The HR Department at any business or organization is one of the most important business function. The HR is responsible for the capabilities and performance of the workforce for the business. If the business have all the required skillset with high performing teams, individuals and business functions, nothing can stop it from dominating the market. Here in Dubai and all around the UAE the markets are very competitive comparing to other gulf countries in GCC and MENA regions. Tougher competition requires maximum performance and productivity. The HR department designs performance appraisal processes to boost the employee performance and capabilities of the workforce. Individual employee performance adds value to the team performance which reflects in the overall performance of the business or organization. That is why the HR department is considered to be the most important business function and the performance appraisal is the key driver for the high efficiency, quality of work, productivity, profitability and growth of the business.
In any market or any scenario leveraging employee’s full potential can provide a great competitive advantage. Whether it is lowering the cost, raising the product/service quality, optimizing the operations and management or anything else, the employee performance is crucial. Businesses have their long term goals and vision. Every business strive hard to achieve those goals and objectives. However, most of the time we noticed that the problem lies within the practices and methodology rather with the resources a business is investing or willing to invest to achieve their high-level organizational goals and objectives. The performance appraisal is the major process a business relies on to optimize and increase its performance. On the bases of performance reviews and appraisals a business perform several HR related tasks, the same are used for building employee development and training programs which are crucial for performance management. In this blog we will discuss how a performance appraisal system can solve a lot of problems and how a business can achieve their performance objectives with it.
What is a Performance Appraisal System?
The performance appraisal is a process of reviewing employee performance usually at the end of a year and on the bases of these reviews the HR department or reviewer determines the value and worth of an employee and its contribution to the high-level organizational goals and strategic objectives. This entire process is a very time consuming and often done almost manually which requires HR department to invest a lot of time and resources in the process. The performance appraisal system is a software and a digital solution which help businesses streamline their performance appraisal process and automates various steps to save time and resources. The performance appraisal system is capable of enabling businesses to execute both traditional and non-traditional appraisal processes with higher accuracy and more efficiency. The performance appraisal system also offer a variety of modern solutions and improve data flow and communication which is a great advantage.
Furthermore the performance appraisal system offers digital tools and allow HR department to evaluate the employee performance against a set of pre-determined objectives, their strengths and weaknesses, their worth and value for the business, the financial aspects of retaining an employee, and facilitates various other HR processes, especially decision making. The performance appraisal system is also capable of integrating with various other third-party tools and systems and help businesses to leverage the data more efficiently. The performance appraisal system also support modern needs and allow businesses to customize their own appraisal strategies and processes. One of the biggest advantage of the performance appraisal system is that it allow businesses to conduct more frequent reviews such as twice a year, at each quarter, monthly or even at the end of a particular project or phase. Which allow management to continuously monitor performance and take timely decisions to set course and make corrections to ensure at the end they will achieve their high-level goals and objectives.
Types of Performance Appraisal in Human Resource Management
Majorly the performance appraisal process involves top-down reviews in human resource management. Where a senior employee evaluate and review their subordinates. There are conflicting information about the origins of the performance appraisal process, however the most common belief is that the performance appraisal processes was first created and implemented during the word war I, however the corporate sector have adopted it in somewhere between 1950s. Here are a few types of performance appraisals:
- Top-Down: This is the traditional employee performance evaluation technique. In this method the supervisor or line manager reviews the performance of the employees and usually the employees doesn’t have any say in the review.
- Self-Assessment:In this method the individual employees rate their abilities, skills, behavior, competencies and performance by themselves. Obviously this could be biased but it has great impact on the employees and encourage them to perform better.
- Peer-to-Peer:In this appraisal processes, the co-workers, team members and other relevant employees who work alongside with the individual employee review their technical, personal and behavioral competencies.
- 360 Degree Feedback: This is a very broader feedback and review process it includes review and feedback from peers, managers, supervisors, cross-function and cross-team feedback, customer and supplier feedback and review from any other stakeholder.
