Performance appraisal is a system of review and evaluation of an
individual or team’s job performance. An
effective system assesses
accomplishments and evolves plans for
development. Performance management is a
process that significantly affects
organizational success by having
managers and employees work together to
set expectations, review results, and
reward performance. Its goal is to
provide an accurate picture of past and
/ or future employee performance. To
achieve this, performance standards are
I. The Performance Appraisal Process:
Many of the external and internal environmental factors previously
discussed can influence the appraisal
process. Legislation requires that the
appraisal systems be nondiscriminatory.
The labor union might affect the
appraisal process by stressing seniority
as the basis for promotions and pay
increases. Factors within the internal
environment can also affect the
performance appraisal process. The type
of corporate culture can serve to help
or hinder the process. Identification of
specific goals is the starting point for
the PA process. After specific appraisal
goals have been established, workers and
teams must understand what is expected
from them in their tasks. Informing
employees of what is expected of them is
a most important employee relations
task. At the end of the appraisal
period, the appraiser observes work
performance and evaluates it against
established performance standards. The
evaluation results are then communicated
to the workers.
The performance evaluation discussion with the supervisor serves to
reestablish job requirements.
Steps in the performance appraisal process
Identify the specific performance appraisal goals.
Establish job expectations (job analysis).
Examine work performed.
Discuss appraisal with employee.
II. Uses of Performance Appraisal
Performance appraisal serves two types of the objectives one is to make
the evaluation decisions and other is to
provide the need assessment source for
the training and development if there is
a gap between actual and expected
performance. For many organizations, the
primary goal of an appraisal system is
to improve performance. A system that is
properly designed and communicated can
help achieve organizational objectives
and enhance employee performance. In
fact, PA data are potentially valuable
for use in numerous human resource
Human Resource Planning:-In
assessing a firm’s human resources, data
must be available that describe the
promotability and potential of all
employees, especially key executives.
Recruitment and Selection:-Performance
evaluation ratings may be helpful in
predicting the future performance of job
Training and Development:-A
performance appraisal should point out
an employee’s specific needs for
training and development. By identifying
deficiencies that adversely affect
performance, human resource and line
managers are able to develop T&D
programs that permit individuals to
build on their strengths and minimize
Career Planning and Development:-Career
planning and development may be viewed
from either an individual or
Compensation Programs:-Performance appraisal results
provide the basis for decisions
regarding pay increases.
Internal Employee Relations:-Performance
appraisal data are also frequently used
for decisions in areas of internal
employee relations including motivation,
promotion, demotion, termination,
layoff, and transfer.
Assessment of Employee Potential: -
Some organizations attempt to assess
employee potential as they appraise job
III. What to Evaluate
What aspect of a person’s performance should an organization evaluate? In
practice, the most common sets of
appraisal criteria are traits,
behaviors, and task outcomes.
Traits:-Many employees in organizations are
evaluated on the basis of certain traits
such as attitude, appearance,
Behaviors:-When an individual’s task outcome is
difficult to determine, it is common to
evaluate the person’s task-related
Task Outcomes:-If ends are considered more important than
means, task outcomes become the most
appropriate factor to evaluate.
Improvement Potential:-Some attention must be given to the
future and the behaviors and outcomes
that are needed to not only develop the
employee, but also to achieve the firm’s
goals. This involves an assessment of
the employee’s potential.
IV. Responsibility for Appraisal
In most organizations, the human resource department is responsible for
coordinating the design and
implementation of performance appraisal
programs. However, it is essential that
line managers play a key role from
beginning to end.
Immediate Supervisor:-An employee’s immediate supervisor
traditionally has been the most common
choice for evaluating performance.
Subordinates:-Some managers have concluded that
evaluation of managers by subordinates
Peers:-Peer appraisal has long had proponents who
believed that such an approach is
reliable if the work group is stable
over a reasonably long period of time
and performs tasks that require
Self-Appraisal:-If individuals understand the objectives
they are expected to achieve and the
standards by which they are to be
evaluated, they are—to a great extent—in
the best position to appraise their own
Customer Appraisal:-The behavior of customers determines
the degree of success a firm achieves.
Therefore, some organizations believe it
is important to obtain performance input
from this critical source.