Objectives of performance appraisal
The basic objective of management is to epitomize efficiency by an adequate utilization of non-human and human resources. The non-human resources are well within the control of the management. There is, therefore, no problem in harnessing them to their maximum. But human resources differ in their skill, capacity and motivation; they therefore affect productivity in a great many ways. In the circumstances, it is necessary to know the relative worth of individuals, so that their job proficiency, skill and interpersonal competence may be enhanced by proper feedback mission in a much more effective way. This calls for a systematic appraisal of employees performance against the targets of role description and specification.
Reason for conducting performance appraisal by organizations
Most organization conduct an annual review of their employees, performance in a more or less ritualistic way. The superior just fills up the performance appraisal report in a quite casual manner, because he feels that it is only required for the purpose of deciding about certain time-honored personnel functions (like promotion, pay increase or demotion). Such an appraisal report gives an apparent rather than a true idea of reality.
Therefore, before embarking upon any performance appraisal programme, the management should determine its rationale and objective. A different appraisal programme should then be designed for different categories of employees keeping in view the kind of information to be gathered for the purpose of taking appropriate personnel action.
In view of the fact that performance appraisal is an important aspect of human resource management, it is considered to be a significant and indispensable tool which furnishes the management highly useful information on the various personnel issues which have a direct bearing on the effective working of an organization.
If valid, timely, accurate, objective and standardized performance data are available, sound and progressive human resource development policies can be practiced to achieve optimal organization effectiveness.
How does performance appraisal help management?
Performance appraisal is necessary because an ideal appraisal programme helps the management in following ways:
1. Performance Improvement
Performance feedback makes it possible for individuals and management to intervene with an appropriate plan of action to improve upon the shortcomings that have been identified.
2. Placement Decisions
Performance evaluation decisions assist the management in assessing the cases for promotion, transfer and demotion.
3. Training and Development Needs
Training and development enables decision-makers to determine as to who deserves a pay rise and low performance may indicate a need for training or retraining. A good performance may show that there is room for further training to release the hidden untapped potential of the employees.
4. Compensation Adjustments
As the performance appraisal assists the management in assessing the relative worth of an individual, it enables decision-makers to determine as to who deserves a pay raise and additional incentives.
5. Informational Inaccuracies
A poor performance may indicate serious flaws in role analysis, human resource planning and development, and other personnel functions. This knowledge would guide the management in introducing improvements in various personnel practices to achieve a higher level of effectiveness.
6. Job Design Error
A poor performance, besides other functional factors, may result in an ill-conceived job design. The appraisal helps the managers to diagnose the error.
7. External Challenges
Traditionally, it was believed that performance was largely influenced by skill and job-related factors. But now it has been recognized that factors associated with one’s family, financial status, health and other personal matters affected the quality of job performance.
These factors, if brought to light during an appraisal, may enable the personnel department to embark upon various assistance programmes.