- Negotiated Review:This is a more detailed employee performance review, it considers the employees tasks and what they were doing before the review, and it also allow employees to give their opinion/explanation along with the review. Great to resolve disputes.
Key Advantages of Performance Appraisal System for the HR Department
The performance appraisal system allow the HR department to closely monitor and optimize the performance of the entire business across all its functions. Here in Dubai and all around the UAE various performance management methods are adopted by the businesses. The performance management system is a very powerful digital tools which doesn’t restrict you to follow only certain methods or practices, in fact it allow businesses to keep evolving and improving their appraisal methods and practices over the time. Here are the key advantages of the performance appraisal system:
1. Collect Valuable Feedback
The feedback is the core of the performance appraisal. A good performance appraisal system provide multiple channels to collect feedback from multiple resources and combine it in a single dashboard to provide a quicker and broader view of the employee performance with high accuracy and reliability of the data. The performance appraisal system allow businesses to improve the transparency of the process and collects data from multiple streams which further improve the accuracy and quality of the feedback data. The performance appraisal system not only collect feedback data but it digitalize it and allow HR to perform several analysis with in-built tools and let them generate actionable reports. Which not only improve the quality but also enable them making more informed decisions with positive impact on the overall performance of the business.
2. Set SMART Goals and Objectives
SMART goals and objectives are crucial for performance management, most of the time the HR Department failed to achieve their performance goal because their goals and objectives are not properly set. The SMART goals and objectives means Specific, Measureable, Achievable, Realist/Results, and Time-bound. The SMART goals and objectives are a very popular technique and performance appraisal system allow businesses to effectively execute it. Furthermore the performance appraisal system allow more in-depth monitoring, historical data and comparison features which help businesses to improve their goals and objectives too. When employee are given SMART goals, they tend to perform well. It gives them a sense of focus, encourages them to outperform themselves and others and help boosting their morale.
3. Improve Promotion Process
For any business or organization it is extremely important to bring the right people at the tops and keep everyone at the right place. For that the businesses follow promotion processes which is mainly based on the employee performance appraisal. The performance appraisal system makes this process more efficient, accurate, and transparent and help HR department to accurately and more closely understand the strength and weaknesses of an employee. Only employees who deserve promotion should get it, it will keep the morale of the others high and will encourage them to follow their footsteps. If wrong person got promoted they will eventually failed, and the other employees especially who deserved promotion will feel a sense of left-behind, their morale will decline and they will also lost over the time. Despite having required talent the HR department might have to hire new people which put extra strain on the business.
4. Improve Reward and Compensation Process
Another great advantage of employee performance appraisal system is that it help the HR Department to improve the reward and compensation process and methods. The performance appraisal system provides in-depth performance data and also monitor several KPIs (key performance indicators), hence the reward and compensations are not only awarded on the bases of the supervisor’s reviews, but a lot many other factors are also taken into account. Which improve the reward and compensation process and ensures the employee who work harder throughout will get the most benefits. Rather than on the bases of just one mistake or just one last performance they rewards and compensation or salary raise is not given. Which encourage employees to perform well throughout the appraisal period and help HR Department to improve the overall performance.
5. Improve the Effectiveness of Employee/Individual Development and Training Program
For any business who wants to grow it is crucial to up-skilling their employees and keep their workforce up-to-date. The performance appraisal system help HR Department to closely monitor employee performance from various different prospective to understand their strength, weaknesses and potential. The performance appraisal system makes it easier to collect all the feedback and performance data from various different competencies, such as technical skills, behaviorally anchored reviews, ability to deal with unexpected situations, decision making abilities, and much more. Hence the training and development program is not only limited to the reviews, but it is designed considering a lot of factors which help HR department to build a more beneficial training and personal development program. According to several studies the training and development programs are a key driver for employee retention and are equally important as rewards, compensations, promotions and non-monetary acknowledgments.
