Process of Performance Appraisal


Performance appraisal is the periodic and systematic assessment of the employees in terms of the performance, aptitude, capabilities and other qualities which are necessary for successfully carrying out their jobs.

It is a systematic effort on the part of management and has a direct linkage with induction, selection, training etc., of the employees. It identifies areas where the employees need training and provides data to determine promotions, transfers, etc.

The performance appraisal process involves the following steps:-


1. Establishment of Performance Standards 2. Communication of Standards 3. Measurement of Actual Performance 4. Comparison of Actual Performance with the Standards 5. Discussion of the Appraisal with the Appraisee 6. Taking Corrective Actions.

Process of Performance Appraisal – Steps and Stages

Process of Performance Appraisal

Performance appraisal is a method of evaluating the output of employees at the workplace, normally including both the qualitative and quantitative aspects of job performance. It is a systematic and objective way of evaluating work-related and behavioural aspects of employees. It is a process of establishing standards regarding employee performance at every level and matching individual performance to those standards.

Performance appraisal is the periodic and systematic assessment of the employees in terms of the performance, aptitude, capabilities and other qualities which are necessary for successfully carrying out their jobs. It is a systematic effort on the part of management and has a direct linkage with induction, selection, training etc., of the employees. It identifies areas where the employees need training and provides data to determine promotions, transfers, etc.

The performance appraisal process has the following steps:


1. Establishment of performance standards.

2. Communication of standards.

3. Measurement of actual performance.

4. Comparison of actual performance with the standards.


5. Discussion of the appraisal with the appraisee.

6. Taking of corrective actions.

Now, let us try to know in brief the above mentioned steps used to design a performance appraisal plan.

Process # 1. Establishment of Performance Standards:

Certain standards to judge the performance of employees must be decided considering the objectives for which the performance appraisal is to be done. These standards must relate to the desired results of each job. The standards should be objectively measurable. Further, these standards should be updated from time to time considering the changes in technology, production processes, etc.

Process # 2. Communication of Standards:


This is the second step in the process of performance appraisal. Job description gives clear idea to the appraisee about what he is expected to do and other related matters. The idea about performance standards must be given to an appraisee as well as to an appraiser. If there are changes made in the standards, they must be communicated to them. Feedback is essential from the appraisees to make the communication effective. It ensures that the information communicated by the superiors to their subordinates has been received and understood properly in the way it was intended.

Process # 3. Measurement of Actual Performance:

The next step is to measure the actual performance of an employee or appraisee. In order to determine actual performance of an employee necessary information is gathered and the suitable technique or techniques are used.

Process # 4. Comparison of Actual Performance with the Standards:

The mere measurement of actual performance has no meaning in absolute sense. It must be compared with the predetermined standards to know whether it is up to the desired level or below it. If it is below the desired levels than appropriate actions are taken to help the employee improve.

Process # 5. Discussion of the Appraisal with the Appraisee:

Once the process of measurement of the actual performance and its comparison with the standards is completed, the results of it should be communicated to the appraisee concerned. It gives the idea to the appraisee about his strengths and weaknesses. Moreover, he gets a chance to discuss if he is not satisfied with the observations.

Process # 6. Taking Corrective Actions:


If the performance appraisal report reveals weaknesses and/or shortcomings, efforts should be made to remove those. This can be done through proper counselling, coaching, training, giving suitable project, etc. Long-term action is desired to eliminate the reasons permanently.

Of course, if an appraisee has proven himself/herself very efficient, salary increase or promotion or both should be recommended and given. If appraisal report is negative, the appraisee concerned should be made to understand areas identified for improvement instead of putting the blame for shortcomings on him. This helps in maintaining positive relations.

Of course, the process and the details of the steps discussed about may vary from organisation to organisation according to the needs and objectives of the performance of appraisal.

Process of Performance Appraisal

Step I – The appraiser should sit together with the appraise to set his goals and KPAs’ – He should also periodically keep reflecting about how well he is progressing in his work.

Step II – During the performance period whenever the employee experience some success or failure, he should record them immediately. These are the facilitators and inhibitors.

Step III – For any process to be successfully completed, regular monitoring is required. The appraiser need to keep checking his progress in terms with his set targets.

Step IV – The rates does self-appraisal in terms of the effort he had put in, problems faced and results achieved. He rates himself.

Step V – Now, the rates should list all factors & classify them into inhibitors and facilitators.

Facilitators like – Job knowledge, interpersonal competence, past experience, hard work, decision making, delegation guidance, healthy working conditions etc.

Inhibitors like – Poor memory, family problems, poor health, problem of expression, lack of guidance, absenteeism, slow work, close supervision, changes in top management, introduction of new technology etc.

This helps in adopting a mechanism to improve his strengths and overcome his weaknesses.

