New to Performance Appraisals? How to Begin and What You Need to Know for Success

Hello friends, I want to conduct a performance appraisal in my company as I am totally new to this topic, and my company also doesn't know much about it. But they want to conduct the same. Therefore, kindly let me know the procedure for this, how to start, what needs to be done, and what things need to be gathered. Please, I need full-fledged knowledge and the procedure for conducting this program. Kindly help me.

I hope the below-mentioned steps will help you in designing an appraisal policy for your organization:

Set Appraisal Objectives and Policies - First of all, you need to set the objectives of your performance appraisal. Based on these objectives, you need to establish policies for the same, such as eligibility criteria, appraisal period (annually, half-yearly, quarterly), and defining promotion and increment policies separately, etc. Ensure full confidence of top management while making policies.

Derive Performance Appraisal Technique - Out of several techniques for performance appraisal, you need to derive one technique for the appraisal based on the nature of your organization (360-degree appraisal, ranking, or grading method, etc.).

Prepare Appraisal Form - Now, you need to create an appraisal form/questionnaire to be used during the appraisal. For this form, you need to set the attributes of the employee's performance on which you want to base your appraisal, such as productivity, quality of work, punctuality, attendance, grooming, etc.

Conduct Appraisal - The final step is to conduct the appraisal at the designated time. Please ensure timely completion and strict confidentiality of the data during the appraisal.

For better understanding, I will provide you with a simple procedure that you can edit/modify as per your preferences:

1. Conduct appraisals at the end of the financial year, in the month of March, and make increments and promotions effective from the 1st of April of the coming financial year. For eligibility, you may use a minimum of 6 months tenure as a parameter. Alternatively, you may conduct appraisals for every employee employed until February; in that case, you need to increase the salary on a pro-rated basis. For example, if an employee joined in December and is entitled to a 15% hike, they will receive an increment of 15% for 3 months out of 12.

2. You may use the grading method for your appraisals. To do this, segregate the groups in your organization, perhaps by department. Make a list of employees for each department and write the appraisal attributes next to their names. Then, gather feedback from the reporting manager on the form based on grades (A, B, C, D). The final grading may be done by the department head (preferred). You can also consult the department head on whether a particular employee is eligible for promotion.

3. Once you have the final grading for all employees as A, B, C, D, set the percentage of increments for these grades: A - 20%, B - 18%, C - 15%, D - 10%.

4. The next step involves releasing the promotion and increment letters to the employees.

I hope this process has simplified the appraisal procedure for you.

Regards,
Ashutosh

Thank you for your reply. Could you also let me know what role KRA plays in performance appraisal? Also, please clarify whether we need to prepare KRAs at the time of an employee's joining or during the performance appraisal. Please clear up the concept of KRA for me.

Thank you.

KRAs (Key Result Areas) are prepared at the time of drafting JDs (Job Descriptions) for a particular position. KRAs are the major attributes of a job description that define the major job responsibilities of that particular position, on which an employee's productivity is measured.

Importance of KRAs in Performance Appraisals

KRAs play a very important role during performance appraisals because an employee's performance is measured based on the KRAs assigned to them. For example, if you are in a generalist HR role but primarily focused on talent acquisition and training, your KRAs will be talent acquisition and training. Therefore, during your appraisal, your reporting manager will evaluate your performance based on your productivity in these two functions during the period.

I hope your doubts are clear now.

Regards