Developing a good appraisal system

End of the year appraisals are always a matter of heartburn and disgruntlement among employees. It is only very rarely that all employees find the appraisal system fair and reflective of their real performance. For managements too, conducting such appraisals is a matter of trepidation. This is more so for companies that are still to develop a strong performance evaluation system. But appraisals have to be done and they are critical for rewarding and retaining talent. They are also important for attracting talent as good performance evaluation systems help to build the employer brand. This article offers a few suggestions as to how you can develop a sound performance appraisal system.

Here are 10 suggestions for creating and implementing a fair, accurate, and discerning employee review system:

*Document everything:*
In a good formal appraisal system everything should be written down. A good performance appraisal system should allow for providing supporting documentation so that when action is taken based on the appraisal, the fairness and relevance of the appraisal can be scrutinized and the entire process made transparent. There is already a lot of literature on how to develop a sound performance appraisal system and HR managers would do well to study them before launching any new system.
*Set clear goals:*
The key idea behind a good performance evaluation system is to reward rather than punish or meet legal requirements, help to lay down and communicate clear performance goals and measure progress, help identify laggards and whether they need any specific help in terms of training and mentoring that can enable them to improve, help identify bosses who are stifling talent or are in some way or the other standing in the way of better realization of an employee’s potential and on the whole lay down a solid channel of communication between employees and the top management. Any good appraisal system should take care of all these goals.
*Make the process user-friendly:*
The appraisal system should be simple, easy to understand and easy to use. Since a good appraisal system almost always require a participatory approach on the part of the boss and his subordinates, the paper work should be kept to a minimum and as simple as possible. A basic and standardized form is highly recommended as it would enable an open, transparent and uniform appraisal process for all employees. To take care of specific needs of specific departments, standardized forms for particular departments may be necessary.
*Allow for flexibility:*
Standardized forms and a uniform system can lead to too much rigidity. Hence, allow for flexibility even within the uniform format. This may be especially relevant in small businesses where one person may have several unique competencies and may be looking after several different functions of different types. Have a system that can take care of such situations so that even as it allows flexibility, it also minimizes the risk of arbitrariness.
*Make it participatory:*
A good appraisal system always allows employees to participate in the review process. Employees must be allowed to give their own self-appraisals by giving them an opportunity in the appraisal form to list their own strengths, weaknesses and goals for the coming year. During the review compare notes and finally try to come up, as often as possible, with an appraisal that has the employee’s consent.
*Set achievable goals:*
If you own a business it is likely that you will work night and day or for that matter do whatever it takes to make the business successful. But you can hardly expect your employees to have a similar attitude, although there are people who do show as much commitment. So be realistic and set such goals that are achievable. Try to customize goals to individual employees so that each have a realistic chance of meeting those goals. Nothing motivates an employee more than being able to meet goals and being recognized for the success. Goals that are too tough and which most are almost sure to fail to meet can only help to demoralize your staff instead of egging them on to raise their levels of performance. Instead if you raise the bar gradually and in a way such that more people succeed in meeting those goals than fail, over a period of time you will be surprised to find how much people have progressed.
*Adjust your business plan:*
A well-designed and well-executed performance appraisal process will enable you and your staff to arrive at clear and achievable goals that both you and your staff have agreed to achieve. Adjust your business plan accordingly so that the performance review should end up with giving you a far more workable business plan which will, more often than not, succeed while helping to retain talent by keeping employees satisfied.

  • k.shriniwas

    There are only 7 suggestion points. What about the balance 3?

    Please mail me. Thanks


  • deepinder


    I am also working on performance appraisal please send me the questionnaire if u ‘ve any on the same.

    The above mentioned pts. are really good and firm too.


  • Kanthasekar

    Dear HR,

    I am working in a company where one of our division is a recruitment firm. I have to do the performance appraisal for the recruiters, if you have any format pertaining to that or any general format please mail me .



    Executive- HR

  • pallavi kumari


    i working on reward sysem so kindly suggest me the process of reward system how do i manage

  • i need feedback about how to ask about salory after review

  • hello,
    i want to develop a performance evaluation system for my organization, that is, a public department in sri lanka.

    sri lanka- anuradhapura

  • Sarraswati


    I’m looking for some guidelines & format for mentoring.