The etymological meaning of the term performance is doing or causing to be done of a thing of part thereof. It refers to the outcome of the behavior of employees. When this term “performance” is applied in case of an employee to appreciate or judge his/her performance then it is known as performance appraisal.
According to Gary Desler, “Performance appraisal may be defined as any procedure that involves—
- Setting work standards;
- Assessing the employees actual performance relative to these standards; and
- Providing feedback to the employee with the aim of motivating that person to eliminate performance deficiencies or to continue to perform above part.”
Performance appraisal encompasses compensation, promotion, transfers, revision, and so on. It is argued by some others that—
“Performance is what should be emphasized in appraisal because this is what the individual contributes.”
Performance appraisal is a form of control, which is used by corporate to accomplish their pre-determined objectives. Appraisal process provides accurate information; provide necessary incentive to motivate people to work hard to reach the desired objectives.
So performance appraisal is very essential to find out the best performance and also performer and vice-versa. This method is probably the single most effective way to determine the causes of success or failure of an organization. It also helps to assess different programs, selecting different ways of organizing work
Benefits of performance appraisal:
Performance appraisal is the process of comparing subordinates’ actual performance to the standards that have been set. The main objectives of performance appraisal are as follows:
- To ensure optimum utilization of allocate resources and also development of human resources.
- To control employee behavior by using reward, punishment and threat system.
- To identify clear goals and roles for the employees.
- To identify and eradicate weakness and to appreciate strong points of the employees.
- To motivate employees by using reward system.
- To know where the employees stand vis-à-vis the company and the owner.
- To gather information on employees to aid decisions on personnel areas like placement, promotion, transfer, training and normal or merit increments etc.
- To promote interpersonal relation between the employees and supervising officers.
- To comply with equal employment opportunity regulations.
- To develop an organizational culture of mutually openness, trust, and mutual respect for achieving organizational goals.
These benefits make performance appraisal system important in business world to find better successes in business life.
Performance appraisal follows a particular structure. This structure exists to facilitate the documentation process that often allows for some sort of quantifiable evaluation. Performance appraisal process involved six steps. These are—
- Establish performance standard with employees,
- Mutually set measurable goals,
- Measure actual performance,
- Compare actual performance with standards.
- Discuss the appraisal with the employees,
- If necessary, initiate corrective action.
These steps are very important to make the appraisal process effective and efficient. These are describe below—
Establish performance standard with employees:
The appraisal process begins with the establishment of performance standards. Performance standard should be established in accordance with the organization strategic goals, and also be clear and objective enough to be understood and measured.
Mutually set measurable goals:
Both employees and employers must be agreed to be specific job performance measures. After establishment of performance standards, it is necessary to communicate the expectation.
Measure actual performance:
The 3rd step in the appraisal process is the measurement of performance. It is necessary to acquire information to determine actual performance. We should be concerned with how and what we measure. These are four sources of information to measure actual performance. These are—
- Personal observation,
- Statistical reports,
- Written report,
- Oral reports.
Combinations of this information’s increase both the number of input sources and the probability of receiving reliable information.
Compare actual performance with standards:
The 4th step in the appraisal process is the comparison of actual performance with standards. The point of this step is to note deviation between standard performance and actual performance so that we can proceed to the 5th step in the process.
Discuss the appraisal with the employee:
In this step, appraiser presents an accurate assessment to the employee. It is very difficult task because the evaluation of one’s ability and contribution has great impact on their self-esteem and performance.
Initiate corrective action:
The final step is the identification of corrective action where necessary. Corrective action can be two types:
- One is immediate and deals predominantly with symptoms. Immediate action corrects something right now and gets things back on track. It is often describe as “putting out fires”.
- Other is basic and delves into causes. Basic corrective action gets to the sources of deviation and seeks to adjust the difference permanently. In some instances, appraiser may rationalize that they do not have the time to take basic corrective action and then take immediate action.
Performance appraisal is an integral part of most organizations. Properly developing and implementing above steps, the performance appraisal process can help an organization achieve its goals.