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Do You Need a Performance Appraisal System? Ask Yourself These 3 Questions

How do you manage the appraisal process for your employees? Do you use sophisticated appraisal methods that make communicating with, and tracking the performances of, your employees easier? Or do you informally evaluate them without much of a performance management process, while providing occasional feedback?

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If your answer is the latter, we don’t judge. That said, it’s probably time to improve your employee appraisal methods. Some people might say that the way to do so is pretty simple and straightforward: use performance metrics. But the reality is that there’s a lot more that goes into the appraisal process than you may realize at first. Not to mention, tracking and analyzing performance metrics is a lot easier said than done. This is where performance appraisal systems come in.

What is a Performance Appraisal System?

Businesses use performance appraisal systems to do two things: manage and organize their performance reviews, as well as create ongoing two-way communication between employees and their managers. This means going beyond a simple, unstructured annual performance appraisal. It involves continuous open communication and evaluation, by both employees and managers, before the appraisal interview even begins. Ultimately, the goal is to foster a culture of evaluation and feedback that’s both consistent and constructive.

How Do You Know If You Need a Performance Appraisal System?

Despite the many benefits, some people say that you don’t really need a performance appraisal system. They argue that you don’t need a formal appraisal system to achieve your appraisal goals. After all, it takes time and effort to develop a performance appraisal system. To evaluate whether or not your business could benefit from a performance appraisal system, ask yourself three questions:

1. Does Every Manager Provide the Same Level of Evaluation and Feedback?

Some managers go all out. They take careful notes on what each of their employees have done, realize their greatest strengths and map out the specifics of how they can improve. These managers inform their employees if they’ve met certain objectives, and detail how they have (or haven’t) helped reach organizational goals. Other managers, however, put in far less work. They don’t take much time to consider their employees’ self-evaluations, and generally give pretty generic feedback.

If you’re lucky, all of your managers fall into the first category. Unfortunately, this is rarely the case. If you want all of your employees to have an equal opportunity to develop, you need to standardize the performance appraisal process. This forces every manager to put in the same amount of work, so that every employee receives a high level of feedback that they can use to improve themselves. A performance appraisal system ensures this standardization. If your company is one of the majority that needs standardization, you need a performance appraisal system.

2. How Do You Make Changes Based on Performance Appraisals?

The final and most crucial step of a performance appraisal is implementing the changes suggested by your managers. Based on the results of the appraisal, a manager may recommend that an employee should be given a raise, extra bonuses or a promotion if they’ve done well. On the other hand, a manager might suggest that the employee enroll in a course through a learning management system, be placed on probation or, potentially, let go if they’ve put in subpar work.

Whatever the case is, these changes need to be made, otherwise the performance appraisal process is pointless. The question then becomes: how do you make sure those changes are made? Does someone collect and record the actions recommended by each manager? Is there a review process for these actions? And who’s in charge of making sure that these actions take place?

Without a performance appraisal system, the potential that nothing happens is much more likely. And if nothing happens, your business will be stuck, unable to improve itself. With a performance appraisal system in place, however, there’s a standard procedure for where recommended actions are recorded, who reviews them and who ultimately acts upon them.

3. Are You Using a Talent Management System?

The simplest question to ask yourself is if you’re already using a talent management system. This is also the most important question to ask, since most include built-in performance appraisal functionality. If you have a talent management system in place, it means that you already have the foundation for a performance appraisal system laid out for you.

A talent management system streamlines the entire appraisal process. It can lay out every step of the process for your managers, so that they know exactly what they need to do and when they need to do it. The system can also collect all of the recommended actions, so they aren’t lost or misplaced. And just as important, it collects your employees’ performance metrics in real time, which makes the initial evaluation of your employees much easier. After that, the only manual work you need to do is schedule the individual appraisal interviews.

With a talent management system in place, you get the best of both worlds: you get to implement a performance appraisal system while avoiding most of the work that’s necessary to start one.

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