Motivation is the process that energizes employees and propels them to pursue their goals. Well-designed and well-executed performance appraisals have a strong motivational impact. Appraisals have the power to motivate employees because they provide a number of interconnected benefits:

  • They demonstrate the need for improvement. If employees don’t have a clear understanding of how they’ve been performing, they can’t be motivated to make any improvements.

  • They meet higher-level psychological needs. Researchers continue to find that recognition is one of the most powerful forms of motivation for large numbers of employees. Although you can find numerous possible sources of recognition on the job, performance appraisals are an opportunity for employees to receive formal, significant, and enduring recognition from their manager.

  • They build a sense of personal value. When managers take the time and effort to carefully review, analyze, document, and discuss performance with employees, the underlying message to the employees is that they’re important and valuable, and this alone is quite rewarding, whether the feedback is positive or not.

  • They enhance personal development. Performance evaluations are motivational for employees who are looking to enhance their personal learning, growth, and development. Appraisals are a highly valuable source of information, insights, and tools necessary for such progress. Performance appraisals are similarly motivational for employees whose needs are centered on achievement, goal attainment, and sensing personal effectiveness, respect, and trust.

  • They turn employees around. When employees are performing poorly, performance appraisals can provide the wakeup call that they need to get refocused and reenergized. With performance appraisal, however, the purpose of the session is not strictly disciplinary, so the employee is more likely to walk in with a more receptive and open mind. As a result, your comments regarding an employee’s questionable performance have an excellent chance of being heard and generating action as a result.

  • They increase satisfaction. When performance appraisals meet the employees’ needs in such areas as gaining recognition, sensing achievement and competence, experiencing growth, and meeting objectives, they’re also contributing to the employees’ job satisfaction, and this is one of the most important elements at work today. When employees are satisfied, some of the most visible indicators are reduced turnover, absenteeism, and tardiness.

On the flip side, when employees are subjected to a shoddy or even nonexistent performance appraisal system, the opportunities to fulfill these higher-level employee needs are substantially reduced.