You’re nearing the period of performance appraisals—what can you do to make it the BEST possible process? 

You need to take several steps to ensure a successful performance appraisal process.

First of all, you need to assess the performance of your staff by providing constructive feedback highlighting their strengths and weaknesses. 

Moreover, you must work with the HR department to arrange a video call or face-to-face meeting at a time convenient for both parties.

Last but not least, you have to write an appraisal form that can greatly motivate an employee and ultimately lead to your company’s success if done correctly. 

Luckily, you’ve come to the right place! 

In this article, let’s tackle the elusive appraisal letter and uncover together: 

• What an appraisal letter is
• The difference between appraisal and appreciation letters
• Tips for stellar performance appraisals

What Is an Appraisal Letter?

An appraisal letter is a structured report that provides information about the employee’s contribution to the company.

In a similar way to performance appraisal assessments, these documents review the performance of your employees and reflect their hard work during the year. 

In a nutshell, it’s written proof that shows you recognize an employee’s efforts while boosting their morale.

The performance appraisal letter contains the following: 

• Strengths and weaknesses
• Information about the current salary increment, the effective date of the appraisal, or revised CTC
• Suggestions for a potential promotion
• Valuable insight into the areas of improvement

Usually, the appraisal process occurs once or twice a year, but doing it more often allows you to set up future goals and expectations that’ll improve your productivity and enable your business to grow. 

Now, let’s talk a bit about the different types of performance appraisals, such as: 

• 360-degree appraisals that focus on collective feedback from managers, subordinates, or peers who work with the employee. This way, you get a complete picture of the worker’s strengths and weaknesses from different perspectives. 
• The rating scale method, a convenient and less time-consuming review that measures achievements based on potential and overall job performance. It rates, on a scale from 1 to 10, different aspects such as proactivity, accuracy, or accountability. 
• Employee self-appraisal, where an employee self-evaluates their own performance. It’s helpful for those who want to enhance their skills and abilities.
• The ranking method that compares an employee’s performance with team members to identify your organization’s lowest and best-performing workers. 
• Manager performance appraisals that review managers’ performance, usually focused on communication, goal-setting, and coaching. 

While this all sounds fine and dandy, what is the true objective of an appraisal letter?

Read on to find out!

What’s the Goal of an Appraisal Letter?

The appraisal letter aims to reward deserving employees for their overall performance.  

This can be done by giving the individual a rundown of their work performance in a given year while showing how much you appreciate their achievements and contributions. 

Generally, employees receiving an appraisal letter like this are encouraged and motivated to do better. As a result, they’re more engaged with their work, which leads to greater job satisfaction. 

But it’s more than that—with almost 98% of employees disengaging from work when they receive little or no feedback, appraisal letters have another critical objective.

By receiving positive feedback, appraisal letters: 

• Improve employee retention
• Enhance employee confidence
• Help employees grow

Moving forward, let’s discuss the differences between appraisal and appreciation letters, which often sound similar. 

What’s the Difference between Appraisal Letters and Appreciation Letters?

The main difference between appraisal and appreciation letters is the purpose. 

Appraisal letters are the outcome of a performance evaluation, which assesses an individual’s performance and contributions during a set period.

Depending on the company’s culture and structure, performance evaluations are carried out quarterly, half-yearly, or annually to all the staff members in the organization.

Meanwhile, appreciation letters are awarded only to employees who have gone above and beyond and have shown exemplary performance. 

So, its purpose is to praise and reward their contributions. 

Author’s Tip: You can give appreciation letters at any point in time accompanied by a thoughtful gift. 

Another notable difference is the person sending these letters. The HR team handles appraisal letters, while a manager can send their appreciation letter anytime. 

Now that everything is clearer, let’s move on to the best part of the article: learning how to write an appraisal letter that shows your co-workers how much you care.

Guidelines on How to Write an Appraisal Letter

People might need more than the plain letter templates they often receive during performance reviews. 

Here are some tips for creating stellar employee appraisal letters that employees will love to read. 

Focus on the positive

It’s tempting to criticize an employee’s performance, especially if they failed to produce the results you wanted. 

But keeping a positive attitude when providing feedback strongly influences how employees receive and respond to criticism. 

When you deliver feedback harshly, it can easily trigger an employee’s ego and lead to unproductive behavior in the long term. 

Good managers know how to create a judgment-free environment for their employees, where they feel less stressed about the future appraisal cycle. 

Author’s Tip: Start your letters with genuine praise and mention the positive sides of working with them. 

Keep a professional and polite tone

Being familiar with someone is okay in certain situations, but you should keep a professional and polite tone during a performance review, no matter the appraisal method. 

This should be a part of a company’s culture because it helps employees better receive, understand, and act on the feedback a manager offers. 

After neatly writing the employee’s name at the beginning of your letter, you can praise their accomplishments and work, all while keeping a respectful tone. 

Give constructive criticism 

The end of any appraisal letter should include constructive feedback. 

While you may be afraid to criticize someone because it could dampen their productivity and mood, good managers know how to provide specific constructive criticism.

Doing so helps the employees and improves their performance, which is highly beneficial for the company in the long run—a win-win situation favorable for everyone involved. 

To emphasize this point, 52% of employees find negative feedback helpful for their career growth.

As a result, when you offer positive or negative feedback, remember to use examples of how the employee can change and improve in time for their next appraisal. 

Author’s Tip: The feedback should be relevant to the employee, so avoid giving general criticism.  

Offer tips and resources for improvement

Continuously working on ourselves is how we improve and grow as people. 

Similarly, employees should receive training and access to courses and workshops that help them improve their shortcomings. 

According to a study, 87% of millennials believe learning and development in the workplace are highly essential for their engagement, which often boosts retention rates. 

It’s even more important to emphasize training employees, especially since the standards have shifted with the pandemic and many people now work remotely.

Author’s Tip: You can also offer actionable suggestions, such as sending an article on improving time management, for example, or assigning a mentor to teach them. 

Outline future expectations

A business professional should always consider their company’s future and its direction.

You have to decide whether the employee has the potential to improve or if your partnership will meet a potential end. 

So, while future expectations should be a short part of the appraisal letter, it’s best to explain them in person. 

This section’s purpose is to show the employee what they can do in the future to improve while suggesting potential expectations you might have for them.

BONUS ROUND!

Take care of your most precious employees by offering them meaningful wellness presents that’ll keep them stress-free and improve their mental health. 

Now Over to You

Listening to your employees is always in style. 

Employees will feel more connected with their work if you pay close attention to their problems, suggestions, or performance. 

Appraisal letters can highlight how much you care about employees and the value they bring to your organization while strengthening your bond with them.

And remember: there’s no one-size-fits-all approach to appraisal letters.

But it’s time to say goodbye to these letters and focus on other aspects of human resources you can improve.

Glance into the future by checking out our HR glossary for more information.