Performance Appraisal

Performance Appraisal Definition

Performance appraisal or performance review is a systematic process in which employee performance at work is evaluated in relation to the projects on which employee has worked and his contribution to the organisation. It is also known as an annual review or performance review.

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It helps the managers place the right employees for the right jobs, depending on their skills. Often, employees are often curious to know about their performance details and compare it with their fellow colleagues and how they can improve upon it. So every company needs a good performance appraisal system.

(source-wisestep)

Performance Appraisal

The basic purpose of performance appraisal is to identify employees worth and contribution to the company. Important factors include – attendance, efficiency, attitude, quality of work, amount of work are just a few important factors.

The physical or objective factors like attendance, amount of work, efficiency can be easily measured by the records maintained by the Human Resource Department Manager. 

However, it gets a bit icky, when it comes to measuring subjective factors like attitude, behaviour, friendliness etc. But to properly evaluate an individual’s performance, appraisal of both subjective and objective factors needs to be done.

As Dale Yoder said, “Performance appraisal includes all formal procedures used to evaluate personalities and contributions and potential of group members in a working organisation. It is a continuous process to secure information necessary for making correct and objective decisions on employees.

Performance Appraisal Methods

There are various methods that are used by managers and employers to evaluate the performance of the employees, but they can be put into two categories:

• Traditional Methods
• Modern Methods

(source – businesstopia)

Browse more Topics under Human Resource Management

• Features of HRM
• Importance and Limitations of HRM
• Role of Personnel Manager
• Qualities of the HR Manager
• Managerial Functions of HR Manager
• Operative Functions of HR Manager
• Recruitment Process
• Selection Procedure
• Training and Development
• Methods of Training
• Traditional Methods of Appraisal
• Modern Methods of Appraisal
• HR Forecasting

Performance Appraisal Process

1. Setting performance standards
2. Set up measurable goals
3. Measure actual performance
4. Compare with preset standards and goals
5. Discuss with the employee – met the expectations, did not meet the expectations, exceeded the expectations
6. Take corrective actions
7. Set standards for next cycle

Advantages of Performance Appraisal

1. A systematic appraisal system helps the managers to properly identify the performance of employees in a systematic manner and their areas of talent and areas where they are lacking.
2. It helps the management to place the right employees for the perfect jobs depending on their skills in particular areas.
3. It helps employees identify the areas in which they need to improve. The managers can also use this information to provide constructive criticism of the way employees perform their work.
4. Potential employees are often given promotions on the basis of or the results of performance appraisals. People who have high ratings get promotions.  They can also transfer or demote employees if they not performing up to the expectations of the managers.
5. An appraisal is also useful in determining the effectiveness and results of training programmes. It can show managers how much employees have improved after taking the training programmes. This will give managers data on how to change and evolve the training programmes.
6. It creates healthy competition among employees as they will try to improve their performance and score better than their colleagues.
7. Managers use appraisal programmes to identify the grievances of employees and act upon them.
8. Keeping extensive records of performance appraisal will give managers a very good idea of which employees have the highest growth rate and are which ones have a declining rate of performance.

                                                                          Learn the Selection Process here. 

Disadvantages of Performance Appraisal

1. If the factors being used in the performance appraisal are incorrect or not relevant, the appraisal will fail to provide any useful or effective data.
2. Sometimes, equal weightage is not given to important factors when performing an appraisal.
3. Some objective factors are very vague and difficult to gauge like attitude and initiative. There is no scientific method to measure these factors.
4. Managers are sometimes not qualified enough to correctly assess the employees and their abilities. Thus, these mistakes can be very detrimental to the growth of the company.

Solved Question on Performance Appraisal

List three ways performance appraisal helps an organisation. 

Answer – Three ways performance appraisal helps an organisation mention as follows:

• A systematic performance appraisal system helps the managers to properly identify the performance of employees in a systematic manner and their areas of talent and areas where they are lacking.
• Performance appraisal helps employees identify the areas in which they need to improve. Furthermore, the managers can also use this information to provide constructive criticism of the way employees perform their work.
• It helps the management to place the right employees for the perfect jobs depending on their skills in particular areas.