Effective Appraisal System

Performance appraisals are a crucial component of performance management. Performance appraisals essentially evaluate an employee’s performance over a period of time against predetermined performance standards and objectives. They also identify an employee’s strengths, areas of improvement, potential, and counterproductive behavior, if any. The results of this evaluation determine salary hikes and promotion eligibility.

A relevant, effective appraisal process does not just seek to weed out employee performance and behavioral issues but also serves to motivate employees to perform better. It affects employee engagement and morale and also impacts the work culture. It aligns individual performance with business objectives and ultimately improves the bottom line.

Performance Appraisal Systems:

Performance appraisal processes are often time-consuming, require a lot of effort, and require a high level of commitment. It can quickly become hectic for the employer and the employee, and is more often than not, seen as a distraction from work. It is often reduced to a buzzword or a formality which ultimately defeats its purpose. Performance appraisal software systems automate many tasks and reduce the overheads related to the appraisal process. It is advisable to opt for a performance appraisal system that comes as a module in performance management software for a more comprehensive and ongoing performance management program.

Selecting an Effective Appraisal System:

Performance management software solutions come in varying shapes and sizes to suit businesses of different sizes and those belonging to different industries. A good place to start, when you are looking for an effective appraisal system, is finding out which solutions are more popular within your industry among organizations with a similar scale of operations. Consider software providers with a successful track record, great reviews, and reliable testimonials. Even so, there isn’t one size that fits all because no two organizations can be exactly alike.

In essence, any performance management software solution you choose must be able to organize your appraisal process, introduce more accuracy in it, and empower it with data. Avoid appraisal solutions that try to measure each and everything or place too much importance on quantifying the performance. You do not want a system with complicated metrics. Instead, you must opt for a solution that gives you simplified, intelligent insights on employee performance.

Factors to Consider When Selecting an Effective Appraisal System:

A performance appraisal software will come at a considerable investment. Let us discuss in detail some of the key factors you must keep in mind as you go about selecting a suitable fit for your organization:

Identify Specific Business Requirements:

Examine your current appraisal system. Do this in consultation with key managers, HR professionals, and employees. Identify parts of the process that are fine, those that can be improved, and those that are not working out well enough. Look for an effective appraisal system that will be able to fix the areas that need to be improved and eliminate issues with the existing system. A new appraisal system should be able to bring about significant improvement to your current processes to make it worth the investment.

Find a solution that works well with your organizational structure. More often than not, managers responsible for sizable teams find it extremely daunting to keep track of individual performances, aligning performance objectives to dynamic business goals, motivating each employee to perform better than themselves and their peers, on an ongoing basis. Find a solution that will take into account such manager-to-subordinate ratios within your organization.

Examine your industry/market trends and find a solution that will be compatible with these trends. Pay close attention to your short-term and long-term business objectives. Try to find an appraisal system that will support and fuel the fulfillment of these objectives.

Employee Goals Management:

During the appraisal process, performance is measured as per pre-determined goals and objectives. Goal setting is a crucial aspect of the appraisal and the performance management process. It can encourage employees to push the envelope in terms of their performance and motivate them to do better. Performance management software can facilitate various aspects of goal setting such as goal assignment, regular check-ins, updates and notifications, monitoring and tracking progress, and storing such data. An ideal performance management software must also be able to provide managers as well as their direct reports a more simplified view of the status of their goals.

–  Software Features:

There are many appraisal systems in the market and they all come packed with various features. More often than not, organizations go the whole hog and purchase software solutions that come with all kinds of bells and whistles and end up with a system that has too many irrelevant features. In this way, you risk paying excessively for features that you might never end up using at all. Too many features can also make the performance management software unnecessarily complicated. This is especially true of small and mid-sized organizations that purchase performance management software solutions that are more suited for enterprise-level operations. It helps to know as much as possible what features you need in a system. Needless to say, give systems that are missing those features a miss. If a system has more features than you need, explore whether it makes sense to pay for those features.

User-Friendly Interface:

Even the most upscale, high-end systems can pour your money down the drain if everyone within your organization does not commit to using it. Initial resistance to new technology is inevitable. However, if they find that the performance management software solution can actually automate mundane tasks and make life easier for them, they will gradually warm up to it. For this reason, it is imperative that you purchase an appraisal system that is easy to use and navigate. It should also be easy to train people to use the system.

Integration with Existing HR Systems:

Most companies looking specifically for performance management software are likely to have some HR technology that is already being used in the organization. If you plan to continue using the existing software systems, the importance of choosing a new performance appraisal software that can integrate with it flawlessly, cannot be stressed enough. The new software must be able to work well in coordination with your existing HR technology stack. The transfer of data among the new and existing systems must be smooth, seamless, and hassle-free.

Consistent, Ongoing Feedback:

Consistent and ongoing feedback is the lifeblood of effective performance management and appraisal. Choose a system that lets managers and employees communicate easily. Managers should be able to appreciate employees on any progress made. They should be able to check in on them to know if they need any discussion or training with a certain area they may be struggling with. Employees should also be able to communicate any issues or propose any suggestions. This ensures that everyone remains on the same page regarding what has been done and what needs to be done. Regular feedback ensures that employees do not lose sight of their goals and stay on track.

Vendor Partnership and Customer Support:

The best software solutions come with great vendor partnerships. Check the extent of support, free of charge, or otherwise, that will be provided by the vendor during the implementation, training, and maintenance phases. Even the most capable performance management software can be rendered useless if you do not have adequate customer support to troubleshoot issues, carry out updates to the system, or just learn more about it. Some vendors even offer self-help guides, tutorials, and discussion forums. Ideally, there should be a single point of contact each, on behalf of the vendor and your organization respectively to communicate with each other. There should also be an escalation matrix in case the point of contact is unavailable or non-responsive.


As businesses grow, their software systems must adapt to the growing needs of the business. An appraisal system is a long-term investment. If used for an adequate long-term period, such software solutions pay for themselves over time with all the cost savings resulting from reduced manual labor and the operational efficiencies they create. Such systems are too expensive to be replaced every so often. Employees will also find it difficult to adapt to new systems now and again. Ensure that you opt for a scalable solution that can grow along with your business.

Reporting and Analytics:

An effective employee appraisal system must be able to generate various kinds of employee performance reports based on current and historical data. This enables the management to make well-informed decisions based on comprehensive, insightful data.

Demos and Free Trials:

All the major performance management software providers offer a demo and free trials of their products. Ensure that you try a couple of products before finalizing one to truly get a sense of the user experience.


An effective appraisal process can go a long way in creating an environment in which employees prefer to stay in and advance their careers. It can enhance employee retention and do wonders for your brand as an employer. Selecting the right performance appraisal system can help you maximize the potential of your appraisal process.

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