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Performance appraisals

Employee Performance

8 May 2025 (Last updated 3 Dec 2025)

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Performance appraisals are an important part of maintaining quality and productivity at the workplace. Employers can use appraisals to reward hard work from their top performing employees but also use this as an opportunity to identify any areas of improvement and set goals for their next check-in.

In this guide for employers, we explain performance appraisals, the process of performance appraisals, benefits of appraisals, and ways Peninsula can help small to medium sized businesses.

Performance appraisals

Appraisals refer to the regular review of an employee’s performance in their role and overall contribution to the company. An appraisal also evaluates an employee’s skills, achievements, growth and output. These are also known as an annual review, employee appraisal, performance review, or evaluation. Although they are not a legal requirement, it is a useful tool to ensure that employers can get the best out of employees and address any issues in its early stages.

Generally, an employer will review and assess past performance to determine any areas of improvement or if there is any potential for promotions or pay increments. Taking the time to do appraisals are will give employers the justification for any decisions behind raises, bonuses, or even termination processes.

Unless it is outlined in the employment agreement or any workplace policies, there is no requirement for a formal time period or structure for an appraisal. Appraisals do not need to be formal and do not need to be on a set timeframe. However, keeping them regular and documented helps to assure consistency from employees as they will have clear expectations and timeframes to meet their targets.

Performance appraisals vs performance reviews

Performance appraisals and performance reviews are terms used interchangeably but there are few differences. Performance appraisal is the formal, structured, and specific process while a performance review can be informal, unofficial, and even a friendly chat between a manager and an employee.

The appraisal process

Appraisals are used to assess, an employee’s performance, acknowledge good performance and can be the early steps of addressing any performance concerns. Approaching appraisals with a positive mindset will help employees feel supported in their development should there be any areas that need improvement.

Although there is no set process for appraisals, here is a general overview of how to conduct an appraisal:

  • Inform employees that a performance appraisal will occur and invite them to a meeting to discuss their current performance and progress. Try to give them ample notice or give them an indication of roughly when appraisals occur in advance to give them time to prepare.
  • Schedule the meeting with reasonable time in advance and confirm it with the employee.
  • Inform the employee about the nature of the meeting, the agenda, and any questions that may arise in the meeting. Let them know if they need to complete any self-assessments prior to the meeting.
  • Some questions employers may ask:
    • How well they think they’re doing in their job?
    • Which areas can use improvement?
    • Whether they need any additional support or help for their role?
    • How they feel about their job and company?
    • What would they change if they could?

Employer should prepare their own feedback and notes prepared for the meeting. This should include the employee’s job description, their tenure, notes from previous reviews if any, performance indicators, metrics, any other relevant figures that are related to their role. Get feedback from other stakeholders, seniors, and even colleagues.
Discuss the tough questions with employees- if they are not performing well, ask why certain targets weren’t met. Give them time to prepare answers. Take notes in the meeting and share the copy with the employee. Share final thoughts, targets, next steps, and a written summary.

Types of appraisals

Appraisals will vary from business to business. However, there are different strategies that can be implemented to get the best understanding of the employee’s performance:

  • Peer assessment: The employee’s colleagues or appropriate coworkers rate their performance.
  • Self-assessment: Employees rate their performance and behaviour against their targets or job description.
  • 360-degree feedback assessment: A holistic approach as it includes input from multiple parties: the employee, supervisor, and peers.
  • * Management by objectives (MBO): This approach works when you have short-term projects and are more about specific and measurable goals. It is ideal for teams that have quarterly or annual targets that need to be met.
  • Behaviourally anchored rating scale (BARS): While this is a newer method of performance appraisals, it admits that behaviours play a big role in employee performance. This method involves rating employees on defined behaviours relevant to their role. For example, if an employee is in a customer service role, how they perform their role is equally important as what they achieve.
  • Objectives and key results (OKRs): This can be used in combination with MBO or self-assessments. This method is suitable for growth-focused businesses and encourages employees to set individual measurable goals that align with company objectives.
  • Graphic rating scale: Graphic rating scales are visual scales used to evalute employees on a continuum. The scale has numerical or descriptive options such as (1-5, 5-10) or (below expectations, meets expectations, exceeds expectations).

