Performance appraisal is referred to as reviewing & evaluating the Job Performance of individual as well as team. An effective system is one that identifies the achievement & specifies plans for development. Performance appraisal is a process in which the employees and managers work together for the success of the organization by setting expectation, reviewing results & awarding performance.
The main purpose is to give authentic picture of employee performance of past as well as future period & therefore standards of performance are prepared that are helpful to achieve all the desired results.
Performance Appraisal Process
There are certain internal & external factors that affect the performance appraisal process. The legal factors stress the appraisal process to be nondiscriminatory. The union labor influences the process by claiming the pay increase & promotion on the basis of seniority. Furthermore the culture of the organization can either hinder the process of performance appraisal or promote it. At the start of the performance appraisal process, specific goals are established and after that the workers of the organization should be aware of the expectations that are required from them in performing their tasks. At the end of the performance appraisal process, the performance of the employees is evaluated by the appraiser by comparing it with the established standards. Finally the results of the performance of employees are communicated to the respective employees.
Steps to Process of Performance Appraisal
Following are the main steps that are involved in the performance appraisal process.
01- The specific performance appraisal objectives are identified.
02- The job expectations (job analysis) are established.
03- The work performed by the employees is examined.
04- The effective performance is appraised.
05- The appraisal results are discussed with the employees.
Performance Appraisal Objectives
There are two main objectives of the performance appraising process, which are as follow.
01- The decision of the evaluation is made through it.
02- The training & development would be provided if there is any gap between the between the actual & standard performances.
But the main objective of the performance appraisal is to improve the performance of employees which ultimately improves the overall performance of the organization. There are many useful aspects of performance appraisal & some of them are as follow.
- Human Resource Planning
When the assessment of the human resource is made then there should be proper information available that can explain the potential & effectiveness of all of the employees of the organization, especially the top executives.
- Recruitment & Selection
The future performance of job applicants can be predicted through the performance evaluation.
- Training & Development
The requirements for the training & development of an employee can be accessed through performance appraisal. The deficiencies regarding the performance of employee is identified which helps the management to design certain training & development programs that assist the relative employee to cover their deficiencies.
- Career Planning & Development
The career planning & development can be analyzed from both the individual as well as organizational perspectives.
- Compensation Programs
The decisions about the increment in the pay are based on the results of the performance appraisal.
- Internal Employee Relation
The decision making in the fields of internal employee relations is supported by the data of performance appraisal like promotion, demotion, motivation, termination, transfer, layoff etc.
- Assessment of Potential of Employee
With the help of performance appraisals, the potential of the employee can be assessed.
Performance Appraisal Analysis
The performance appraisals evaluates the following aspects of an employee performance.
Many organizations evaluate certain traits of employees in the performance appraisal like appearance, attitude, initiative etc.
The employee task related behavior is evaluated when his task’s outcome is difficult to ascertain.
- Task Outcomes
When the ends are considered to be important than the means in such case the outcomes of tasks are evaluated preferably.
- Improvement Potential
The potential of the employee is evaluated to determine the need for any improvement.
Performance Appraisal Methods
The performance appraisal method depends on the purpose of the performance appraisal. When the employees are selected for the training, promotion & merit pay increase then the rating scale method is more appropriate to employed. When the development of employees is initiated, then the collaborative method is effective. Following are some of the common methods of performance appraisal.
- 360-Degree Feedback
The inputs from certain internal & external sources are used in this method.
- Rating Scales
In this method employees are rated on the basis of two important factors which are as follow.
01- Job Related
02- Personal Characteristics
- Critical Incidents
When there is requirement of recording of highly unfavorable & favorable actions, then critical incidents method is used.
In such case the concise narration is written by the rater about the performance of the employees. This method is useful to consider the strong behavior in the work of employee rather than normal work.
- Work Standards
In this method the performance of each employee is compared to an established standard or required level of output.
In this method, the overall performance of employees is rated in a given set of groups. Also paired comparison is made in which is varied method of ranking in which performance of each employee of the organization is compared with every other employee.
- Forced Distribution
In this method the rater put individuals in certain work grouped which are limited in number just like frequency distribution.
- Results Based Systems
In such method, the senior & junior employees are collectively agreed on certain goals for the coming appraisal period.
