The world over, there is a growing debate on the relevance of Employee Appraisals.

Some say that employees hate them and Managers are sure appraisals don’t work.

On top of that, appraisals make everyone apprehensive as there is typically too much at stake attached – increments, bonus, promotions or even terminations.

Some of the key flaws why appraisals have become unpopular are

  1. There is a lack of a culture of regular, constructive feedback between employees and colleagues. In the absence of regular feedback, appraisal becomes the only time when the employee gets to know what the company thinks of the individual.
  2. Appraisals are usually linked to ratings and mostly, due to bad goal settings, ratings are arbitrary and left to the whims of the individual. Sometimes, personal bias plays a role too, thus causing further acrimony.
  3. With so much at stake, appraisals are rarely honest as employees try their best to self-promote and hide any past mistakes. Managers too are skeptical of causing disharmony within the team and play safe by keeping everyone happy.

But as you can make out, the reasons why appraisals are considered bad are really people-centric, rather than the process. In principle, the performance appraisal process has quite a lot of value to offer. Here are 10 of the most key reasons why appraisals are valuable to any organization.


  • Gratitude Pays


Show me a human who doesn’t like appreciation for a good job done.

Every employee expects some form of gratification for the contributions to the success of the organization. Appraisals are the time when the company can say a big Thank You.

This gratitude can be in the form of promotions or bonuses, but sometimes an honest, heartfelt expression of Thanks with a pat on the back, goes a long way to enhance employee engagement and retention. 


  • New Roles & Goals


In a dynamic business environment, organizational goals are ever-evolving.

Thus, an employee’s roles and goals also need to evolve to make his/her contribution most effective.

The appraisal provides an opportunity to re-assess fitment of the employee to newer, urgent roles with reprioritized Objectives, defined with key results.

  1. Better Bonding

Human relationships work best when feedback is open and both sides have an opportunity to be heard.

While such 1-on-1s  is indeed important right through the year, the Appraisal is a good time to look back and have free and open discussions on what went right and what can be done better.

This is also a good time for the Manager to get & respect the feedback from the employee and discuss ways things can be done better.

Thus, an appraisal is a good time to strengthen the bond within the team.

  1. Motivation Boost

With a fair appraisal of performance, one of the immediate impacts is a boost in performance if both employee and manager have engaged fairly and concluded agreeably.

The employee now understands how the past contribution has been effective and how the company expects newer responsibilities & greater ownership to achieve better outcomes.

The Manager is driven too at this opportunity to nurture and mentor the employee’s talent and help them grow into a greater individual.

  1. Issue Resolution

There is a lot that remains unsaid. An angry remark here or a blame game gone wrong can all lead to heartburns in the relationship between the employee and the manager who doesn’t like appreciation.

The Appraisal process allows an opportunity to openly air any grievances or issues that need some sort of closure or resolution.

Employees can express how they have felt wrong about something and how things could have been handled better. Managers can also point out personality traits that need better management or else, there may be future trouble.

All in all, an open and fair discussion can lead to address issues before they arrive as big future problems that can’t be solved.

  1. Self-Development

As the employee’s roles change, he or she is required to bring different skills to the table to get the job done. Not necessarily, everyone is skill ready by the time the responsibility comes upon the person.

Thus, the appraisal process also helps to identify the development needs of an employee to help perform the job better. These needs can be identified by an employee and Manager independently and collaboratively.

The needs identified here are marked with priority and a timeline. This can help the Training manager plan programs aligned with the development needs and their urgency.

  1. Providing a Career Path

The performance appraisal is the ideal chance to address long term career aspirations of the employee that get lost in the operational rigmarole of day to day task. 

In addition to the fact that this provides the employee an opportunity to carve out the long term career path, this also makes the employee feel satisfied and belonging. 

This always leads to a win-win for both the company and the employee as a clear career path aligned to one’s dreams makes the employee completely focussed on the organization’s success before individual fulfillment, as now he or she knows the route is same – one leads to the other.

  1. Understanding our flaws

Most of us are actually pretty bad at identifying our own faults or weaknesses.

Maybe, we are under stress and often, give vent to our anger without reason to colleagues and juniors. All the while, we may be thinking of ourselves as nice, sensitive people.

Appraisal provides another opportunity for employee and managers to highlight such concerns that help both to find out things that they need to be better at.

  1. Build Listening Skills

There are two aspects of valuable feedback. The first aspect is that the feedback giver provides a context for the feedback and it’s definitely constructive in nature. The purpose of feedback is the improvement and not finger-pointing.

If the feedback is valuable, then the recipient should be receptive to it as it’s only for his/her own benefits. Thus, to be receptive, one has to hear a person out completely and then for some more to understand fully what was said. 

In this form of listening, the recipient is not passive but actually is reflecting on the feedback as he/she is receiving it.

Thus, any feedback session provides a great opportunity to practice the art of listening in an engaging manner with earnestness and discuss agreeably.

  1. Fosters Healthy Competition

Healthy competition moderated by seniors is good for any teamwork. A spirit of competitiveness helps to push the individual to try harder than what he/she thought was enough. Thus, an extra push by individuals helps in better chances of an outcome being realized.

Appraisals, thus, provide an opportunity for peers to figure out who is doing better than whom and what one should be doing to catch up or improve to excel. A healthy spirit of competition in a team thus helps the Manager improve focus on the key business goals and get committed contributions from the team members.

A lot has been spoken about how Appraisals are no longer relevant. I beg to disagree. Appraisals cannot be dead – the way it’s being conducted will evolve but the foundation blocks that make the process valuable will remain the same – feedback, conversations and rewards based on performance will still remain the cornerstones of an effective performance management program.

About the author

Souvik Majumdar is Chief Customer Success of GroSum, a cloud-based performance management software that helps build a goal-oriented and continuous feedback-based work culture. He is passionate about employee engagement and has spent the last decade working with organizations to improve their performance management processes and implement online systems.