Performance Appraisal

 Performance Appraisal

The term performance appraisal refers to the regular review of an employee's job performance and overall contribution to a company. Also known as an annual review, performance review or evaluation, or employee appraisal, a performance appraisal evaluates an employee’s skills, achievements, and growth, or lack thereof.

Companies use performance appraisals to give employees big-picture feedback on their work and to justify pay increases and bonuses, as well as termination decisions. They can be conducted at any given time but tend to be annual, semi-annual, or quarterly.

KEY TAKEAWAYS

·         A performance appraisal is a regular review of an employee's job performance and contribution to a company.

·         Companies use performance appraisals to determine which employees have contributed the most to the company’s growth, review progress, and reward high-achieving workers.

·         Although there are many different kinds of performance reviews, the most common is a top-down review in which a manager reviews their direct report.

·         Employees who believe the evaluation's construction isn't reflective of their company's culture may feel dissatisfied with the appraisal process.

·         Performance appraisals are also called annual reviews, performance reviews or evaluations, or employee appraisals.

How Performance Appraisals Work

Performance appraisals are usually designed by human resource (HR) departments as a way for employees to develop in their careers. They provide individuals with feedback on their job performance. It ensures that employees are managing and meeting the goals expected of them, giving them guidance on how to reach them if they fall short.

Because companies have a limited pool of funds from which to award incentives, such as raises and bonuses, performance appraisals help determine how to allocate those funds. They provide a way for companies to determine which employees have contributed the most to the company’s growth so companies can reward their top-performing employees accordingly.

Performance appraisals also help employees and their managers create a plan for employee development through additional training and increased responsibilities, as well as to identify ways the employee can improve and move forward in their career.

Ideally, the performance appraisal is not the only time during the year that managers and employees communicate about the employee’s contributions. More frequent conversations help keep everyone on the same page, develop stronger relationships between employees and managers, and make annual reviews less stressful.

Types of Performance Appraisals

Most performance appraisals are top-down, meaning supervisors evaluate their staff with no input from the subject. But there are other types:

·         Self-assessment: Individuals rate their job performance and behavior.

·         Peer assessment: An individual's workgroup or coworkers rate their performance.

·         360-degree feedback assessment: Includes input from an individual, supervisor, and peers.

·         Negotiated appraisal: A newer trend that utilizes a mediator and attempts to moderate the adversarial nature of performance evaluations by allowing the subject to present first. Also focuses on what the individual is doing right before any criticism is given. This structure tends to be useful during conflicts between subordinates and supervisors.

 

Performance Appraisal is the systematic evaluation of the performance of employees and to understand the abilities of a person for further growth and development. Performance appraisal is generally done in systematic ways which are as follows:

1. The supervisors measure the pay of employees and compare it with targets and plans.

2. The supervisor analyses the factors behind work performances of employees.

3. The employers are in position to guide the employees for a better performance.

Objectives of Performance Appraisal

Performance Appraisal can be done with following objectives in mind:

1. To maintain records in order to determine compensation packages, wage structure, salaries raises, etc.

2.  To identify the strengths and weaknesses of employees to place right men on right job.

3. To maintain and assess the potential present in a person for further growth and development.

4. To provide a feedback to employees regarding their performance and related status.

5. To provide a feedback to employees regarding their performance and related status.

6. It serves as a basis for influencing working habits of the employees.

7. To review and retain the promotional and other training programmes.

Advantages of Performance Appraisal

It is said that performance appraisal is an investment for the company which can be justified by following advantages:

1.     Promotion: Performance Appraisal helps the supervisors to chalk out the promotion programmes 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 pre-requisites 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 programmes. It helps to analyse strengths and weaknesses of employees so that new jobs can be designed for efficient employees. It also helps in framing future development programmes.

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:

a.     Through performance appraisal, the employers can understand and accept skills of subordinates.

b.     The subordinates can also understand and create a trust and confidence in superiors.

c.      It also helps in maintaining cordial and congenial labour management relationship.

d.     It develops the spirit of work and boosts the morale of employees.

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.