Human resource management (HRM) conducts performance management. A very common and central process of performance management systems is performance appraisal (PA). Many researchers would argue that “performance appraisal is one of the most important processes in Human Resource Management”.
The performance management process begins with leadership within the organization creating a performance management policy. Primarily, management governs performance by influencing employee performance input (e.g. training programs) and by providing feedback via output (i.e. performance assessment and appraisal). “The ultimate objective of a performance management process is to align individual performance with organizational performance”. The PA process should be able to inform employees about the “organization's goals, priorities, and expectations and how well they are contributing to them”.
What is Performance Appraisal?
Performance Appraisal is the systematic evaluation of the performance of employees and to understand the abilities of a person for further growth and development.Performance Appraisal are employed to determine who needs what training, who will be promoted, demoted, retained or fired. A performance appraisal is a review and discussion of an employee's performance of assigned duties and responsibilities. The appraisal is based on results obtained by the employee in his/her job, not on the employee's personality characteristics. The appraisal measures skills and accomplishments with reasonable accuracy and uniformity. It provides a way to help identify areas for performance enhancement and to help promote professional growth. It should not, however, be considered the supervisor's only communication tool. Open lines of communication throughout the year help to make effective working relationships.
Each employee is entitled to a thoughtful and careful appraisal. The success of the process depends on the supervisor's willingness to complete a constructive and objective appraisal and on the employee's willingness to respond to constructive suggestions and to work with the supervisor to reach future goals.
What are the purposes of Appraisal?
The staff appraisal schemes are all concerned with taking stock of the process of the present situation, reviewing past performance and planning for the future.Within this very general description, though, there are a number of different specific purposes and outcomes of the appraisal process.
- To maintain records in order to determine compensation packages, wage structure, salaries raises, etc.
- To identify the strengths and weaknesses of employees to place right men on right job.
- To maintain and assess the potential present in a person for further growth and development.
- To provide a feedback to employees regarding their performance and related status.
- It serves as a basis for influencing working habits of the employees.
- To review and retain the promotional and other training programs.
- The enhancement of motivation and communication.
Performance Appraisal Interview.
The performance appraisal interview is typically the final step of the appraisal process. The interview is held between the subordinate and supervisor. The Performance appraisal interview can be considered of great significance to an organization’s Performance Appraisal system. It is most advantageous when both the superior and subordinate participate in the interview discussion and establish goals together. An Appraisal interview needs to cover three main areas:
A review of past performance in the job during the preceding period - from both the appraiser and appraisee's point of view.
Building an action plan for the next period - identifying realistic aims and targets, together with the necessary actions and support required to achieve them and dates for their achievement.
A look into the future - enabling longer term plans to be formulated in respect of the individual's aims and objectives and considering any steps that can be taken to develop the individual's potential.
Advantages of Performance Appraisal.
It is said that performance appraisal is an investment for the company which can be justified by following advantages:
Promotion: Performance Appraisal helps the supervisors to chalk out the promotion programs for efficient employees. In this regards, inefficient workers can be dismissed or demoted in case.
Compensation: Performance Appraisal helps in chalking out compensation packages for employees. Merit rating is possible through performance appraisal. Performance Appraisal tries to give worth to a performance. Compensation packages which includes bonus, high salary rates, extra benefits, allowances and pre-requisites are dependent on performance appraisal. The criteria should be merit rather than seniority.
Employees Development: The systematic procedure of performance appraisal helps the supervisors to frame training policies and programs. It helps to analyse strengths and weaknesses of employees so that new jobs can be designed for efficient employees. It also helps in framing future development programs.
Selection Validation: Performance Appraisal helps the supervisors to understand the validity and importance of the selection procedure. The supervisors come to know the validity and thereby the strengths and weaknesses of selection procedure. Future changes in selection methods can be made in this regard.
Communication: For an organization, effective communication between employees and employers is very important. Through performance appraisal, communication can be sought for in the following ways:
- Through performance appraisal, the employers can understand and accept skills of subordinates.
- The subordinates can also understand and create a trust and confidence in superiors.
- It also helps in maintaining cordial and congenial labour management relationship.
- It develops the spirit of work and boosts the morale of employees.
All the above factors ensure effective communication.
Motivation: Performance appraisal serves as a motivation tool. Through evaluating performance of employees, a person’s efficiency can be determined if the targets are achieved. This very well motivates a person for better job and helps him to improve his performance in the future.
Moreover Periodic reviews help supervisors gain a better understanding of each employee's abilities. The goal of the review process is to recognize achievement, to evaluate job progress, and then to design training for the further development of skills and strengths. A careful review will stimulate employee’s interest and improve job performance. The review provides the employee, the supervisor, the Vice President, and Human Resources a critical, formal feedback mechanism on an annual basis, however these discussions should not be restricted solely to a formal annual review.
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