Process of Performance Appraisal – Top 9 Stages of Performance Appraisal Process

Performance appraisal is the process of observing and evaluating a staff member’s performance in relation to pre-set standards. Classical approaches to performance appraisal have treated it as a measurement process, whilst contemporary approaches to appraisal are more concerned with information processing within the performance appraisal decision-making process. Broadly, two schools of thought with respect to performance appraisal can be identified, advocating either developmental or judgmental approaches to appraisal.

Developmental approaches see performance appraisal as a participative process, involving coaching and counseling, and the setting of goals, standards and direction for the employees. Such approaches are concerned primarily, with motivating an employee and agreeing aims and objectives (in line with the organization goals) for a forthcoming period. Judgmental approaches are concerned with providing evaluations and assessments of employees’ performance.

This frequently involves deciding on levels of pay or reward for employees and should if undertaken effectively, be, fair, consistent and based on objective observation and understanding of individuals behavior at work.

Difficulties occur when these two approaches to appraisal are confused, and whilst much of the orthodoxy on appraisal is biased towards a developmental approach, it should be recognized that judgmental approaches’ and attitudes to appraisal are adopted by many related performance of the employee in comparison with specified targets, and improvements and modifications that need to be made are agreed.

The next formal step is the preparation of the performance appraisal report, towards the end of the annual cycle. At this point, discussions are held between the manager and employee regarding his/her performance and likely performance appraisal decisions. This leads to the formal appraisal decision, the result of which determines an employee’s salary increment.

Performance appraisal process includes nine stages:

At the first stage, performance standards are established based on job description and specifications. The standards should be clear, objective and incorporate all factors.

The second stage is to inform these standards to all the employees including the appraisers.

The third stage is following the instructions given for appraisal of employee performance by the appraisers through observation, interview, records and reports.

Fourth stage is finding out the influence of various internal and external factors on actual performance. The influence of these factors may be either including or hindering the employee performance. The measured performance may be adjusted according to the influence of external and internal factors. The performance derived at this stage may be taken as actual performance.

Fifth stage is comparing the actual performance with that of the other employees and previous performance of the employee and others. This gives an idea where the employees stands. If performance of all the employees is ranked either too high or too low there may be something wrong with the standards and job analysis.

Sixth stage is comparing the actual performance with the standards and finding out the deviations. Deviations may be positive or negative if employees performance is more than the standards, it is positive deviation and vice versa negative deviation.

Seventh stage is communicating the actual performance of the employees and other employees doing the same job and discusses with him the reasons for positive and negative deviations from the preset standards as the case may be.

Eight stage is suggesting necessary changes in standards, job analysis, and internal and external environment.

Ninth stage is follow up of performance appraisal report. This stage includes guiding, counseling, and directing the employee or making arrangements for training and development of the employee in order to improve performance. If the actual performance is very poor and beyond the scope of improvement, it may be necessary to take steps for demotion or retrenchment or any other suitable measure.

Process of Performance Appraisal – 6 Different Steps Followed by the Organizations while Developing an Appraisal System

The following are the different steps generally followed by the organizations while developing an appraisal system:

1. Setting or establishing performance standard.

2. Communicating the standard to employees

3. Measuring the performance

4. Comparing the actual performance with the standard.

5. Discussing the appraisal with employees.

6. Initiating or taking corrective action.

Step # 1. Setting or Establishing Performance Standard:

Performance appraisal process begins with setting or establishing performance standard. Establishing performance standard means setting up of criteria or basis to be used for appraising the performance of employees. The criteria or basis is fixed on the basis of job analysis and job description. The standard accepted should be clear and should not be expressed in an articulated or a vague manner.

The person who is to do appraisal and frequency of making appraisal should also be decided in advance. If work performance cannot be measured in view of its nature, then the personal characteristics which contribute to employee performance may be considered while appraising the performance of employees.

Step # 2. Communicating the Standard to Employees:

Once the performance standards are established, the same need to be communicated to employees so as to make them understand what is expected of them and feedback should also be collected from employees. After obtaining the feedback, if necessary, standard may have to be revised or modified.

Step # 3. Measuring the Performance:

The third step involved in the appraisal process is measurement of performance of employees on the basis of information available from various sources such as personal observation, oral and written report. It should be observed that measurement must be objective based on facts and findings and evaluators feelings should not influence on the performance measurement of employees.

Step # 4. Comparing the Actual Performance with Standard:

In this step, the actual work performance of the employees is compared with pre­determined standard which helps to know the deviation which may be positive or negative.

Step # 5. Discussing the Appraisal with Employees:

In this step the results of the appraisal are communicated to employees and discussion is made with them regarding the deviation and reasons for deviation. A discussion on appraisal enables employees to know their strength and weakness which will have impact on their future performance.

Step # 6. Initiating or Taking Corrective Action:

The final step in the process of appraisal is taking or initiating corrective action according to the need or necessity. Here, the areas which need improvement are identified and corrective actions are taken. Training coaching, counselling etc., are the common examples of corrective actions that help to improve the employee performance.

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