Why Is The Objective Setting Important In Performance Appraisals

Objective setting
Objective setting

The previous blog discussed eight key aspects to help you understand employee performance appraisals. Among them the first aspect is objective setting. Here is why it is important in performance appraisals.

Objective setting in performance appraisals involves defining specific and measurable goals or objectives for employees to achieve within a given period. These objectives should align with the organization’s overall goals and objectives.

Here’s a breakdown of the key elements in Objective setting in performance appraisals

  1. Specific
  2. Measurable
  3. Attainable
  4. Relevant
  5. Time-bound
Performance Appraisals Objective setting
Performance Appraisals Objective setting


Objectives should be clear and unambiguous, leaving no room for interpretation. Employees should understand what is expected of them. For example, instead of setting a vague objective like “improve customer service,” a specific objective could be “reduce customer complaint rate by 10% within six months.”


Objectives should have quantifiable criteria or indicators to measure progress and success. This allows for an objective performance evaluation. Measurable objectives enable both the employee and the manager to track progress and determine whether the objective has been achieved. For example, a measurable objective could be “Achieve a sales target of $500,000 in the current quarter.”


Objectives should be realistic and achievable within the given timeframe and available resources. Setting unrealistic goals can lead to frustration and demotivation. While objectives should challenge employees, they should also be attainable with reasonable effort and skill. Managers should consider factors such as employee capabilities, workload, and available support when setting objectives.


Objectives should be relevant to the employee’s role and contribute to the organization’s overall success. They should align with the employee’s job responsibilities and the broader goals of the department or company. Relevant objectives ensure that employees focus on activities that have a meaningful impact.


Objectives should have a specific timeline or deadline for completion. This adds a sense of urgency and helps employees prioritize their tasks. Time-bound objectives also provide a basis for tracking progress and conducting performance reviews regularly. For example, an objective could be “complete the project proposal by the end of the month.”

Effective objective setting requires collaboration between managers and employees. Employees should have the opportunity to provide input, discuss their capabilities and constraints, and gain clarity on the objectives. This collaborative approach enhances employee engagement and ownership of their performance.


During performance appraisal, managers assess employees’ progress toward their objectives. They evaluate whether the objectives were achieved, identify any obstacles faced, and discuss strategies for improvement or adjustment if needed. Objective setting is an ongoing process, and objectives may be revised or added as organizational priorities change or new challenges arise.

By setting clear and meaningful objectives, organizations can align employee efforts with strategic goals, enhance motivation and accountability, and facilitate effective performance evaluation.

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  • Ram

    Ram, the author of "Business Development: Perspectives" on Amazon Kindle, has a wealth of experience in business development across multiple industries. He has over 30 years of experience in commodities, FMCG, and software industries, and has held various leadership positions in these sectors. In the commodities and FMCG industries, Ram served as GM of Business Development for southern India, where he successfully established new businesses and expanded existing ones. In the software industry, he was Regional Director of Business Development for Asia, where he was responsible for expanding the company's presence in the region. Ram has a proven track record of turning around loss-making ventures and establishing successful businesses. Ram has also served as the Director of Industry Partnerships and IT Blog editor at a software company, showcasing his expertise in technology and industry partnerships.

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