Why are employee appraisals important?

Employee appraisals are a widely-used element in performance management, all over the world

First published on Thursday, Jun 04, 2020

Last updated on Thursday, May 25, 2023

But why are they important? And how can HR make a case for using appraisals, if your organisation doesn’t already?

From identifying employee training needs, to spotting your company’s rising stars, employee appraisals have many important uses.

Using appraisals to measure and reward performance

The first and most obvious purpose of employee appraisals is to measure employees’ performance. Your organisation might need to do this for several reasons:

  • To make sure employees are working to the required standard
  • To gauge which employees are performing the best and therefore eligible for bonuses, pay rises and other rewards
  • To address performance issues where necessary

Using appraisals for employee development

Whether staff are performing well or poorly, employee appraisals present an ideal opportunity for HR to identify the next stage in their development. Many organisations use personal development plans (PDPs) within staff appraisals, to direct and record staff development. You can use PDPs to set development goals that the employee should try to reach before their next appraisal.

For under-performing staff, you can use appraisals to identify skills gaps and training needs. Employees can then take the training programmes they need to perform their role better.

Using appraisals to spot potential

Appraisals aren’t just for remedial action. They’re also a moment to sit down with your best-performing employees and to map out their career path. Rather than addressing skills gaps, this may include offering training to develop skills required for promotion.

Appraisals are therefore extremely useful in the talent management process, a major element of which is developing and retaining high-performing employees. Without an effective appraisal system, you might never spot talented individuals who could be the future of your organisation.

Using appraisals to manage changing roles

Almost every job role changes over time, whether because of new technology, new products and services your company introduces, or changes to the size of your team. Employees often need help to understand these changes and how their role is affected. Appraisals are an ideal time to manage this, by:

  • Explaining new responsibilities clearly
  • Setting clear goals related to the new responsibilities
  • Arranging training in new technology or products

Using appraisals to improve performance

The goals you set in employee appraisals don’t just have to be about staff development. You can also challenge employees to improve their performance, and increase your team’s productivity as a result.

Performance goals must be fair and achievable, or they could have a negative impact. Use performance data to set goals where possible — for example, if an employee’s performance has slipped below a previously recorded level, you can use that data to remind them they can do better.

Giving your employees a voice

Finally, don’t forget that employee appraisals aren’t a one-way street. When they have worries, questions, or ideas, the one-to-one setting of an appraisal meeting is a great chance for employees to speak up.

When line managers listen to employees and address their concerns, the result can be a happier workforce. It’s yet another reason appraisals can be important to your organisation.

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