Why Are Performance Appraisals Important at a Business?

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A performance review checklist benefits the worker and company.
A performance review checklist benefits the worker and company. (Image: performance review image by Christopher Hall from Fotolia.com)

Performance evaluations are appraisals of an employee's work, skills and productivity during a specific time. Companies and employees benefit from the practice of assessing the work of an employee. Companies may use a standard method for appraising employees such as a checklist of specific areas in which the manager or supervisor can rate the worker. A business may also tie salary increases to the performance review.

Employee Motivation

Performance appraisals can motivate employees to perform better on the job. When an employee understands his work will be evaluated and a salary increase may accompany that evaluation, his motivation to perform well is increased. Employees may also be motivated by a chance to sit down and discuss job performance with a manager or supervisor.

Feedback

Businesses gain important feedback from employees during performance appraisals. Not only do managers and supervisors have an opportunity to hear the concerns and suggestions of the employee, but the employee also has a chance to learn the areas where she excels and the areas that may require more attention. Both parties benefit from these exchanges. Employees cannot change a poor performance when they are unaware of it.

Improvement

Employees have an opportunity to improve areas after an honest assessment of their work. When a supervisor or manager explains the areas the employee can improve, the worker can make an effort to improve before the next performance review. A business may use a performance appraisal as an opportunity to learn ways the company can improve as well. Employee suggestions may be encouraged during a performance evaluation.

Better Use of Skills

Managers and supervisors who evaluate employees take the time to assess the strengths and weaknesses of each worker in their charge. This provides the manager with an opportunity to match the worker's strengths with job duties. During a performance appraisal, the worker can learn the manager’s assessment of his strengths and weaknesses as well. Managers can then place workers in areas where they are more likely to excel on the job.

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