6. Help Retaining Best Talent during Downsize or Right-Size
The performance appraisal system collects feedback and data from various sources, it can also help HR Department to accurately estimate the financial impact on an employee for example, how expensive the employee is and what financial value he/she is adding to the business. Furthermore the performance appraisal system provides HR Department with the most accurate data about employees and their capabilities which help them to understand the worth of each individual employee and their impact on performance of their team, department or the overall performance of the entire organization. There could be many reasons for downsizing, such as financial difficulties, new competition in the market, overall market conditions, etc. Which force businesses to lay-off some of their workforce to optimize the expenses. Right-sizing is a relatively new turn, it also means laying off employees but not due to external factors. In fact it accounts internal factors, such as an employee become non-productive over the time, their behavior got changed and is impacting others, or their skill might not be needed.
Mostly due to new technologies and automation business might not need certain skills. Whatever the scenario is if a business will have to lay off some of its employees, the performance appraisal system ensures that the business retains the best talent and only lay off the poorly performing or low-performing employees with least impact on the overall operational capabilities and performance of the business.
7. Improve the Impacts of Coaching and Mentoring
The managers at each business are expected to coach their sub-ordinates and teammembers. If a manager is saying the right thing, the employees will keep inspiring from them and it will become easier for the manager to become a good mentor for the employees. However, this is not as simple as it may sound. It is very difficult to understand the actual difficulties and problems an employee is facing and where they need support to make improvements. However, with the help of performance appraisal system since everything is digital and a huge amount of data is available for the managers with interactive reports and intuitive performance dashboards. This enables them to understand the obstacles an employee is facing but is unable to express. The performance appraisal system also help them understand the strength and weaknesses of the employees in terms of technical, behavioral and knowledge competencies. Which let them communicate better with the employees and help them encourage to perform well.
8. Increase Employee Engagements
Employee engagement is one of the most serious concern of the HR department, as it is very crucial for employee retention and to boost their performance and productivity. Communication is a key to employee engagements. A performance appraisal systems facilitates and encourages communication between the individual employees and their supervisors or managers. Furthermore the ability to collect 360 degree feedback also allow individual employee to review the performance of their supervisors and managers and also let them provide feedback about them. Which not only help improving the performance of the supervisors and managers but also tell employees that they are important and their opinion matters too. The digitalization help improving in-person and digital communication which also let the managers and HR Department understand the problems, issues and strengths/weaknesses of the employees and let them address the issues.
The performance appraisal system also help communicating the individual and high-level organizational goals and objectives to the individual employees and tell them about their value and contribution in the high-level goals. Which increase employee engagements and also help HR Department to reduce employee turnover.
9. Improve Employee Retention
For any business retaining the employees is a key factor in maintaining a great workforce. When businesses hire an employee, they invest on them, the employee themselves gain experience over the time, they get integrated within the organization and understand its internal processes and culture. However, the new recruits will take time to learn and understand the internal processes, culture of the business and many things, hence they take a lot of time to reach to the performance level of their predecessor. This entire process costs a lot of resources and have significant financial impact too. That is why employee retention is very important. The key factors that plays role in employee retention are reward and compensations, individual development programs, and the communication. If the employee knows they are valued by the business and their say will be listened they feel more connected to the business and become more loyal. The employee loyalty doesn’t only increase employee retention but it also drive performance.
10. Help HR Department Dealing with Legal Situations
Here in Dubai and all around the UAE the federal and local governments have very strict laws and regulations against discrimination and employee rights at workplace. The federal and local governments have great policies in place to protect employee rights and have several government departments to ensure the workplace environment is supportive for the employees. Discrimination or favoring an individual employee due to personal bias or any other reason could lead to a lawsuit. Hence having a proper performance management system in place could provide you an advantage and let you provide all the data to prove no misconduct have happened. Such claims could have devastating impact on the business’s reputation and could also have a significant financial impact too. Which is why a proper performance appraisal system will help you dealing with such situations. In fact the performance appraisal system ensures greater transparency which help preventing any such situation.
