How to Implement a Performance Appraisal System?

Implementing a performance appraisal system in an organisation often involves change and concern. founder and CEO Karl Laas explains how to initiate a performance appraisal system, how to overcome people’s concerns and how to make it simple, convenient and enjoyable for the whole organisation.

Employee performance appraisal and giving feedback are relevant and important. Evaluations received from colleagues and managers may decide whether the employee receives incentive fees, what his/her career opportunities are and in the worst case his/her employment status. Several executives and HR managers have expressed their concerns when implementing performance appraisal systems. This is mostly because the managers fear that implementing the appraisal system will send a signal to the employees that the company is planning redundancies. Managers are also sometimes reluctant to ask for feedback from the company’s partners because it would then seem that the company is incapable of managing their employees.

Most of the fears that we have witnessed in our clients can be eliminated and overcome with the help of simple techniques. Below we will find out how and why employees from different levels object to performance appraisal and how to overcome these.

Statement: The appraisal system is implemented in order to make employees redundant. Reality: The goal of the appraisal system above all is to help the development of the employees.

Statement: The appraisal system is another impractical way for the management to entertain themselves by picking on their employees. Reality:The appraisal system also provides an opportunity to give feedback about the management and managers. Although the management implements the appraisal system it also benefits the employees because it allows them to make proposals to the management about improving the working conditions.

Statement: Employees do not gain anything from the appraisal system. Reality: On the contrary, employees receive feedback and evaluation from their colleagues about their work input. It tells them where they can improve themselves.

Statement: Even if the appraisal system is implemented, it does not change anything. Reality: The appraisal system does not change anything by itself. But it creates a basis for change.

Statement: My clients are not interested in giving feedback about my company’s employees. Reality: On the contrary, if customers have something important to say about your employees, then they are very interested in giving feedback. This is because they also hope that the feedback they give would improve the management of the company. Asking for this kind of feedback from clients is a significant sign of quality.

 Implementing the appraisal system can be difficult especially when there are people in the company who are sceptical about it or when the management cannot see a clear benefit of the appraisal system.

We recommend the following steps for the implementation of the appraisal system in your company:


  1. Discuss the basic principles of the appraisal system with key employees in your company. For example, you can decide on the types of questions asked and how they are used – whether you base them on the core values of your company or use questions that apply to specific positions. Discussing the questions and evaluation as a team helps employees adjust to the appraisal system and helps explain why it is necessary.
  2. Prepare at least some specific appraisal questions with a larger number of managers. For example you can prepare value-based questions and the main occupational group-based questions.
  3. Introduce the appraisal system’s technicalities and content. People like to know in advance what is going to happen.
  4. Conduct a smaller and simple (Team Spirit) appraisal to introduce the technicalities of the system. It is an easy and fast method which gives people the opportunity to evaluate the technical solutions used and you can also find out if everybody knows how to use it.
  5. Use a test appraisal. While implementing the appraisal system, test appraisals can be conducted before the actual appraisals. Employees will know in advance that these results are not taken into consideration. It would be good to use a questionnaire where it is clear that it is a test appraisal – it does not have to be too formal.
  6. Implement the appraisal on the basis of function or division. This technique helps relieve tensions connected with appraisals in the company. Those who have done the appraisal can talk about it with their colleagues. Moreover, you will have time to complement and improve the system.

 You should also make sure that all new employees in the company are evaluated. For that you can create trial period appraisal forms in the system. First of all, this ensures that the new employees embrace the appraisal system quickly, and secondly, it also has a positive effect because during the trial period appraisal, the colleagues of the new employees will also provide feedback and they will also learn how to use the appraisal system.

Suffice to say the appraisal system on its own will not bring changes in the company. It provides an opportunity to discover the problems and deal with them. Along with the appraisal system, companies would like to implement certain standards that positions or employees have to comply with (e.g. the grade after the trial period has to be at least 6.8 points). We believe that it is important to make sure that these standards are based on sufficient practice and discussed within the company. Consultants who deal with implementing and using standards can provide the best advice about these issues.

How to compile a good appraisal system and good questions?

  1. Value-based appraisal – use the core values of your company as questions in the appraisal system. Value-based questions can be the same for all the employees in your company – position is irrelevant in this case. Company values have to be shared by all employees. Using value-based questions helps to unify what is considered to be relevant in the company. Example: If the core value of your company is Joy, then the question in the appraisal system could be, “Is the employee joyful?” or just “Joy”. In the latter case a longer explanation can be added to the question – “The employee is always joyful and inspires his/her colleagues and clients. Creates a positive atmosphere around himself/herself”.
  2. Occupational-group(work family)-based appraisal – you can build the questions so that every occupational group has a specific set of questions. These kinds of occupational group-based questions can be constructed functionally and hierarchically. For example, certain questions can be asked from all the executives, project managers etc. Example: If there are several middle managers in the company, then you can ask questions about tasks connected with management functions only from them, "The employee makes the necessary decisions on time“, „The employee motivates and inspires his/her team“. Example 2: Also, more specific questions can be asked from specialists, “The employee is aware of up-to-date methods in performance appraisal and constantly develops himself/herself in that regard.”
  3. Position-based appraisal – position-based questions are linked to the tasks of a specific position in your company. If there are several similar positions then additional occupational group-based questions can be asked. Example: The appraisal questionnaire for assistants dealing with reception could include a specific question, “Manages client reception well, is kind and provides good service”.
  4. Attitudes – in addition to meeting the core values we also recommend finding out people’s attitudes towards the job and using the result in performance appraisal. It is these types of questions where clients can best offer feedback. Example: In regard to these questions, two aspects can be explored. Firstly, how the employee’s attitude appears to colleagues and partners – “Always has a creative approach to new tasks and looks for solutions.” Secondly, it is possible to find out proposals and recommendations that the colleagues and partners have for the employee. You might ask, “Name three things that the employee must do differently from now on” and “Name three things that the employee could do differently. Please explain”. Or you could just ask for three recommendations for the employee for the future.

In conclusion we believe that the development of a good appraisal system depends on the needs of each specific company. If the demands for the appraisal system are not very high and there are about 100 positions that need to be evaluated then every HR manager with some interest can create an appraisal system within a reasonable period. It requires just a few days and concentrating on the task. But if a thorough analysis is necessary then we recommend you also involve professional HR consultants.

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To find out more, please contact us at: or (+372) 6007 100. 

  • abhijit das
    good, but i want details

    Sep 06

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    Dec 24

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