their performance targets.
  • Career Development: In addition, it can serve as a platform for discussing career aspirations and development plans. This helps employees understand their potential career paths within the organisation.
  • Decision Making: Besides, performance reviews are often used as a basis for making decisions about promotions, salary adjustments, bonuses, and other aspects of compensation and benefits.
  • Performance Measurement and Accountability: Moreover, performance evaluation allows organisations to objectively assess how well employees are performing in their roles. This information is important for managing overall workforce productivity.

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Performance Evaluation Methods

There are various methods for conducting a performance appraisal. Here are five commonly used methods:

Graphic Rating Scales

This is one of the most traditional methods. It involves creating a scale with specific performance criteria and rating levels (e.g., poor, satisfactory, excellent). Managers then evaluate employees based on these criteria.

360-Degree Feedback

The 360 Degree Feedback method involves gathering feedback from various sources, including supervisors, peers, subordinates, and even external stakeholders. This provides a comprehensive view of an employee’s performance from multiple perspectives.

Management by Objectives (MBO)

In this method, specific and measurable objectives are set for each employee in alignment with organizational goals. Performance is then evaluated based on how well these objectives are met.

Behaviorally Anchored Rating Scales (BARS)

BARS combines elements of both graphic rating scales and critical incidents. It involves creating specific behavioral anchors that represent different levels of performance. Managers then assess employees based on these behaviors.


This method allows employees to evaluate their own performance against established criteria. It encourages self-reflection and can provide valuable insights into an employee’s perception of their strengths and areas for improvement.

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Performance Review Examples

Here are some examples of performance appraisal comments for different scenarios:

If an Employee Exceeds Expectations

Example 1: “Vikram consistently exceeds expectations in meeting project deadlines. His attention to detail and ability to adapt to changing priorities is commendable.”

Example 2: “Sonal demonstrated exceptional leadership during the team’s recent client presentation. Her effective communication skills and strategic thinking were instrumental in securing a new contract.”

If an Employee Meets Expectations

Example 1: “Mohit consistently meets the established sales targets and maintains a high level of customer satisfaction. His product knowledge and rapport-building skills are assets to the team.”

Example 2: “Eesha reliably completes her assigned tasks on time and produces high-quality work. She actively seeks feedback and takes initiative to improve her skills.”

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If an Employee Needs Improvement

Example 1: “Alizha has occasionally struggled with time management, resulting in some missed deadlines. We encourage Alizha to work on prioritising tasks and utilising time-management strategies.”

Example 2: “Danish has shown potential in her role, but there have been instances of communication breakdowns. We recommend further development in effective communication and active listening.”

If an Employee Exhibits Outstanding Achievements

Example 1: “Tanishk played a pivotal role in the successful implementation of a new software system, demonstrating outstanding technical expertise and a remarkable ability to lead cross-functional teams.”

Example 2: “Sarika’s exceptional problem-solving skills were evident when she identified and resolved a critical issue, ultimately saving the company a significant amount of time and resources.”

To Highlight Areas for Development for an Employee

Example 1: “Chandan has shown a strong aptitude for data analysis, but we encourage him to further develop his presentation skills to effectively communicate insights to non-technical stakeholders.”

Example 2: “Zara has a solid foundation in her current role, but there is room for growth in taking on more complex projects and expanding her expertise in certain areas.”

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What is performance appraisal?

It is an evaluation process to analyse the growth of the workforce. Organisations reward employees who have exhibited improvement based on the outcome of appraisal processes.

What are the different types of performance evaluation methods?

360-degree feedback, Graphic Rating Scales, BARS, and MBO are some of the highly prevalent performance review methods.

What is the purpose of performance review?

Employers conduct quarterly, half-yearly and annual reviews to provide feedback, encourage communication, recognise and reward growth, and allocate bonuses, and salary increments.

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