What Performance Appraisal is all about in 2021
Performance appraisal may be understood as the review of an individual’s performance in an orderly way, the performance is measured by considering factors like job knowledge, quality and quantity of output, initiative, leadership abilities, supervision, dependability, co-operation, judgment, versatility, health, and the like.
According to Flippo, a prominent personality in the field of Human resources, “performance appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in the matters pertaining to his present job and his potential for a better job.”
In the words of Yoder, “Performance appraisal refers to all formal procedures used in working organizations to evaluate personalities and contributions and potential of group members.” Thus performance appraisal is a formal programme in an organization which is concerned with not only the contributions of the members who form part of the organization, but also aims at spotting the potential of the people.”
According to International Labor Organization, “A regular and continuous evaluation of the quality, quantity and style of the performance along with the assessment of the factors influencing the performance and behavior of an individual is called as performance appraisal.”
Importance of Performance Appraisal
Performance is always measured in terms of outcome and not efforts. Performance Appraisal is needed in most of the organizations for the following reaons:
(1) To give information about the performance of employees on the job and give ranks on the basis of which decisions regarding salary fixation, demotion, promotion, transfer and confirmation are taken.
(2) To provide information about amount of achievement and behavior of subordinate in their job.
This kind of information helps to evaluate the performance of the subordinate, by correcting loopholes in performances and to set new standards of work, if required.
(3) To provide information about an employee’s job-relevant strengths and & weaknesses.
(4) To provide information so as to identify shortage in employee regarding ability, awareness and find out training and developmental needs.
(5) To avoid grievances and in disciplinary activities in the organization.
(6) It is an ongoing process in every large scale organization.
Objectives of Performance Appraisal
Including objectives into the appraisal system may draw attention to areas for improvement, new directions and opportunities.
1. Salary Increase: Performance appraisal plays an important role in making decision about increase in salary. Increase in salary of an employee depends on how he is performing his job. Evaluation of an employee takes place on a continuous basis which may be formally or informally. In a large as well as in small organizations performance appraisal takes place but it may be in a formal or informal way. It shows how well an employee is performing and to what extent a hike in salary would take place in comparison to his performance.
2. Promotion: Performance appraisal gives an idea about how an employee is working
in his present job and what his strong and weak points are. In comparison to his strength and weaknesses it is decided whether he can be promoted to the next higher position or not. If necessary what additional training is required. Similarly it could be used for demotion, discharge of an employee and transfer.
3. Training and Development: Performance appraisal gives an idea about strengths and weaknesses of an employee on his present job. It gives an idea about the training required by an employee for overcoming the limitations that an employee is having for better performance in future.
4. Feedback: Performance appraisal gives an idea to each employee where they are, how they are working, and how are they contributing towards achievement of organizational objectives. Feed works in two ways. First, the person gets view about his performance and he may try to conquer his weaknesses which may lead to better performance. Second, the person gets satisfied after he relates his work with organizational objectives. It gives him an idea that he is doing a meaning full work and can also contribute in a better way.
5. Pressure on Employees: Performance appraisal puts a sort of stress on employees for better performance. If the employees are aware that they are been appraised in comparison to their performance and they will have positive and acceptable behaviour in this respect.
Performance Appraisal Process
1. Establish Performance Standards: It begins by establishing performance standards i.e. what they expect from their employee in terms of outputs, accomplishments and skills that they will evaluate with the passage of time. The standards set should be clear and objective enough to be understood and measured. The standards which are set are evolved out of job analysis and job descriptions. Standards set should be clear and not the vague one. The expectation of the manager from his employee should be clear so that it could be communicated to the subordinates that they will be appraised against the standards set for them.
2. Communicating the Standards Set for an Employee: Once the standards for performance are set it should be communicated to the concerned employee, about what it expected from them in terms of performance. It should not be part of the employees’ job to estimate what they are expected do. Communication is said to be two ways street, mere passing of information to subordinate does not mean that the work is done. Communication only takes place when the information given has taken place and has been received and understood by subordinate. . If necessary, the standards may be tailored or revised in the light of feedback obtained from the employees.
3. Measuring of the Actual Performances: It is one of the most crucial steps of performance appraisal process. It is very important to know as how the performance will be measured and what should be measured, thus four important sources frequently used by managers are personal observation, statistical reports, oral reports, and written reports. However, combination of all these resources gives more reliable information. What we measure is probably more critical to the evaluation process than how we measure. The selection of the incorrect criteria can result in serious consequences. What we measure gives an idea about what people in an organization will attempt to achieve. The criteria which are considered must represent performance as stated in the first two steps of the appraisal process.
