Appraisal Letters – A Guide to Explore Your Rights

In today’s highly competitive environment, one must always aim to stand apart with top-notch performers in the organization. Recognising your employees for their commitment and effort is critical to a company’s long-term success. To that end, the management team, including HR, conduct annual performance reviews to evaluate the performance of the employees’ performance and send out an appraisal letter to their star employees praising them for their continued valuable contribution towards the company goals.

An appraisal letter systematically assesses an employee’s work performance and acknowledges their contribution to the company in a specified period. 

The letter highlights the employee’s achievements, skills, growth, and shortcomings. The company may also use the data to issue promotions and increase salaries. All the employees in a company receive them.

Purpose of an Appraisal Letter

Appraisal letters are essential for employers as they recognize and reward employees who contribute to the company’s success, motivating them to work harder for overall organizational growth.

Appraisal letters assess employees’ work achievements over a year. The HR department initiates the process and issues appraisal forms to gather feedback on their performances. The HR department assigns a manager to meet with each employee individually to discuss their improvements, setbacks and future goals and inform them of the company’s expectations of them.

Additionally, they may advise them on which skills to develop to do better going forward and how to set achievable work targets. Such positive feedback can enhance the employee’s confidence, improve their morale, and help them grow professionally and personally.

Difference between Appraisal letter and Appreciation letter

Appraisal Letter

• Assesses individual performances and evaluates their contributions during a set period.
• Given quarterly, half-yearly or annually, per the appraisal cycle of the company.
• Given to all employees in an organization.
• Follows a particular pattern and format
• Descriptive feedback document that remarks on the achievements and shortcomings of the employee
• Provided to the employee by the HR department
• May mention details such as increment in salary and promotion

Appreciation letter

• Awarded to the employees to praise their outstanding performance.
• Can be given to an employee at any point in time for their achievements.
• Awarded to employees showcasing exemplary performance.
• Can be personalised as per the giver or the receiver.
• Only highlights the good things and the achievements
• Could come from any superior
• Does not have any such information

Types of performance appraisal

May mention details such as increment in salary and promotionThe primary goal of appraisals remains consistent across most organizations, although the methods for assessing employee performance may vary. Let us look at the types of performance appraisals:

Self-Appraisal

Self-Appraisal enables the employee to make their own judgement of their own annual performance. Some companies let the employees have self-assessments to give them a better idea about their professional standing & contention with work. It also allows employees to reflect on their performance, achievements, and areas for improvement. This introspection can be insightful and encourage personal growth.

Self-Appraisal can also enable individuals to recognise their strengths and weaknesses and encourage a dialogue between employees and managers during performance reviews, enabling more meaningful discussions based on self-assessment insights.

360- Degree Appraisal

The 360 Degree Appraisal method takes a more rounded and holistic approach to appraising employees. In this method, the employee’s overall performance is evaluated based on the employee’s work and the feedback from other colleagues, subordinates, and managers.

Simply put, it presents a holistically comprehensive picture of the employee’s annual performance from different people’s perspectives.

Manager Performance Appraisal

The managers conduct the Manager Performance Appraisal based on their own observations. Managerial appraisals are conducted in conjunction with other appraisal methods, such as self-assessment and 360-degree appraisal. The manager discusses your accomplishments and challenges faced during the year of evaluation and attempts to meet a common ground on which you can be appraised. Apart from discussing past performance, you can also draw a map for future goals. It is an effective appraisal method as it leaves little room for ambiguity and enables a transparent discussion between you and the reporting manager.

Methods of performance appraisals

Rating scale method

Performance appraisal is a systematic evaluation method used to assess employees based on their performance and potential. Employees are rated on a scale from 1 to 10 on criteria like regularity, target achievement, and accountability, with the total points determining their classification as performers or non-performers. This method is a popular choice because it’s budget-friendly and saves time. The Rating scale method is applicable everywhere and can be used to analyse a large workforce.

Essay appraisal method

The Essay Appraisal method is a traditional approach of evaluation where a detailed essay is written on the employees describing their strengths and weaknesses. It gives a descriptive analysis of an employee’s performance supported by performance reports and data.

The ranking method is another commonly used evaluation method wherein employee performances are compared to the performances of co-workers. This approach is employed when an organization seeks to discern its top-performing individuals. The managers categorise the employees as excellent, very good, average, poor and very poor based on their annual performances.

Checklist method

The checklist method objectively assesses the employee’s performance on a series of traits and statements. The evaluation is done by answering questions in Yes or No. The manager analyses performance on a set of traits to identify your strengths and weaknesses and provide appraisals accordingly.

Critical incident method

This method is based on major incidents that take place in the organization during the year. Companies that follow this method maintain logs of all the important incidents (both positive and negative) that occur and collate the same at the end of the performance period to rate employees.

Read More – Salary Increment – Meaning, Format & Samples

Appraisal Letter Format

[Company Name/ Letterhead]
[Date of Appraisal]
[Employee Details]
[Name of the Company]
[Location]

Dear Employee,
On behalf of the XYZ company, we would like to extend this appraisal letter for your dedication and substantial contribution to the organization. We are pleased to inform you that your performance rating for the year 20XX-20XX is _______. The annual remuneration has been revised to Rs. __________ with effect from ______. Also, please refer to the attached appendixes for your Revised Compensation & Benefits.

We appreciate your contribution and eagerly anticipate your continued involvement in the company’s success.

For XYZ Company
Manager