Employee performance should be evaluated regularly. Employees want feedback—they want to know what their supervisors think about their work. Regular performance evaluations not only provide feedback to employees, but also provide employees with an opportunity to correct deficiencies. Evaluations or reviews also help in making key personnel decisions, such as the following:
- Justifying promotions, transfers, and terminations
- Identifying training needs
- Providing feedback to employees on their performance
- Determining necessary pay adjustments
Most organizations utilize employee evaluation systems; one such system is known as a performance appraisal. A performance appraisal is a formal, structured system designed to measure the actual job performance of an employee against designated performance standards. Although performance appraisals systems vary by organizations, all employee evaluations should have the following three components:
- Specific, job‐related criteria against which performance can be compared
- A rating scale that lets employees know how well they're meeting the criteria
- Objective methods, forms, and procedures to determine the rating
Traditionally, an employee's immediate boss conducts his or her performance appraisal. However, some organizations use other devices, such as peer evaluations, self‐appraisals, and even customer evaluations, for conducting this important task.
The latest approach to performance evaluation is the use of 360‐degree feedback. The 360‐degree feedback appraisal provides performance feedback from the full circle of daily contacts that an employee may have. This method of performance appraisal fits well into organizations that have introduced teams, employee involvement, and TQM programs.