INTRODUCTION

WHAT IS PERFORMANCE APPRAISAL

A performance appraisal, performance review, performance evaluation, (career) development discussion, employee appraisal is a method by which the job performance of an employee is evaluated. Performance appraisals are a part of career development and consist of regular reviews of employee performance within organizations. A performance appraisal is a systematic and periodic process that assesses an individual employees job performance and productivity in relation to certain pre-established criteria and organizational objectives. Other aspects of individual employees are considered as well, such as organizational citizenship behavior, accomplishments, potential for future improvement, strengths and weaknesses, etc. To collect PA data, there are three main methods: objective production, personnel, and judgmental evaluation. Judgmental evaluations are the most commonly used with a large variety of evaluation methods. Historically, PA has been conducted annually (long-cycle appraisals), however many companies are moving towards shorter cycles (every six months, every quarter), and some have been moving into short-cycle (weekly, bi-weekly) PA. The interview could function as providing feedback to employees, counseling and developing employees, and conveying and discussing compensation, job status, or disciplinary decisions. Performance appraisal is often included in performance management systems. Performance Appraisal helps the subordinate answer two key questions; first, "What are your expectations of me?" second, "How am I doing to meet your expectations?" Performance management systems are employed to manage and align" all of an organization's resources in order to achieve highest possible performance. How performance is managed in an organization determines to a large extent the success or failure of the organization. Therefore, improving Performance Appraisal for everyone should be among the highest priorities of contemporary organizations. Some applications of Performance Appraisal are compensation, performance improvement, promotions, termination, test validation, and more. While there are many potential benefits of Performance Appraisal, there are also some potential drawbacks. For example, Performance

Appraisal can help facilitate management-employee communication; however, Performance Appraisal may result in legal issues if not executed appropriately as many employees tend to be unsatisfied with the Performance Appraisal process. Performance Appraisals created in and determined as useful in the United States are not necessarily able to be transferable crossculturally.

NEED OF PERFORMANCE APPRAISAL

A central reason for the utilization of performance appraisals is performance improvement initially at the level of the individual employee, and ultimately at the level of the organization. Other fundamental reasons include as a basis for employment decisions (e.g. promotions, terminations, transfers), as criteria in research (e.g. test validation), to aid with communication (e.g. allowing employees to know how they are doing and organizational expectations), to establish personal objectives for training programs, for transmission of objective feedback for personal development, as a means of documentation to aid in keeping track of decisions and legal requirements and in wage and salary administration. Additionally, Performance appraisals can aid in the formulation of job criteria and selection of individuals who are best suited to perform the required organizational tasks. A Performance Appraisals can be part of guiding and monitoring employee career development. Performance Appraisals can also be used to aid in work motivation through the use of reward systems.

ADVANTAGES OF PERFORMANCE APPRAISAL

There are a number of potential benefits of organizational performance management conducting formal performance appraisals (PA). There has been a general consensus in the belief that Performance Appraisals lead to positive implications of organizations. Furthermore, PAs can benefit an organizations effectiveness. One way is PAs can often lead to giving individual workers feedback about their job performance. From this may spawn several potential benefits such as the individual workers becoming more productive.

Facilitation of communication: communication in organizations is considered an essential function of worker motivation. It has been proposed that feedback from PAs aid in minimizing employees perceptions of uncertainty. Fundamentally, feedback and

management-employee communication can serve as a guide in job performance. Enhancement of employee focus through promoting trust: behaviours, thoughts, and/or issues may distract employees from their work, and trust issues may be among these distracting factors. Such factors that consume psychological energy can lower job performance and cause workers to lose sight of organizational goals. Properly constructed and utilized PAs have the ability to lower distracting factors and encourage trust within the organization. Goal setting and desired performance reinforcement: organizations find it efficient to match individual workers goals and performance with organizational goals. PAs provide room for discussion in the collaboration of these individual and organizational goals. Collaboration can also be advantageous by resulting in employee acceptance and satisfaction of appraisal results. Well constructed PAs can be valuable tools for communication with employees as pertaining to how their job performance stands with organizational expectations. At the organizational level, numerous studies have reported positive relationships between human resource management (HRM) practices" and performance improvement at both the individual and organizational levels. Determination of training needs: Employee training and development are crucial components in helping an organization achieve strategic initiatives. It has been argued that for PAs to truly be effective, post-appraisal opportunities for training and development in problem areas, as determined by the appraisal, must be offered. PAs can especially be instrumental for identifying training needs of new employees. Finally, PAs can help in the establishment and supervision of employees career goals.

DISADVANTAGES OF PERFORMANCE APPRAISAL Despite all the potential advantages of formal performance appraisals (PAs), there are also potential drawbacks. It has been noted that determining the relationship between individual job performance and organizational performance can be a difficult task. Generally, there are

