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What Are the Benefits of Using an Annual Performance Appraisal?

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An article by Archer North & Associates states that, where performance appraisal has been conducted properly, both supervisors and subordinates have found the experience to be beneficial and positive. For all concerned, the process can formalize human resource decisions that can otherwise seem arbitrary and haphazard, and provide an opportunity for discourse between employees and supervisors.

Benefits for the Employee

An annual performance appraisal is an indicator that your employer cares about your well-being and career satisfaction. The Center for Association Leadership stresses that the review should focus on the performance and development of the employee and should hold the employer and employee accountable for results. Benefits for the employee include understanding the reasoning behind human resource decisions regarding salary, promotions and work assignments, as well as the opportunity to request development opportunities in the form of training or an expanded work role. The employee may receive recognition for accomplishments and has the opportunity to set goals for the future. According to Archer North, employees prefer negative recognition over no recognition at all.

Organizational Benefits

For the organization, the performance appraisal can fortify corporate goals and provide information for sound human resource planning regarding training, promotions, work assignments, and recruitment. It can assist in matters of conflict by documenting instances of discrimination or employee grievance. Improved morale among staff may result, and according to Stephen P. Robbins, author of “Organizational Behavior,” the process positively affects productivity if the correct evaluative criteria are used.

Benefits for the Supervisor

Supervisors responsible for reviews can benefit from training. Appraisal training can help to avoid power mongering among reviewers or defensive reactions from those being reviewed. Performance appraisals can be more effective if conducted as a counseling session, rather than a review of performance. A research study submitted in July 1999 to the U.S. Fire Administration found that the person doing the rating created all of the problems related to conducting performance evaluations. Other benefits for the supervisor include improved management skills, better relationships with staff, and a method with which to monitor the training and development needs of staff.

Maximizing Benefits

Giving negative feedback is as unpleasant for the deliverer as it is for the receiver, but it is a valuable staff management tool. According to an article in “Forbes,” dated July 2012, a study showed that 85 percent of companies found performance appraisals were effective. For the employee, use them to your advantage. Whether it is as an opportunity to chat with your reviewer, or a path to career development, approaching it with a relaxed attitude will help you to walk away feeling that it was time well spent.


Caroline Banton has more than 14 years of experience in the communications and publishing fields, working in global development and finance. Her articles have covered business, economics and recruitment, among other topics. Banton holds an M.B.A. in marketing management.

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