What is performance appraisal?
Performance appraisal is an organized, periodic assessment of the job performance, based on previously established criteria, of an individual employee or a group of employees. A performance appraisal typically assesses how well an employee treats a customer as well as how well the employee follows company guidelines and rules, such as ensuring that the employee is dressed properly or makes sure to offer customers certain products. A performance appraisal may also target a group of employees, usually a set of employees working during a specific shift, for similar criteria that is applied during an individual appraisal. Performance appraisals are typically used to assess whether or not an employee remains a competent hire, whether or not the employee requires additional training, and whether or not an employee is suitable for a potential salary hike, promotion or other work related benefit.
There are two main types of performance appraisals: an objective performance appraisal and a third party subjective performance appraisal. An objective performance appraisal is an appraisal which is solely based upon objective data, such as an employee's sales figures, production numbers and similar information. A third party subjective performance appraisal is an appraisal which is based upon subjective data provided by a third party figure, commonly in the form of a "secret shopper" who evaluates employee performance while visiting a company in an undercover guise.
There are both benefits and downsides to performance appraisals. A performance appraisal may help a company determine the quality of their employees by providing objective data, such as their overall sales figures; as well as subjective data, such as their customer service record. However, this data may present an incomplete image of an employee’s quality: for example, an employee’s sales figures do not indicate whether or not that employee works well with others or with customers, and an employee’s customer service record does not indicate how well they do with production or sales.
How is performance appraisal conducted?
There are several different ways that data for performance appraisal may be collected, depending on the type of performance appraisal being performed. Objective appraisals gather data by assessing various factual figures and determining whether or not these figures suggest a poor or good job performance. The figures that are typically measured often include a specific employee's sales figures, their specific production numbers, their clocked work hours and various other recordable data. This objective data is used to assess performance by comparing the data to the previously established criteria. This criteria is usually set by the company and is meant to encourage a minimum level of production and sales by all employees within their company.
For example: Employee A of a sales-oriented toy company has made an average of 25 sales per day, Monday through Friday, for the last three months. The company has established that employees must make at least 15 sales per day, Monday through Friday, on a quarterly basis. An objective performance appraisal of Employee A would suggest that they are doing above average in their job performance and are suitable for retention or even promotion or other positive benefits. Typically, an objective assessment will not only assess a common factor such as total sales but other objective factors, such as their attendance record, as well as any official citations, warnings or other notes.
Third party subjective appraisals gather data by employing a third party to gather subjective data based upon their own observations and opinions of an employee. This information is usually obtained through what are commonly called “secret shopper” visits. These third party “secret shoppers” are usually given guidelines and a list of criteria to look for during their visit to a store, which includes taking down names of specific employees who exhibit—or don’t exhibit—certain behaviors and other criteria. After their visit, the “secret shoppers” will provide their information to the company who will then use it to make a performance assessment of particular employees or a shift of employees as a whole. The way that this information is used will typically depend on the size of the company and the intention of the performance evaluation. Smaller companies may use one or two secret shopper reports as a basis for their performance appraisal, while larger companies may wait until they have multiple secret shopper reports for that same shift to make their judgments. This is because smaller stores typically have much smaller staff than a larger store, and it may take multiple reports for enough information about a particular employee to be provided. However, because this information is subjective, it is usually combined with objective reports like the aforementioned sales figures, to make a more rounded assessment.
An example of a third party subjective appraisal: Shopper B is working undercover as a secret shopper at a small, customer service-oriented toy store where Employee C works. Shopper B has been given a list of specific criteria that employees must follow, such as always greeting customers when they arrive, always offering assistance when it is obviously needed, and never pulling out cell phones or other personal electronic devices while on the sales floor. Shopper B observes that Employee C does not greet them when they walk into the door, nor do they offer them assistance when they are attempting to reach an item on a high shelf. When Shopper B is ready to check out with their item, Employee C is busy texting on their cell phone and makes them wait a few moments to finish their text message. Likewise, Employee C is brisk and rude during the check-out. After this experience, Shopper B makes out their secret shopper report and indicates that Employee C did not fit the specified criteria. The toy store may use this evaluation of Employee C’s behavior to determine whether or not they deserve retention, firing, punishment, additional training or any other course of action.