The Ultimate Guide to the Performance Appraisal

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The Ultimate Guide to the Performance Appraisal

Performance appraisals are a reoccurring phenomenon when it comes to managing employees. In this article, we will give an in-depth explanation of what a performance appraisal is, we’ll discuss the different types of appraisals, explain how to measure job performance, and share a template for the employee performance review.

Table of contents
What is a performance appraisal?
What is job performance?
5 key success factors for a good performance appraisal
Job performance evaluation form
Employee performance appraisal apps

What is a performance appraisal? A definition

The performance appraisal is also referred to as the performance review, performance evaluation, and employee (performance) appraisal. A performance appraisal is a method to regularly evaluate an employee’s job performance and overall contribution to the company in order to improve that performance.

Performance appraisals help provide feedback, they offer a formal moment in time to evaluate job performance, and they help in distributing raises and bonuses among the employees.

A crucial element of the employee appraisal is that it is a shared responsibility between the employee and manager. While the manager has the lead in this process, an active involvement of the employee creates the buy-in that is necessary to make the improvements that the performance appraisal is set up for in the first place. We will discuss this in more detail later in this article.

Performance appraisal is part of the performance management cycle. The difference between performance appraisal and performance management is that performance management encompasses all the interactions between employee and supervisor that help in improving performance. The performance appraisal is a regular sit-down as part of the performance management cycle in which the employee is formally assessed.

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Performance management includes all the formal and informal meetings we listed in the table below. These can both be planned and unplanned sit-downs.

Planned1-on-1Performance appraisal
UnplannedHallway check-inAd-hoc sit-down

The performance appraisal is the practice we’re most familiar with. Usually, this happens once or twice a year, taking place at the start of the year and around the half-year point. These are formal sit-downs in which the direct manager or supervisor evaluates performance on the main tasks and responsibilities of the employee. Based on this appraisal, a performance score is defined, which is used for promotions, rewards, and terminations.

What is job performance? A definition

Because performance appraisals aim to assess and improve job performance, it is important to define what job performance is.

Job performance is the degree to which an employee fulfills the tasks of their job description. People with good job performance fulfill all the requirements of their job, achieve the objectives of their jobs, and meet the criteria for performance. This is also referred to as in-role job performance.

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Employees can also help their organization through behaviors that are not directly related to their task functions. This is called extra-role performance, contextual performance, or organizational citizenship behaviors.

This extra-role behavior includes helping colleagues with work when they return from an absence, helping colleagues who struggle with high work pressure or other problems, and the willingness to do things that don’t fit in your function but do contribute to the organization in general.

Both in-role and extra-role behaviors are important when it comes to good performance and both should be taken into account during the performance appraisal.

5 Key Success Factors of a Performance Appraisal

Every company does performance appraisals differently. However, there are several best practices that every manager should know for employee performance appraisals.

In this 4-minute Learning Bite we explain what a performance appraisal is and how to implement it looking at five of our AIHR best practices.

1. Use a clear outline

Both managers and employees may feel uncomfortable during the performance appraisal. It is arguably the most formal setting they will be in all year and it doesn’t happen often enough to make it a common phenomenon.

Using a job performance evaluation form or some other appraisal outline will be helpful for both the preparation of the meeting and doing the performance review itself. We attached a performance evaluation form below as an example.

2. Involve the employee as much as possible

One of the key problems in employee appraisals is a lack of buy-in from the employee. A meta-analysis by Cawly, Keeping & Levy (1998) shows that there is a strong correlation between the participation of the employee and their reaction.

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Employee participation is the extent to which employees are able to participate in the performance appraisal session. Employees who participated in their performance review were more satisfied, rated the session as much more fair, useful, and were much more motivated to improve. A high degree of employee participation explained 40% of the variance in satisfaction, 35% in fairness, 30% in usefulness, and 19% in motivation to improve.

3. Start with the bad news

Most of us have learned to start with good news before delivering the bad news and suggestions for improvement. According to Daniel Pink (2018), employees are most satisfied when bad news is addressed early on in the interview. Positive information is then saved until the end, so the meeting ends on a positive note.

4. Employees want more regular feedback

Getting feedback once a year is not something that will drive performance. Employees report that they are looking for regular, continuous feedback to do their work better. Find ways to let managers touch base with employees continuously using technology. For more inspiration about this, check the section on appraisal apps below.