Criticism of appraisals

While performance appraisals have several benefits, they also have some drawbacks for the organisation and employees.

  • Appraisals are standardised and do not take into account individual temperament and style of working.
  • Several companies tend to use standardised or general appraisals without considering their company culture or nature of the roles.
  • If handled poorly, they can be awkward and confronting if there is no plan.
  • Due to the close relationship between a manager and their employee, appraisals can become about likability and not performance strictly.
  • Not all roles may have clear metrics or figures that can signify good performance or progress.

Benefits of performance appraisals

Performance appraisals have multiple benefits for both employees and employers. When executed effectively, they have a strong impact on the workplace.

Regular appraisals ensure that employees have a clear target they are working towards. They feel motivated and have established expectations about potential rewards. Appraisals boost employee morale and productivity and incentivize hard work and dedication.

Although it could be awkward, having regular conversations about performance, tends to boost employee satisfaction and engagement in the long run. Focussing on a person’s strengths and future plans helps create a more productive conversation and ensures both the employee and employer are aligned in their goals.

Key things for employers to remember

If regular appraisals are used effectively, employers will be able to address any areas of concern quickly and input strategies for improvement.

However, employers also don’t necessarily need to wait till an appraisal to give feedback or get feedback from them. Schedule informal check-ins with employees once or twice a month to keep track of progress and any other support they may need.

Establish effective policies with Peninsula

Communication between employers and employees is key to productive workplaces. Poorly handled appraisals can be detrimental to your company and also cause misunderstandings. You need a bespoke approach and tailored advice that allows you to create effective policies and procedures for your business. Peninsula understands the specific needs of your business and ensures that we provide the customised resources and help you need. Get started on developing an appraisal process today. Contact us to learn more.

