Performance Appraisal

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Ian Pratt

Performance Appraisal Definition

The performance Appraisal, or Annual Review, is a process where an employee with his/her manager establish an annual performance and development plan, monitor progress against the plan and, at the end of the time period, evaluate the employee’s overall contribution to the organisation.

Organisations develop their Appraisal processes to achieve predefined outcomes, the four main reasons for developing appraisal processes are


Provide feedback to your employees about their overall contribution to the organisation, their skills and growth against plan. Often their performance is compared with others in simular roles


Justify the allocation of limited bonus funds or pay increases based on the employees overall contribution to the organisation or their ranking


Identify areas for employee development within their current role or towards their career goals and agree actions to facilitate their ongoing development


Justify taking action required to resolve underperformance

The Performance Appraisal Process


When thinking about employee performance appraisals many managers quickly picture themselves sitting in a formal setting, with their employee providing feedback on the employee’s performance over the last 12 months.

Many managers will find this to be an uncomfortable time consuming process and, as a result, they debate the value of the annual performance review process.

However, a comprehensive performance appraisal process is made up of four phases

  1. Defining your employee’s performance expectations
  2. Measuring and evaluating employee performance relative to those expectations
  3. Providing feedback on performance against agreed standards
  4. Recording or documenting your employee’s performance

In the diagram below you can see that the appraisal process is not an annual event it is a never-ending process, there is no start and no end ... it’s an ongoing cycle of planning and evaluation of employee performance.

Performance Appraisal

Note: It is common to see the two steps "Provide Feedback" and "Record Performance" combined to create a three stage performance appraisal process, as shown below.

Performance Appraisal Process

An example of how the appraisal process operates over a twelve-month timeframe from developing performance and development plat to appraisal interview and follow-up.

Performance appraisal Process

The Three Phases Defined

Phase 1: Setting Expectations

Determining how you are going to measure or evaluate your employee’s performance, including what criteria or key performance indicators you are going to measure to evaluate the employees overall contribution and which type of rating scale you will use.

Note: it is common to evaluate an employee’s performance and their behaviour separately.

Phase 2: Monitor and Measure

Measuring your employee’s performance should, where possible, be completed using tangible performance measures that are free from bias however this is not always possible. In a perfect world the employee should be able to collect their own performance data and present their performance to you. Ian Pratt advocates for you to provide feedback to your employee on his/her performance each month.

Phase 3: Feedback and follow through

In the feedback and follow through step you summarise, in an appraisal interview, the monthly feedback that you have provided for the employee during the year to determine their end of year performance rating.

Given the purpose of the appraisal interview is to have a conversation about the employees performance and agree on a rating (A or agree to disagree) it is generally best to avoid a conversation about addressing performance gaps during the appraisal interview, these can be addressed in a follow up meeting.

Performance Appraisal Integrated with Monthly Feedback

The end of year appraisal interview should not be viewed as the only time during the year that managers and employees communicate about the employee’s performance. More frequent conversations help keep everyone on the same page about current performance, develop a stronger relationship between employees and managers, and make annual reviews less stressful.

For organisations that aim to establish high performance teams Ian Pratt advocates for the managers to give monthly feedback in a One On One and to align this feedback with the performance and development goals established in the appraisal planning meeting.

The diagram below shows the performance appraisal and one on one process as an integrated performance feedback process.

Performance Appraisal Process

Ensuring the objectives established in the annual performance plan are aligned with the KPI’s in your one on ones will ensure the performance feedback is aligned and that there are no surprises at the end of the year.

Performance Appraisal Process

As you can see, once you have developed your performance criteria for the employee appraisal you can then add this criteria to your one on one template (get your one on one template here). You can then give rating feedback in each of your one on one’s against these criteria. By ensuring this alignment exists you will eliminate surprises when the employee receives their appraisal performance rating.