The term performance appraisal refers to a process whereby a supervisor compares the results achieved by an employee versus a set of expectations. Performance appraisals allow managers to provide employees with feedback, discuss their achievements, and identify opportunities for improvement.
At the start of the performance appraisal process, an employee works with their manager or supervisor to identify a set of goals for the coming year. These goals can include steps the employee can take to develop their career as well as specific deliverables the employee will produce throughout the year.
For example, the employee may outline one or two personal development goals along with several goals related to the roles and responsibilities of their position in the organization. Once agreement is reached, these goals become the standard against which the performance of the employee will be measured.
Performance review meetings are then held at midyear and yearend to review the employee's progress versus the goals documented at the start of the year. The process may also include a self-assessment by the employee. This meeting provides the employee's manager with the opportunity to deliver performance feedback and gain insights from the employee. Typically, the process includes providing the employee with a qualitative "rating" which can range from unsatisfactory through outstanding.
Ultimately, companies can use the appraisal process to identify employees that need additional training as well as high potential individuals. The process can also include placing underperforming employees on performance improvement plans. Employees that do not meet the standards outlined in an improvement plan may eventually be demoted or have their employment terminated.