This is a challenge all companies face and there are solutions, but correcting poor performance requires effort by both employees and management.

There are many reasons why employees don't reach their potential such as:

• Don't possess the right skill set
• Lack of training and/or coaching
• Not having goals and expectations clearly communicated
• Lack of opportunities for advancement
• Don't understand how their actions make a contribution to the company's goals
• Lack of authority needed to be effective at their job
• Having to contend with poor working conditions

The most effective solution to the above issues is implementing and maintaining a Performance Appraisal program, which allows for timely feedback on an employee's performance. Performance Appraisals allow companies to measure and monitor employee performance based on clearly defined goals and expectations.

Although employee related concerns should be addressed as they occur, Performance Appraisals should be conducted on a regular basis. Companies may choose to facilitate performance reviews with employees quarterly, semi-annually or yearly. The employee's job description is typically used in conjunction with the review, allowing the employee and manager to focus on specific tasks and responsibilities.

There are various methods utilized to conduct performance appraisals. The primary tools are:

• Rating Scale – traditional method where a numeric scale is used to define the employee's skill and ability level from high to low.
• Self-Appraisal – this method requires the employee to conduct a self-reflective review while management does the same. The employee and manager review the results and variations.
• 360 Degree Feedback – this method is also referred to as a multi-source feedback tool as it assesses one's performance from the perspective of management, customers and peers alike. Results are collected and compiled into one confidential report and shared with the employee directly.

The employee's immediate manager should be conducting the review as they are in the best position to assess performance through direct observation.

Effective performance appraisals are part of a larger HR related process, which includes determining compensation levels, training and development, hiring and selection, succession planning and discipline. Unless correctly integrated into the company\'s system, the appraisal process can be viewed by employees as irrelevant if lacking in feedback and follow up.

Regardless of the method used to evaluate performance, the feedback an employee receives allows for future development and potential growth within the company. It doesn't just look at how close the employee is to a desired result; it serves as a reminder of the parameters the employee needs to perform within, in order to achieve that result.

Still wondering why performance appraisals should be conducted?

1. Determines required training and development.
2. Clearly defines and communicates job expectations.
3. Provides continual feedback and offers opportunity for growth and advancement.
4. Creates a motivational working environment.
5. Removes barriers allowing employees to work harder and smarter.
6. Assesses hiring practises to ensure the right person is in the right job.
7. Determines additional tasks and responsibilities employees can undertake.
8. Shows employees the company cares, which ultimately results in retention.

A motivated employee makes all the difference, regardless of what size organization they work for.  Effective Performance Appraisals engage employees at every level of development and should be based on the company's mission, vision and business objectives.