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 is generally done in systematic ways which are as follows:
The supervisors measure the pay of employees and compare it with targets and plans.
The supervisor analyses the factors behind work performances of employees.
The employers are in position to guide the employees for a better performance.
It is said that performance appraisal is an investment for the company which can be justified by following advantages:
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 programmes. 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 programmes.
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.
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.
In this case, the present performance appraisal is greatly influenced by past performance. A person who has not done a good job in the past is considered (assumed) to be bad for doing present work.
Latest Behaviour Effect
The rating is also influenced by the most recent behaviour. The rater may ignore an average behaviour during the full appraisal period.
Sometimes the raters may evaluate on the basis of one negative quality. This results in overall lower rating of the particular employee. For e.g. "He does not shave regularly. Therefore, he must be lazy at work."
To distill the foregoing argument, the characteristics a personnel appraisal system should contain to satisfy both employers and employees--and to survive a court challenge--are specified below. As discussed, however, implementing this HRM function is fraught with difficulty. Readers are invited to evaluate the extent to which the following standards are met by agencies in their jurisdictions:
1. The rating instruments, which should strive for simplicity not complexity, are derived from job analysis.
2. Training is provided to all employees about the systems and to managers in its use.
3. The appraisal is grounded in accurate job descriptions and the actual ratings are based on observable performance.
4. Evaluations are completed under standardized conditions and are free of adverse impact.
5. Preliminary results are shared with the ratee.
6. Some form of upper level review, including an appeal process, exists that prevents a single manager from controlling an employee's career.
7. Performance counseling and corrective guidance services exist .