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A guide to performance appraisals

Managing people

A guide to performance appraisals

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Whether you own a start-up or an established small business, at some point, you’ll need to formalise your HR functions. You can do this by introducing an ‘on-boarding’ process for new hires to immerse them in your business. You can also get the most out of your staff with performance appraisals.

This guide looks at how regular appraisals helps you to manage your staff’s performance and keep them motivated.

What is a performance appraisal?

A performance appraisal – also known as performance evaluation or performance review – is a meeting between an employee and manager to discuss the employee’s performance. Businesses usually have performance meetings every quarter or once a year. Managers and employees provide feedback, set targets for improvement, and negotiate pay rises.

A performance appraisal is valuable because it sets aside time to discuss individual employees’ work. Without regular performance evaluations, this might only happen occasionally (if at all).

The appraisal method you use depends on your business size, industry, and culture.

Performance appraisal methods

Appraisals vary from one business to another and depend on the employee’s job. For example, someone working in retail might be evaluated on how they interact with customers. And a B2B salesperson might be assessed on their sales figures.

Common appraisal methods include:

  • Employee evaluation form

An employee evaluation form is a document that HR sends to the employee before their performance appraisal. The employee then answers specific questions about their performance and sends the form to their line manager. During the appraisal meeting, the form serves as a guide when discussing the employee’s progress. Most companies use employee evaluation forms during appraisals.

  • Meetings and catch-ups

For a less formal approach, you might choose to have more casual meetings every few months to discuss progress or issues. This is common in smaller companies where staff work closely together.

  • Rating scales

With rating scales, employees and managers work through a predefined list of activities and rank the employee’s performance against each metric. This is common in larger companies that want data on general performance across the business.

  • Ranking against objectives

Objective-based appraisals involve setting targets at the beginning of each year or quarter, and then deciding if the employee has achieved these goals during the appraisal meeting. This method can be used in almost any organisation.

  • 360-degree feedback

When a business seeks 360-degree feedback on an employee, they get comments from the manager, colleagues, and customers to get a bigger picture of performance.

What to include on a performance appraisal form

This depends on your employees and how you work. Here’s an example of the type of questions to include:

  1. Achievement questions

Example: “List your most significant achievements since your last appraisal.”

Purpose: This gets the employee to reflect on their successes and gives them a chance to highlight the value that they believe they bring to the company.

  1. Professional development questions

Example: “What are your goals, and how can the organisation help you to reach them?”

Purpose: This kind of question frames the interview in a positive way, so the employee can focus on improvement.

  1. Issues and problems questions

Example: “Describe anything that you feel unhappy about in the workplace.”

Purpose: This allows the employee to report any personal problems or discuss issues like bullying or poor conditions.

Appraisal form samples

Evaluation scales rank progress quantitatively. This gives you data to understand how staff are performing across the business, by asking employees to rate how strongly they agree or disagree with statements like:

  • Do you agree that you are paid fairly for your work?
Completely agree    Completely disagree
1  2 3 4 5




  • Do you receive enough support from your manager?
Completely agree    Completely disagree
1  2 3 4 5




  • Is your work challenging enough?
Completely agree Completely disagree
1  2 3 4 5




In larger businesses, this kind of quantitative information can tell you if a team has morale issues, for example. You can then investigate and resolve underlying issues.

Performance appraisal process

An employee review covers similar questions to the ones included in an appraisal form. This example shows the typical information an organisation might include:

  • Introduction and purpose

Explain why you are carrying out the performance review.

  • Points on general behaviour and performance

Discuss issues around punctuality, attendance, compliance, and attitude.

  • Job-specific discussion

Talk about how well the employee is performing in their specific role.

  • Year-on-year comparison

Discuss how well the employee is doing in comparison with previous years.

  • Goals and targets

Discuss whether they have achieved objectives set in the past, and set goals for the future.

Performance management for any organisation

There are many benefits for organisations that set up employee performance management procedures. Employees are supported, issues get discussed and resolved, and new targets are set. This helps employees to flourish and improves collaboration across the organisation.

Sage offers Enterprise Management HR solutions that allow you to manage and track staff progress and skills, so you can maximise performance while saving time.

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Comments (1)

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