Importance of Performance Appraisal Systems

Performance Appraisal

Performance appraisal is the assessment of an individual’s performance in an performance in a systematic way, the performance being measured against such factors as job knowledge, quality and quantity of output, initiative, leadership abilities, supervision, dependability, co-operation, judgment, versatility etc. assessment should not be confined to the past performance alone. Potentials of the employee for the future performance must also be assessed.

Performance appraisal can be defined as “the systematic evaluation of the individual with respect to his or her performance on the job and his or her potential for development”.

A more comprehensive definition is, “Performance appraisal is a formal structured system of measuring and evaluating an employee’s job and how the employee can perform effectively in future so that the employee, organization all be benefited.”

Performance appraisal, to common understanding, is the formal and informal assessment of the performance of the employee at work. In an informal system we are aware that superior is continually making judgments about their subordinates’ performance on a subjective basis. By contrast, superiors could resort to using formalized appraisal techniques when assessing the performance of subordinate, and these judgments arc considered to be more objective. In formalized systems the terms ‘performance appraisal and ‘performance management’ are used. Both refer to a process where by mangers and their subordinates share understanding about what has to be accomplished, and the manager will naturally be concerned about how best bring about those accomplishments by adept management and development of people in short and long terms. Also, performance would be measured using the techniques discussed in this chapter and it will be subsequently related to targets or plans. In this way the subordinate receives feedback on his or her progress.

Importance of Performance Appraisal Systems

In many organizations, the feedback on job performance is ambiguous or is given annually as a ritualistic exercise. Many subordinates therefore have trouble in gasping how their efforts are perceived by the organization. Almost every one who has worked at a job can remember times when they were unclear on how their performance was being judged.

The annual performance appraisal system tends to serve only a little purpose: salary administration, training and succession planning. But this is not the sole objective of performance appraisal. These objectives will only dilute and weaken the clarity and validity of any appraisal system. Most organization ties the formal appraisal system directly to salary increase, which decrease their validity.

Performance appraisal system is therefore very important for organizations to:

(a) Link Salary and Status Realistically to the Performance Appraisals

Most personnel departments have a very narrow outlook to appraisals. The general view is to receive the appraisal forms at a date (which usually is the deadline), issue instructions regarding increments and promotions, receive the data regarding the same and they issue letters to the concerned employee informing of their salary increase. The appraisal process gets polluted as the appraiser and appraise have at the back of their minds promotion and salary increase, rather than performance plans and participative reviews. This dilutes the objectives of appraisal to great extent. In fact, if organizations create, a culture of continuous feedback on the performance they would be making the appraisal system more relevant. Several organizations have already started delinking performance appraisal from salary increase.

(b) Making Objectives of Performance Appraisals Clear to All Employees

If performance appraisal should not directly be linked to salary increase the question then arises, what should the objectives of performance appraisals be that could be realistically achieved?

Some suggestions:

  • To do joint goal setting, and link the goals to the organizational objectives
  • To provide role clarity by defining Key Result areas for Accounting.
  • To establish a level of performance in the current job and seek ways of improving it.
  • To identify potential for development and to support the total process of planning
  • To increase communication between the appraiser and the appraise.
  • To identify factors that facilitate performance and other factors that hinder performance.
  • To help the employees identify and recognize their own strengths and weaknesses. To make them assess their own competencies and how the same can be multiplied and improved.
  • To generate data about the employee for various decisions like transfers, rewards, job-rotation, etc.

(c) Focus on Developmental Appraisals

Managers should develop part ownership in the employee’s future. Any good appraisal system should focus on developmental appraisal. Developmental appraisal mean that an organization needs to develop not just isolated performance appraisal tool/system, but the total frame work for the individuals development, improvement in job and level of competence and preparing employees for future jobs. Thus, appraisal of people, which is a part of the total HRD system, lies to be linked to long-term development activity and carrier planning.

Organizations have to show vision for the future. Vision, strategies and objectives will give rise to individual objectives and performance standards. The immediate rewards and recognition do not lead to enduring performance and upgrading of competence and therefore are not real motivators. The appraisal as a tool not only gives the individual and the organization the idea of where the individual stands in terms of his skills, competencies and abilities, but also monitors the process of growth and development, together with the inputs that are required to develop a high level of competence by individuals.

(d) Let Employees Appraise Their Own Performance

Subordinates need feedback more often on their performance. The best way to do it is to let them appraise their own performance.

Self-appraisal would;

  1. Motivate the employee to take more responsibility for his/her own performance.
  2. Focus on the job behavior only.
  3. Reduce ambiguity in performance and focus on change in job behavior.

When subordinates undertake self-appraisal, they analyze their job duties and how key issues in a job they handle. Each individual may rate himself or herself.

Self-appraisal may focus on cost control, communication, planning, training, delegation and decision-making. After self-appraisal, the subordinate discusses the ratings with his/her direct report or superior to get a feed back on performance. Both then come to an agreement in areas of convergence and draw a job improvement plan.

(e) Create a Climate for Open Appraisals in Organizations

In most organizations, the concept of open appraisal is misunderstood. Open appraisal does nut mean that the appraisal ratings are shown by the subordinate, and his/her signature is then obtained. What it does mean that both the appraiser and the appraise share their views on performance with each other, identify the areas of improvement and work towards it. One of the objectives of open communication between the appraiser and the appraise is to bring them together to solve organizational problems and performance related problems. The quality of ratings is likely to improve if there is shared understanding between the appraiser and the appraise.

(f) Muscle Builds the Organization

In today’s competitive world, raising performance goals is essential. This entails analyzing the company’s current situation, projecting the future, establishing higher expectations, and selling the top management on the upgrading process and developing an action plan. Muscle builds the organization by;

  1. Enhancing your own performance
  2. Accelerating the professional growth of the best performers
  3. Not tolerating managerial performers. One cannot muscle build the organization, unless marginal performers are replaced.
  4. Developing multiple skills and competencies by worshiping success and potential.

(g) Build Commitment in the Workplace

Change is an inevitable part of manager’s job. As conditions change, individual responsibilities are also expected to change. In commitment-based approach, the workplace, jobs are designed to be broader than before, team accountability is as important as individual accountability for performance. The performance expectations are high and emphasize continuous important in the workplace.

About Abey Francis

Abey Francis is the founder of MBAKnol - A Blog about Management Theories and Practices - and he's always happy to share his passion for innovative management practices. You can found him on Google+ and Facebook. If you’d like to reach him, send him an email to: [email protected]
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