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The systematic evaluation of the performance of employees and to understand the abilities of a person for further growth and development.
Standards for each employee; must provide feedback.
Performance Appraisal is characterized as a structured process in which the supervisor or manager assesses an employee’s personality and performance against predefined criteria, such as job awareness, quality and quantity of production, leadership skills, attitude towards work, participation, cooperation, judgment, flexibility, health, initiative, etc. It is also known as performance rating, performance evaluation, employee assessment, performance review, merit rating, etc.
Methods of Performance Appraisal:
Traditional Methods (Past-oriented Methods) are;
Rating Scales, Checklists, Forced Choice, Forced Distribution, Critical Incident, Performance test and observation, Field review, Confidential Record, Essay method, Comparative Evaluation Approaches, Cost Accounting Method
and Behaviorally Anchored Rating Scales.
Modern Methods (Future Oriented Methods) are;
Management by objectives, Psychological Appraisal, Assessment Centre, 360-Degree Feedback and 720-Degree Feedback.
Performance Appraisal Process:
1- Establish performance standards with employees:
derived from company’s strategic goals.
based on job analysis and job description.
2-Communicate expectations and set goals:
goals must be articulated from supervisor to employee and from employee to supervisor.
3- Measure actual performance:
4- Compare actual performance with standards:
explanation of different levels of performance and their degree of acceptability against the performance standard.
5- Discuss the appraisal with the employee:
feedback employees receive has strong impact on self-esteem and subsequent performance.
basic corrective action deals with causes
Objectives of Performance Appraisal:
To facilitate communication between superior and subordinate.
To identify the requirement for training and development of employees
To provide notice, upon completion of the term, to those workers who are employed as probationary personnel.
To help employees understand where performance they stand
To make communication between superior and subordinate easier.
To provide confirmation to those employees who are hired as probationary employees, upon completion of the term.
Advantages of Performance Appraisals:
1. 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.
2. 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 prerequisites are dependent on performance appraisal. The criteria should be merit rather than seniority.
3. Employees Development: The systematic procedure of performance appraisal helps the supervisors to frame training policies and programs. It helps to analyze strengths and weaknesses of employees so that new jobs can be designed for efficient employees. It also helps in framing future development programmers.`
4. 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.
5. 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 labor management relationship.
It develops the spirit of work and boosts the morale of employees.
All the above factors ensure effective communication:
6. 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.