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Although human resources purists point out the numerous distinctions between the two, in practice, performance appraisal and evaluation are used interchangeably. Both refer to a process by which your employer reviews how well you’ve done your job and possibly determines any increases in salary or benefits you’ll receive as a result. In strict terms, however, an evaluation generally precedes an appraisal.
The Cart Before the Horse
In the “Encyclopedia of Business,” second edition, the selection titled “Employee Evaluation and Performance Appraisals” groups both terms together, noting that in some cases, evaluation is one step in a performance appraisal, which in turn is a broader part of an organization’s performance management system. In an evaluation, a person intimately aware of an employee’s work — such as a supervisor, manager or peer — provides feedback on measures such as work quality, punctuality and job skills. In the strictest sense, performance appraisals attempt to assess the overall value of an employee’s work in terms of contribution to business objectives.
According the Society for Human Resource Management (SHRM), performance appraisals are the tail end of a long chain of business procedures. They start with your business’s strategic plan, which lays out goals for the company to reach through a set of strategies. These strategies are fulfilled by individual business units, which heavily determines how individual job tasks and requirements are defined. These looming goals and strategies also play a role in setting the skills and core competencies each employee must have to successfully complete her job and contribute to meet the strategic goals.
These factors, in theory, form objective measures on which to evaluate an employee’s actual performance. Performance consists of behaviors as well as results. In the end, individual components of the appraisal are weighted by a pre-determined scheme. For example, conducting work tasks might be more important than “organizational citizenship” qualities like being a team player.
An evaluation can occur outside the context of determining an annual pay increase. Ideally, informal employee evaluation is an on-going process in which an employee receives routine feedback on how he’s doing. Logistically speaking, performance appraisals and evaluations are time-consuming, costly and conducted by subjective human beings. That’s why in practice, evaluation and appraisal look alike. In an evaluation form template offered by HR World, a leading online human resources community, an evaluation measures topics such job skills, quantity and quality of work, work habits, communication, initiative, judgment and leadership. Evaluations sometimes take into account goals set between the employee and his supervisor, as well as an employee’s self-evaluation.
Talk to any group of human resources and business leaders and you’re likely to hear many opinions about the fairness, accuracy and usefulness of performance appraisals and employee evaluations. A 2010 “Wall Street Journal” article said that everyone “hates” performance appraisals and likened them to rotten milk. Among the criticisms are that they’re tied to a date on the calendar, rather than need, and that few people get to say what they really think. The process also drives home the illusion that the boss’s opinion is the key to an employee’s pay raise and career progress.
But evaluations and appraisals can also be litigation risk factors. Employee management experts speaking in “Indiana Court Times” question whether employers should do them at all, and a legal expert for SHRM says as faulty as they are, evaluations and appraisals are often used against employers in court cases.