According to the Wall Street Journal, high staff turnover can mean you are paying out “twice an employee’s salary to find and train a replacement.”
Employee retention has always been one of the serious concerns of an HR professional. With work going online due to the pandemic, the situation has become doubly difficult. While the appraisal season is on, it should be kept in mind that a proper, structured performance appraisal influences employee retention.
Here are some of the ways by which performance appraisals impact employee retention:
Provides clarity on job responsibilities:
Regular performance appraisals help employees gain clarity over their roles and responsibilities. Occasional performance appraisals enable employees to go through their job descriptions and prepare as per the requirements. Having a proper and accurate idea of job responsibilities is important for employees to stick to their companies.
Helps in better understanding goals:
Performance appraisals make employees aware of how their goals and objectives align with that of the company at large. As managers explain to the employees how their individual work makes an impact on the business, responsible employees take ownership of their targets and work towards achieving them.
Offers skill-based compensation:
Rewards and recognition are one of the driving forces that leads to improved productivity and better work. When employees receive appropriate compensation as a part of effective performance appraisals, they feel acknowledged. This encourages them to dive into their work with enhanced motivation which as a result, improves retention.
Improves employees’ morale:
Effective, objective and successful performance appraisals explain to employees their strengths, weaknesses, and area that require improvements. Appraisals are opportunities to communicate to the employees. The way a manager evaluates the performance of an employee goes a long way in boosting an employees’ morale.
Encourages employee development:
An employee wishes to continue with the same company if he or she receives constant learning and development opportunities. With performance appraisal addressing the areas of concern for a particular employee, companies offer appropriate training so that employees can become better equipped with newer skills and abilities.
Appreciates employee contribution:
While performance appraisals give managers a chance to analyze employee performances, they also provide a great opportunity to appreciate the work and the contribution of the employees to the company. When employees are appreciated for their hard work and recognized for the same, they tend to continue with the same employer.
Offers regular feedback:
Through regular feedback, employees connect more with their managers leading to improved communication. This keeps the managers, supervisors, or team leaders informed about the progress of the employees. Once they form a better idea about where the employees stand, they can curate their feedback better.
Formative appraisals prepare employees:
While performance appraisals happen once a year, a formative performance appraisal conducted in the midterm, helps employees to figure out their strong points and work on the weaker ones. When employees continually receive feedback for their work, they understand that the company is concerned about them and thus, thinks less about leaving the firm.