Meaning of Performance Appraisal:
In the present highly competitive environment, organizations have to ensure
peak performance of their employees continuously in order to compete at the
market place effectively. Traditionally, this objective was attempted to achieve
through employee performance appraisal, which was more concerned with
telling employees where they lacked in their performance.
Though this served the purpose to some extent, it was not considered enough
to raise the employee performance at the most desirable level. Performance
management has overcome this problem to some extent.
Performance appraisals are essential for the effective management and
evaluation of staff. Appraisals help to develop individuals, improve
organizational performance, and feed into business planning. Formal
performance appraisals are generally conducted annually for all staff in the
organization. Each staff member is appraised by his or her line manager.
(Directors are appraised by the CEO, who is appraised by the chairman or
company owners, depending on the size and structure of the organization).
Annual performance appraisals enable management and monitoring of
standards, agreeing expectations and objectives, and delegation of
responsibilities and tasks. Staff performance appraisals also establish individual
training needs and enable organizational training needs analysis and planning.
Concept of Performance Appraisal:
Appraisal is the evaluation of worth, quality or merit. In the organization
context, performance appraisal is a systematic evaluation of personnel by
superiors or others familiar with their performance. Performance appraisal is
also described as merit rating in which one individual is ranked as better or
worse in comparison to others. The basic purpose in this merit rating is to
ascertain an employee’s eligibility for promotion.
However, performance appraisal is more comprehensive term for such
activities because its use extends beyond ascertaining eligibility for promotion.
Such activities may be training and development, salary increase, transfer,
discharge etc. besides promotion.
A formal definition of performance appraisal is as follows:
,“Performance Appraisal is the process of evaluating the performance and
qualification of the employees in terms of the requirements of the job for
which he is employed, for the purpose of administration including placement,
selection for promotion, providing financial rewards and other actions which
require differential treatment among the members of a group as distinguished
from actions affecting all members equally.”
Beach has defined performance appraisal as follows:
“Performance Appraisal is the systematic evaluation of the individual with
regard to his or her performance on the job and his potential for
development.”
Performance appraisal is the area of performance management where the
focus on performance is the hardest to maintain. More often than not the
appraisal turns into an assessment of the individual rather than their
performance. It is often exacerbated by the one-way nature of the appraisal
where managers tell performers what they think of their performance and/or
of them.
Heyel has defined:
“Performance-appraisal is the process of evaluating the performance and
qualifications of the employees in terms of the requirements of the job for
which he is employed, for purposes of administration including placement,
selection for promotions, providing financial rewards and other actions which
require differential treatment among the members of a group as distinguished
from actions affecting all members equally.”
According to Dale Yolder:
“Performance Appraisal includes all formal procedures used to evaluate
personalities and contributions and potentials of group members in a working
organization. It is a continuous process to secure information necessary for
making correct and objective decisions on employees.”
Performance appraisal process
1.Establishing performance standards
,The first step in the process of performance appraisal is the setting up of the
standards which will be used to as the base to compare the actual performance
of the employees.
This step requires setting the criteria to judge the performance of the
employees as successful or unsuccessful and the degrees of their contribution
to the organizational goals and objectives. The standards set should be clear,
easily understandable and in measurable terms.
In case the performance of the employee cannot be measured, great care
should be taken to describe the standards.
2.Communicating the standards
Once set, it is the responsibility of the management to communicate the
standards to all the employees of the organization. The employees should be
informed and the standards should be clearly explained to the employees. This
will help them to understand their roles and to know what exactly is expected
from them. The standards should also be communicated to the appraisers or
the evaluators and if required, the standards can also be modified at this stage
itself according to the relevant feedback from the employees or the evaluators.
3.Measuring the actual performance
The most difficult part of the Performance appraisal process is measuring the
actual performance of the employees that is the work done by the employees
during the specified period of time. It is a continuous process which involves
monitoring the performance throughout the year. This stage requires the
careful selection of the appropriate techniques of measurement, taking care
that personal bias does not affect the outcome of the process and providing
assistance rather than interfering in an employees work.
4.Comparing actual performance with desired performance
The actual performance is compared with the desired or the standard
performance. The comparison tells the deviations in the performance of the
employees from the standards set. The result can show the actual performance
being more than the desired performance or, the actual performance being
less than the desired performance depicting a negative deviation in the
organizational performance. It includes recalling, evaluating and analysis of
data related to the employees’ performance.
, 5.Discussing results [Feedback]
The result of the appraisal is communicated and discussed with the employees
on one-to-one basis. The focus of this discussion is on communication and
listening. The results, the problems and the possible solutions are discussed
with the aim of problem solving and reaching consensus. The feedback should
be given with a positive attitude as this can have an effect on the employees’
future performance. Performance appraisal feedback by managers should be in
such way helpful to correct mistakes done by the employees and help them to
motivate for better performance but not to demotivate. Performance feedback
task should be handled very carefully as it may leads to emotional outburst if it
is not handing properly. Sometimes employees should be prepared before
giving them feedback as it may be received positively or negatively depending
upon the nature and attitude of employees.
Objectives of performance appraisal
The following are the objectives for conducting performance appraisals year
after year:
Employee promotion
This is an essential first step towards promoting an employee based on
subjective and objective factors- performance and competency.
Employee needs
To identify the training and development needs of an employee.
Employee Confirmation
To provide confirmation to those employees who were recently hired and are
on their probation period.
Making decisions about promotions and compensation
To make a concrete decision, what should be the percentage of a hike in the
salary of an employee based on the work done by them?
Improving communication
To encourage a proper feedback system between the manager and employees.