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Employee Performance

Managing Poor Performance

In addition to managing their business, employers also have to manage staff and their performance. Business owners and employers need to consistently address performance instead of relying on once a year reviews and discussions. Underperformance or poor performance can lead to low productivity, low morale, and conflict among workers. Poor performance is not just a reflection on the employee but it is also a reflection on management and leadership. In this guide, we outline what constitutes poor performance, understanding potential reasons, and ways to manage poor performance. Understanding poor performance Poor performance is when an employee fails to meet the expectations of the job. They can be underperforming when they don't hit certain milestones or goals. Poor performance can also be related to employee behaviour and their general attitude at work. Poor performance or underperformance often shows up as: Failure to do the duties of the role or meet the standard required Non-compliance with workplace policies, rules or procedures Unacceptable behaviour at work Disruptive or negative behaviour that affects co-workers Underperformance doesn't just affect an individual employee, it has a ripple effect on co-workers, team morale, customers, and ultimately business productivity. Reasons for poor performance Nobody wants to perform poorly. There are usually reasons behind poor performance or underperformance. Some common reasons include: Burnout or lack of general well-being Workplace conflict Lack of motivation Skill gaps Personal problems Lack of clarity around job role and duties Lack of communication around targets and goals Cultural differences and misunderstandings Understanding the root cause of poor performance can help you address it effectively. Signs of poor performance Business owners and employers have a lot to keep track of. It can be challenging for them to identify poor performance but some intentional observation can help separate poor performance from occasional mistakes. Your employees are human beings so they are bound to make mistakes. It is crucial you know the difference between a mistake and consistent underperformance. Here are a few signs that can help you recognise poor performance: An employee failing to accomplish their KPIs/goals/milestones for a month or more at a time. Failing to hit KPIs consistently can be a red flag. An employee is having consistent conflict with co-workers and leadership. An employee is regularly submitting subpar work. An employee is becoming defensive and failing to implement changes. Poor performance vs misconduct Underperformance is not the same as serious misconduct. Serious misconduct includes deliberately unprofessional, dangerous or unlawful behaviour, such as theft, fraud, sexual harassment or assault, which may warrant instant dismissal. Managing poor performance Best practice for managing poor performance may look different for different employers. However, there is one common element that all businesses and employers should keep in mind. Having a clear policy around performance improvement and performance management can help reduce confusion, establish a fair process, and set clear expectations among employees. Poor performance or underperformance is not likely to go away on its own and other employees may lose motivation if they have to constantly carry the burden of poorly performing colleagues. The steps to manage poor performance are: Identifying the problem- Poor performance is not the same as a mistake or an error. It needs to be a pattern of behaviour that has been observed by the employer. Before you can address underperformance, you need to write down the examples of the behaviour and the action causing the issue. Note the frequency of the occurence and details such as dates and times. Explain why it is an issue and specify the impact. Mention changes and improvements that can be done to fix the problem. Any documents or statistics such as business stats, KPIs, customer feedback should be included in this. Have copies of this entire record to give to the employee. Assessing the problem- Once you have identified the problem, consider the severity, the duration of the poor performance, and the gap between expectations and delivery. By assessing the problem, you can prepare for potential solutions and pathways. Getting HR support- Having an HR expert involved early in performance problems can ensure you avoid any misunderstandings and confusion. An HR partner can help you in understanding the policies, explain it the employee, and discuss next steps. HR can also help in determining the appropriate time to discuss and correct the issue. Should you consider a performance improvement plan (PIP) or a performance management plan (PMP)? Whatever the problem is, HR is an excellent support to have for business owners and employers. Meeting with the employee- Organise a face-to-face meeting with your employee to discuss poor performance. Let the employee know about the reason for the meeting in advance so they can adequately prepare. If you will be referring to documents to back your concerns, provide copies to the employee before the meeting. Inform the employee they can bring a support person of their choice to the meeting. The support person is to be present at the meeting but not speak or advocate for the employee. The meeting should take place in a private and comfortable environment. Being professional in the meeting- During the meeting, things may get emotional. However, you need to be professional and calm. Clearly describe the problem without getting personal or aggressive. Do not use phrases such as 'You always' or 'You never.' Explain the impact on the business, the employee's work, and co-workers. Outline the outcomes you hope to achieve from the meeting. It is essential you make the employee feel safe and listen with an open mind. Ask questions to understand the context and the circumstances. Having a plan- Once the problem has been discussed, work together with the employee to find a solution. Employees will be more motivated to improve their performance if they have contributions in the solution. While developing a situation, ensure that: the employee understands clearly the changes required the employee contributes solutions and improvements the employee has been offered appropriate support and assistance such as training, mentoring, or adjustments there is a set date for follow-up meetings Recording the actions in a PIP- A document that outlines what the employee needs to improve their performance is a way to avoid miscommunication. The PIP will clearly identify what needs to be improved or changed, how it will be changed and any support that is to be given. The PIP gives the employee reasonable time to improve their performance and it clearly mentions the possible consequences if the employee's performance does not improve. Monitoring the situation- It takes more than one meeting and conversation to resolve poor performance. Employers should regularly check-in with the employee to discuss progress and any obstacles. Continue to give them feedback and encouragement. Remember to be flexible and give time to the employee to improve their performance. Dismissing an employee for underperformance Employers cannot dismiss their employees in circumstances that are 'harsh, unjust or unreasonable.' What is harsh, unjust or unreasonable will depend on the circumstances of the case. You must have a valid reason for the dismissal relating to the employee's capacity or conduct and follow a fair performance management and dismissal process. Before dismissing an employee, provide the employee with written reasons why you are considering dismissal and give the employee a reasonable opportunity to respond to those reasons. A failure to follow these steps before dismissing an employee may result in an unfair dismissal claim against you. It's important that before dismissing an employee you can show you have: told them the purpose of performance meetings in advance and allowed them to prepare told them they could have a support person present clearly outlined the expected level of performance and the improvement that was required clearly warned them that their performance needed to improve gave them time and support to improve their performance told them that they may be dismissed if their performance didn't improve HR and WHS support for businesses Peninsula works with small business owners and employers, supporting them in HR and WHS matters. Our advice team provides access to customised resources, documents, and advice in issues such as performance management and dismissal. Call us on 1300697028 to learn how we can help you.

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