The use of performance appraisal in employee retention strategy

HR Insight

Our experts' advice will help you conduct the best performance appraisal process to increase employee retention.

The year is coming to the end, therefore employers are getting busier with countless evaluation procedures, including the performance appraisal. While this process plays a vital role in employee retention strategy, some managers still struggle as to what they should include and how to conduct it successfully.

To effectively increase employee retention by using performance appraisals, consider the following points:

What is performance appraisal?

Performance appraisal, or employee appraisals, is an annual process, in which employees’ productivity and performance in assigned projects will be documented, evaluated and compared to the established objectives by their managers. They will also get feedback and advice on their skills or future growth within the company.

The outcomes of this process vary from company to company and depend on business growth, company size or personal performance. However, in general, the result will determine whether the employees can get a promotion, salary raise, bonuses, and other rewards.

Will this process impact employee retention?

To begin with, recruit and employ talents are time and money consuming, so try to increase employee engagement and retain them for a lasting professional relationship should be your top priority.

Adecco Motivation at Work Survey shows that professional recognition and job satisfaction are two main factors when it comes to staying or leaving a job. Fortunately, you can ensure these elements in your workplace and increase employee retention by conducting effective performance appraisal sessions. Once you have a transparent process, you can easily identify your best talents and show them your appreciation properly. Furthermore, the appraisal process can help you spot some employees who are at the hazard of walking out and whether more retention motivations are needed.

The only problem is, employee retention will only be improved if your performance appraisal is well-planned. Then, how can you draft this process correctly?

3 main factors ensure your successful employee appraisal process

Take note of your business goals

To accurately evaluate your employees’ performance, your process should be aligned with your core goals. This means you should show them how their works had contributed to each of your company’s achievements. They will clearly understand their accomplishments and have a better sense of their role in the organization. Besides, if you give them practical objectives at the end of the process, they will be more motivated and tend to work harder to achieve their personal goals.

Create a standard structure

Fairness between all employees is a must-have factor to maintain a great employee retention strategy. Hence, in your appraisal process, try to standardize the structure and give the employees essential information. For example, you can start the discussion with a summary of their success, update some on-going process, then list skills or areas for improvement, and end up with prospective opportunities for their professional development.

Make it a conversation

Don’t be a teacher and let the performance appraisal turn into a boring lecture at college. Instead, listen to your employees and encourage them to be open and honest. The more the employees engage in the process, the better they acknowledge the final outcomes and what they should do to increase productivity and performance at work. Meanwhile, you also get some hints to advance the employee retention rate.


After all, employee appraisal is not only vital to reward the right employees. The same principle can also be used to retain your talents and minimize the cost of hiring and training. Hence, take your time to plan the best process.

If you need any support from HR experts for a stress-free workplace, don’t hesitate to contact us now via our email or our telephone (84) 28 3636 5811 (Ho Chi Minh City Office) or (84) 24 3218 1190 (Hanoi Office).

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