two overarching problems from which several complications spawn. One of the problems with formal PAs is there can be detrimental effects to the organization(s) involved if the appraisals are not used appropriately. The second problem with formal PAs is they can be ineffective if the PA system does not correspond with the organizational culture and system. Detrimental to quality improvement: it has been proposed that the use of PA systems in organizations adversely affect organizations pursuits of quality performance. It is believed by some scholars and practitioners that the use of PAs is more than unnecessary if there is total quality management. Negative perceptions: Quite often, individuals have negative perceptions of PAs. Receiving and/or the anticipation of receiving a PA can be uncomfortable and distressful and potentially cause tension between supervisors and subordinates. If the person being appraised does not trust their employer, appraiser or believe that they will benefit from the process it may become a "tick box" exercise. Errors: Performance appraisals should provide accurate and relevant ratings of an employees performance as compared to pre-established criteria/goals (i.e. organizational expectations). Nevertheless, supervisors will sometimes rate employees more favourably than that of their true performance in order to please the employees and avoid conflict. Inflated ratings are a common malady associated with formal PA. Legal issues: when PAs are not carried out appropriately, legal issues could result that place the organization at risk. PAs are used in organizational disciplinary programs as well as for promotional decisions within the organization. The improper application and utilization of PAs can affect employees negatively and lead to legal action against the organization. Performance goals: performance goals and PA systems are often used in association. Negative outcomes concerning the organizations can result when goals are overly challenging or overemphasized to the extent of affecting ethics, legal requirements, or quality. Moreover, challenging performance goals can impede on employees abilities to acquire ne cessary knowledge and skills. Especially in the early stages of training, it would be more beneficial to instruct employees on outcome goals than on performance goals. Derail merit pay or performance-based pay: some researchers contend that the deficit in merit pay and performance-based pay is linked to the fundamental issues stemming from PA systems.

WAYS TO IMPROVE PERFORMANCE APPRAISAL

Although performance appraisals can be so easily biased, there are certain steps that can be taken to improve the evaluations and reduce the margin of errors through the following: Training - Creating an awareness and acceptance in the people conducting the appraisals that within a group of workers, they will find a wide range in difference of skills and abilities. Providing Feedback to Raters - Trained raters provide managers who evaluated their subordinates with feedback, including information on ratings from other managers. This reduces leniency errors. Subordinate Participation - By allowing employee participation in the evaluation process, there is employee-supervisor reciprocity in the discussion for any discrepancies between self ratings and supervisor ratings, thus, increasing job satisfaction and motivation. Performance appraisal processes are one of the central pillars of the performance management which is directly related to the organizational performance and have a direct impact on it. Employee performance ultimately effects the organizational performance and objectives.

RELATIONSHIP PERFORMANCE

BETWEEN

APPRAISAL

AND

ORGANISATION

According to a few HR professionals, the appraisals have no value for the organisation as there is no direct relationship in performance appraisals and the organizational performance. Also, there is no strong evidence to prove that appraisals positively impact the performance of the employees. But the HR professionals who see the organizational performance as a result or sum of the employees performance, argue that apart from the direct benefits to the organisation, appraisals contribute to employee satisfaction, which in turn leads to improved performance.

For an organisation to be effective, the goals, the standards and the action plans need to be planned well in advance. Thus, performance appraisal facilitates the achievement of organizational goals. It also facilitates the optimal use of the organizational resources. Performance appraisal is the strength of performance management, which in turn effects the organizational performance. It helps to identify and overcome the problems faced by the employees in their work. Performance appraisal is like a double edged sword for an organisation. Although it has many benefits for the organisation, various studies have also revealed that performance appraisals have the equal probability of having a bad impact on the organizational as well as the employee performance. Where the performance appraisal improves the work performance and employee satisfaction, it can also demotivate employees and leaving a bad impression on the good employees. Most of the employees do not approve of continuous performance monitoring and performance appraisals, and also consider it as a burdensome activity. According to Professor Kuvaas "Performance appraisals and other tools which involve feedback and target management should be adapted to the employees individual needs and characteristics. Otherwise, there is a risk of harming the good employees without being able to help the less good." Performance appraisal processes can create a sense of insecurity in the working environment and can become an obstacle in achieving the required changes in the attitudes and the performance of the employees. The element of bias in the appraisals can also worsen the situation. Therefore, performance appraisals can effect the organizational performance both positively and negatively, and should be dealt with care and expert knowledge and experience.

PRE-REQUISITES APPRAISAL

FOR

EFFECTIVE

&

SUCCESSFUL

PERFORMANCE

Documentation means continuous noting and documenting the performance. It also helps the evaluators to give a proof and the basis of their ratings.

Standards / Goals the standards set should be clear, easy to understand, achievable, motivating, time bound and measurable.

Practical and simple format - The appraisal format should be simple, clear, fair and objective. Long and complicated formats are time consuming, difficult to understand, and do not elicit much useful information.

Evaluation technique An appropriate evaluation technique should be selected; the appraisal system should be performance based and uniform. The criteria for evaluation should be based on observable and measurable characteristics of the behavior of the employee.

Communication Communication is an indispensable part of the Performance appraisal process. The desired behavior or the expected results should be communicated to the employees as well as the evaluators. Communication also plays an important role in the review or feedback meeting. Open communication system motivates the employees to actively participate in the appraisal process.

Feedback The purpose of the feedback should be developmental rather than judgmental. To maintain its utility, timely feedback should be provided to the employees and the manner of giving feedback should be such that it should have a motivating effect on the employees future performance.

Personal Bias Interpersonal relationships can influence the evaluation and the decisions in the performance appraisal process. Therefore, the evaluators should be trained to carry out the processes of appraisals without personal bias and effectively.

USES OF PERFORMANCE APPRAISAL

1. 2. 3. 4. 5. 6. 7. 8.

Promotions Confirmations Training and Development Compensation reviews Competency building Improve communication Evaluation of HR Programs Feedback & Grievances