What are Key Objectives of a Performance Appraisal System for HRM?
The employee performance appraisal system is a tool for human resource management which helps to implement performance management strategies and to achieve higher performance across the entire business. Basically the primary objective of the performance appraisal is to align all available resources with the high-level organizational goals and objectives to maximize the contribution of each individual employees in the business goals and objectives. The rapid adaptation of new technologies and digitalization in the business practices have completely changed the dynamics of traditional performance appraisal methods. Now a days’ businesses are practicing more modern performance appraisal methods which are mainly aided by a digital solution or software since the manual processes tend to be ineffective and prone to errors and issues which can cause a variety of very serious problems for the HR Department. Here are the five key objectives of using a performance appraisal system:
 | 1. Set and Communicate Goals EffectivelySetting up goals is the very first step towards performance appraisal process. The SMART goals and objectives are the modern form of goals, however, setting up perfect goals and objectives that align individual resource with the top-level goals and objective is not enough, being able to communicate those goals and objectives to the individual employee is a key to success. Communicating what each employee will have to do and what is expected from them will encourage them and provide them more clarity which results in great improvement in overall performance and efficiency. |
 | 2. Continuous Feedback CollectionFeedback at the end of each year will only help you identifying the issues and problems and on top of that mostly the traditional year-end appraisals are largely influenced by the latest performance rather than the overall performance throughout the year. Performance appraisal system offer continuous feedback and allow managers to correct course during the appraisal period and evaluate several time to ensure everything is on track. This makes easier to achieve the high-level and individual goals by the year-end. |
 | 3. Identify Strengths and WeaknessesToday’s world is rapidly changing, businesses have to keep their workforce up-to-date and relevant all the time. Technologies are coming and going at a rapid pace which is also impacting the business practices hence the employees and their job roles as well. Even small looking problems can have huge impact over the time. It is crucial to identify the strengths and weaknesses of the employees and guide them appropriately and take measures to improve the workforce. The performance appraisal system made it very simple and easy as the entire data is digital and extracting actionable reports requires just a few clicks. |
 | 4. Talent Development and Employee RetentionThe talent development depends on employee retention. Employee retention can be increased by increasing employee engagement and offering transparent reward and compensation programs. Furthermore the talent development is done by conducting good training programs, coaching and mentoring. The performance appraisal system help building a complete framework to achieve all that and improve the outcome of all relevant efforts. It is much more expensive hiring a new employee comparing to retaining an employee and developing them gradually over the time. |
 | 5. Reward and Recognize PerformanceRecognizing the performance of an employee means rewarding them for their good performance. The performance appraisal system not only monitor employee performance but it regularly collect data which help managers and supervisors to understand various obstacles an employee is facing. It remove bias and make reward and recognition processes more transparent. When an employee’s good work is acknowledged by either monitory or non-monetary compensations it encourages them as well as others to perform better. |
Conclusion
The HR Department at any business is one of the key component which is responsible for ensuring a smooth operation and sustainable growth. The make sure that the business have required skillset and a high performing workforce to achieve maximum productivity and profitability. The performance appraisal is one of the core process of the HR Department. Traditionally the performance appraisal was done at the end of the year, and mostly it is a manual process. It takes a lot of time, requires a lot of resources and due to manual process the problems and issues are very common. However, the performance appraisal system is a digital solution and software which has ability to automate and simplify the performance appraisal process. It increase transparency and accuracy of the appraisal and help boosting the performance of each individual resource, departments and entire organization. RSI Concepts is a leading performance appraisal system designing and development company in Dubai, UAE. If you want to learn more about the subject or want us to help you building a high quality performance appraisal system exclusively for your needs, please feel free to contact us through our Contact Us page or leave a comment in the comment box below and we will get in touch with you soon.
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