- Assessment Centers
When organization recognize a difference in the purpose of performance appraisal along with the difficulty to attain that purpose, assessment center is used an alternative to the performance appraisal.
- Management by Objective
This method is goal oriented in which the employees and supervisors are allowed to set the objectives of employees would be meet during the rating period & the appraisal is made by the employees to check that how effectively they would have accomplish the objectives.
Problems in Performance Appraisal
There are many performance appraisal methods that are strongly criticized. In most of the cases, the problems in the performance appraisal are not natural but are related to the ineffective usage. Following are some of the problems in the performance appraisal.
- Lack of Objectivity
It is basic weakness in many traditional methods of performance appraisal that they lack objectivity. Al though there may be some portion of subjectivity but the inclusion of job related factors should enhance the objectivity.
- Halo Error
This is a problem related to performance appraisal method in which the evaluator considers a single factor as prime important & assigns a bad or good rating on the basis of only that factor while excluding the importance of other factors in the criteria.
This problem is related to the provision of undeserved low or high rating.
- Central Tendency
In this problem the employees are rated incorrectly near the middle or average of the scale.
- Recent Behavior Bias
It is a natural fact that recent behaviors are remembered more clearly than the behaviors shown in the distant past. But the performance appraisal is for a specified period of time & the performance of employees are evaluated for that certain period.
- Personal Bias
When the performance appraisal is carried out by the supervisor, then there comes an element of bias in the process on the basis of religion, gender, race, age group or disability.
- Manipulating the Evaluation
In certain situations, almost every aspect of the performance appraisal method is virtually controlled by the supervisor which may result into the manipulation of the appraisal system.
Function of HRM in the Performance Appraisal
During the performance appraisal process, the Human Resource Management performs the following roles.
- Development of the Appraisal System
HRM department helps in the formulation of the performance appraisal system by facilitating various departments in establishing the standards of performance & by getting the suitable methods of performance appraisal on the basis of the requirements of the specific department. The HRM department plays an important role in the development of an effective system of performance appraisals by performing the function of monitoring during the process.
- Provide Rater Training
It is proved through research that when the appraisers are given the relevant training then they become accurate raters. As a worse appraisal is of no use so raters must be provided with appropriate training because training can help in the avoidance and elimination of the fundamental errors in the process of performance appraisals. So HRM department provides the training facility to the raters.
- Monitoring & Evaluation of the Appraisal System
Continuous monitoring is essential for the effective implementation & smooth working of any system. Performance appraisals are quite significant for all the organizations because there are certain important decisions that are supported through the results of the performance appraisals like demotions, promotions and even terminations. So to make a performance appraisal system more effective, HRM department performs the function of monitoring & supervision.
Performance Appraisal Failures
In some cases the purpose of the performance appraisals are not accomplished which results into the failure of the whole process. Performance appraisals process fails due to the any of the following reasons.
- The manager does not hold the sufficient information.
- The appraiser does not possess the required skills for conducting the process.
- Performance appraisals are not seriously taken by the manager.
- The manager may not be prepared for the process.
- The continuous feedback is not received by the employees.
- The managers are not sincere and honest before the performance appraisals.
- The discussion of the development of employee is ineffective.
- The language used is ineffective.
- The reward for performance is not sufficient.
Performance Appraisal Improvement Strategies
In case of the poor performance of employees as a result of the performance evaluation, then following strategies can be applied for the improvement of the performances of the employees.
- Positive Reinforcement
Positive reinforcement is the application of authentic consequence that enhances the chances that the individual would repeat the same behavior leading to that consequence. The positive reinforcement includes the following examples.
- Letter of Recommendations
- Pay Increase
- Favorable Performance Appraisal
Administration of an aversive consequence is referred to as punishment. Punishment includes the following examples.
- Shouting or Criticizing an Employee
- Unappealing Task Assignment
- An Employee is Sent Home without Pay
The performance of employees is improved through punishment.
- Self Management
In many organizations, employees are given the option to take the responsibility of routine functions in their fields. Resultantly the employees are not directly supervised for their work & all the administrative responsibilities are taken by the employees.
- Employee Assistance Programs (EAPs)
Many organizations are using specially designed programs of employee assistance that assist the employees to solve their personal problem which would otherwise result into the low productivity, absenteeism etc.