5. Meticulously document your employee performance appraisal sessions

Important decisions about who to promote, which salaries to raise, but also who to terminate are based on performance management information. Performance appraisal meetings should, therefore, be meticulously documented. Performance data should be assessed and reported in a standardized way across the organization and stored in a central database, for instance in a Talent Management System. This is also important when you switch to more continuous feedback.

A 2016 paper from the NeuroLeadership Institute found that 91% of companies that have adopted continuous performance management report better data for people decisions. These companies also report making major progress in removing bias in promotion and advancement.

Performance Appraisal Infographic

Job performance evaluation form

A job performance evaluation form usually has several elements. On top, the name of the appraisee is listed with their employee ID and the appraisal date, together with the name of the appraiser/direct manager, and appraisal period.

Next, there is usually a performance section, followed by a behavior section. In the performance section, the manager can rate the employee on different elements. These can be competencies or a simpler job performance scale. Both serve to assess the performance of the employee in their current role.

In the behavioral section, the employee can be rated about going the extra mile. This includes ratings about the quality of teamwork, altruism, and commitment to the organization.

The job performance evaluation form usually also includes a section for points of improvement, to be specified by the appraised and appraiser.


Jobs often have a predefined set of competencies required to do them successfully. These competencies fall into two categories: Core competencies, and job-specific competencies.

Core competencies are the competencies that everyone in the organization needs. These are set by the board and everyone is required to have at least a minimum understanding of them. The more senior the function, the higher the required competency level. An example is being commercial for a consulting firm, where associates and partners all need to work to generate more revenue from new and existing customers.

Job-specific competencies are often defined by HR and the direct manager. They are the competencies that are required for superior performance in the job. For each competency, between three and five levels are defined with their associated behaviors. The employee is then assessed on which level he/she ranks on these competencies.

We added an example of this below, coming from the SHRM special report on performance management. As you can see, here they use a five-point scale mapped on three competency levels.

Performance appraisal using competencies

Job performance & job behavior scales

This approach is used mostly in the scientific literature. When studying individual performance, it is impossible to create a custom-made assessment for all functions. Instead, researches looked for one way to assess them all.

Researchers use an instrument that measures two things: in-role and extra-role behavior.

In-role behavior involves all the activities relevant to the employee’s job description. Questions include the following statements and having these questions answered by a direct supervisor is a quick way of assessing one’s performance.

  • Employee achieves the objectives of the job
  • Employee meets the criteria for performance
  • Employee fulfills all the requirements of the job

The second element is extra-role behavior. Extra-role behaviors are all the behaviors that go above and beyond the job description. This involves helping out colleagues, organizing a team event, and more.

  • Employee helps other employees with their work when they have been absent.
  • Employee helps others when their workload increases (assists others until they get over the hurdles)
  • Employee volunteers to do things not formally required by the job

Based on the scores on these behaviors, the supervisor can assess the performance of the employee on both elements.

A final element that’s often added, is an item on the potential of the employee. Is the employee ready for a direct promotion, or does he/she still have to learn a lot?

We attached an example job performance appraisal form (PDF) under the link. For more information about this, read our article on the employee performance review template. In this article, we go into more depth and also provide an editable competency-based example template
A digital feedback tool

Employee Performance Appraisal Apps

Below you’ll find a small sample of performance appraisal apps. Some of them are standalone appraisal systems, others are a part of a bigger, cloud-based, performance management solution.

AssessTeam has developed an appraisal app that gives employees, among other things, access to their overall job performance score and an indicator of pending evaluations. Each employee can see everything that their evaluators or subordinates tell them about how they are performing in their role, from the successes and failures indicated.

Mettl 360View
Mettl 360View is a 360-degree performance appraisal and feedback tool that enables users to create and launch surveys to collect feedback from peers, managers, and clients. Users can choose to work with pre-built survey templates or custom templates. To learn more about this way of appraising and giving feedback, check our full guide to 360-degree feedback!

3sixtylite is a highly customizable online appraisal tool able to handle 360, 180 and 90-degree appraisals. While many feedback applications are developed solely based on the guidance of HR consultants, 3sixtylite’s tool is developed by HR consultants and Web Application developers combined. 

StaffTRAK Performance
If you don’t have much budget, you can use StaffTrak’s simple, cost-effective, excel-based appraisal system. It’s a 5-piece performance management kit for small businesses which contains a word and excel-based quarterly appraisal form, a bonus scheme, an appraisal guide, and a probationary period management form.

Perform is a performance appraisal module developed by HR software platform People. It includes templates and pre-built/customizable questions which means you can start with your appraisals right away.

If you know or use a different employee performance appraisal app, don’t hesitate to share it with us in the comments!

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