Scope of improvement
In the present highly competitive environment, organizations have to ensure
peak performance of their employees continuously in order to compete at the
market place effectively. Traditionally, this objective was attempted to achieve
through employee performance appraisal, which was more concerned with
telling employees where they lacked in their performance.
Though this served the purpose to some extent, it was not considered enough
to raise the employee performance at the most desirable level. Performance
management has overcome this problem to some extent.
Performance appraisals are essential for the effective management and
evaluation of staff. Appraisals help to develop individuals, improve
organizational performance, and feed into business planning. Formal
performance appraisals are generally conducted annually for all staff in the
organization. Each staff member is appraised by his or her line manager.
(Directors are appraised by the CEO, who is appraised by the chairman or
company owners, depending on the size and structure of the organization).
Annual performance appraisals enable management and monitoring of
standards, agreeing expectations and objectives, and delegation of
responsibilities and tasks. Staff performance appraisals also establish individual
training needs and enable organizational training needs analysis and planning.
Concept of Performance Appraisal:
Appraisal is the evaluation of worth, quality or merit. In the organization
context, performance appraisal is a systematic evaluation of personnel by
superiors or others familiar with their performance. Performance appraisal is
also described as merit rating in which one individual is ranked as better or
worse in comparison to others. The basic purpose in this merit rating is to
ascertain an employee’s eligibility for promotion.
However, performance appraisal is more comprehensive term for such
activities because its use extends beyond ascertaining eligibility for promotion.
Such activities may be training and development, salary increase, transfer,
discharge etc. besides promotion.
A formal definition of performance appraisal is as follows:
,“Performance Appraisal is the process of evaluating the performance and
qualification of the employees in terms of the requirements of the job for
which he is employed, for the purpose of administration including placement,
selection for promotion, providing financial rewards and other actions which
require differential treatment among the members of a group as distinguished
from actions affecting all members equally.”
Beach has defined performance appraisal as follows:
“Performance Appraisal is the systematic evaluation of the individual with
regard to his or her performance on the job and his potential for
development.”
Performance appraisal is the area of performance management where the
focus on performance is the hardest to maintain. More often than not the
appraisal turns into an assessment of the individual rather than their
performance. It is often exacerbated by the one-way nature of the appraisal
where managers tell performers what they think of their performance and/or
of them.
Heyel has defined:
“Performance-appraisal is the process of evaluating the performance and
qualifications of the employees in terms of the requirements of the job for
which he is employed, for purposes of administration including placement,
selection for promotions, providing financial rewards and other actions which
require differential treatment among the members of a group as distinguished
from actions affecting all members equally.”
According to Dale Yolder:
“Performance Appraisal includes all formal procedures used to evaluate
personalities and contributions and potentials of group members in a working
organization. It is a continuous process to secure information necessary for
making correct and objective decisions on employees.”
Performance appraisal process
1.Establishing performance standards
,The first step in the process of performance appraisal is the setting up of the
standards which will be used to as the base to compare the actual performance
of the employees.
This step requires setting the criteria to judge the performance of the
employees as successful or unsuccessful and the degrees of their contribution
to the organizational goals and objectives. The standards set should be clear,
easily understandable and in measurable terms.
In case the performance of the employee cannot be measured, great care
should be taken to describe the standards.
2.Communicating the standards
Once set, it is the responsibility of the management to communicate the
standards to all the employees of the organization. The employees should be
informed and the standards should be clearly explained to the employees. This
will help them to understand their roles and to know what exactly is expected
from them. The standards should also be communicated to the appraisers or
the evaluators and if required, the standards can also be modified at this stage
itself according to the relevant feedback from the employees or the evaluators.
3.Measuring the actual performance
The most difficult part of the Performance appraisal process is measuring the
actual performance of the employees that is the work done by the employees
during the specified period of time. It is a continuous process which involves
monitoring the performance throughout the year. This stage requires the
careful selection of the appropriate techniques of measurement, taking care
that personal bias does not affect the outcome of the process and providing
assistance rather than interfering in an employees work.
4.Comparing actual performance with desired performance
The actual performance is compared with the desired or the standard
performance. The comparison tells the deviations in the performance of the
employees from the standards set. The result can show the actual performance
being more than the desired performance or, the actual performance being
less than the desired performance depicting a negative deviation in the
organizational performance. It includes recalling, evaluating and analysis of
data related to the employees’ performance.
, 5.Discussing results [Feedback]
The result of the appraisal is communicated and discussed with the employees
on one-to-one basis. The focus of this discussion is on communication and
listening. The results, the problems and the possible solutions are discussed
with the aim of problem solving and reaching consensus. The feedback should
be given with a positive attitude as this can have an effect on the employees’
future performance. Performance appraisal feedback by managers should be in
such way helpful to correct mistakes done by the employees and help them to
motivate for better performance but not to demotivate. Performance feedback
task should be handled very carefully as it may leads to emotional outburst if it
is not handing properly. Sometimes employees should be prepared before
giving them feedback as it may be received positively or negatively depending
upon the nature and attitude of employees.
Objectives of performance appraisal
The following are the objectives for conducting performance appraisals year
after year:
Employee promotion
This is an essential first step towards promoting an employee based on
subjective and objective factors- performance and competency.
Employee needs
To identify the training and development needs of an employee.
Employee Confirmation
To provide confirmation to those employees who were recently hired and are
on their probation period.
Making decisions about promotions and compensation
To make a concrete decision, what should be the percentage of a hike in the
salary of an employee based on the work done by them?
Improving communication
To encourage a proper feedback system between the manager and employees.
Scope of improvement