4. Comparing Actual Performance with Standards Set in the Beginning: In this step of performance appraisal the actual performance is compared with the expected or desired standard set. A comparison between actual or desired standard may disclose the deviation between standard performance and actual performance and will allow the evaluator to carry on with the discussion of the appraisal with the concerned employees.
5. Discussion with the Concerned Employee: In this step performance of the employee is communicated and discussed. It gives an idea to the employee regarding their strengths and weaknesses. The impact of this discussion may be positive or negative.
The impression that subordinates receive from their assessment has a very strong impact on their self esteem and, is very important, for their future performances.
6. Initiate Corrective Action: Corrective action can be of two types; one is instant and deals primarily with symptoms. The other is basic and deals with the causes. Instant corrective action is often described as “putting out fires”, where as basic corrective action gets to the source from where deviation has taken place and seeks to adjust the differences permanently. Instant action corrects something right at a particular point and gets things back on track. Basic action asks how and why performance deviated. In some instances, managers may feel that they do not have the time to take basic corrective action and thus may go for “perpetually put out fires.
Factors Affecting Performance Appraisal
There are various factors which may influence the performance appraisal system in any organization.
1. Value System of Evaluator: The task of evaluator is to assess the work of subordinate and write reports of the same. They are projected to do this for some purposeful assessment. It happens that evaluator sometime judges the performance on the basis of their own value system. Each person has his own value system and socio-cultural environment. Mostly, it is found that the reports are influenced by the evaluator’s value-system. This subjective element has lot of impact on final report.
2. Dominant Work Orientation: The performance Appraisal Report of a subordinate is prepared by a superior is found to have an impact by the dominant work orientation of the superior officer. Sometimes there is more emphasis on certain aspect of the work as compared to other aspect which may be equally important by the superior. It introduces subjectivity performance appraisal system.
3. Loyalty: It plays a vital role in evaluating employee. An Employee shows loyalty due to many re asons such as common values, objectives, emotional needs, interests, caste, religion, language or region. Loyalty brings the superior and the loyal subordinate closer and closer to each other, and creates distance between those employee who are not loyal to their superior. This makes assessment of superior to be biased.
4. Level of Achievement: Subordinates evaluation may also depend on the level of achievement of the superior. If there is a vast difference between the level of achievement of the superior and Subordinate, then it can create problems of adjustment and purpose for which evaluation is done is not achieved.
Benefits of Performance Appraisal
An effective performance appraisal system can be of benefit to three parties they are for organization, for appraiser and for appraisee.
1) For the Organizations: Following are the benefits of an organization.
It leads to better performance throughout the organization, due to successful communication of the objectives and values of the organizations, sense of being close to the organization, loyalty and improved relationships between managers and staff.
Overall improvement in the duties performed by each employee of the organization.
Due to performance appraisal of employee new ideas for improvement in their work is generated.
Long-term plans can be generated.
The need for training and development can be identified more clearly.
A traditions of nonstop improvement and success in the organization can be formed and maintained.
Career development plans can be chalked out for capable employee to enhance their performance in future.
2) For the appraiser: Following are the benefits to the appraiser:
It gives an opportunity to the appraiser to develop a general idea of individual jobs and departments.
For every new or difficult situation new idea is generated for improvement or for overcoming that problem.
It gives an opportunity to integrate team and individual objectives and targets with departmental and organizational objectives.
It gives an opportunity to explain the amount of work expected by manager from teams and individuals.
It gives an opportunity to focus more on targets.
It enables to form more productive relationship with staff based on mutual trust and understanding.
3) For the Appraisee: Following are the benefits for the appraisee:
Increased job satisfaction.
Increased sense of personal value.
Increase in morale of an employee.
It gives an opportunity to know their strength and weaknesses.
It gives an idea about areas of their improvement.
Problems of Performance Appraisal
Biasness in rating employee: It is the problem with subjective measure i.e. the rating which will not be verified by others.
2. The superiors may be unsuccessful in conducting performance appraisal of employees and post performance appraisal interviews.
3. The performance appraisal is mostly based on subjective assessment.
4. The performance appraisal techniques have a low reliability and validity in terms of result.