It allows the employee to see where he or she ranks against all the other employees in the company. Advantages of Performance Appraisal. The increment in skills and knowledge develop an overall personality, attitude and behavior of the employees. It helps to identify employee's job related behavior and outcomes. By reviewing the data from performance appraisals, training and development professionals can make good decisions about where the organization should concentrate company-wide training efforts. In other words, it is the process of measuring productivity in terms of efficiency and effectiveness. Basic elements of effective performance appraisal systems An effective performance appraisal system that accomplishes an organization's goals should have essentially four elements: 1. They need to identify the departments that are rich with talent and the ones that are suffering a talent drought. A good employee performance review method can make the whole experience effective and rewarding. Growing body of literature emphasises the compensation and reward aspects of performance management. Here’s a close look at the six most-used modern performance methods: 1. The major purpose of performance appraisal is to evaluate how well employees have conducted their duty. Progress report of employees does not only help in determining promotion but also in determining termination. Other than this, performance appraisal has several other uses, which are as follows. Encouraging Performance Improvement. The complete process of performance appraisal includes continuous feedback from the supervisors. Main uses are as follows: Performance appraisal for nursing staff 1. Based on observed job-related behavior. Almost everyone in an organization wants to get ahead. Thus, giving feedback to employees is also a major purpose of performance appraisal.eval(ez_write_tag([[336,280],'businesstopia_net-medrectangle-4','ezslot_3',139,'0','0'])); Every company has to set mutually acceptable criteria or performance standards so that it could compare employee’s performance with it. But, it is also equally important for an employee to know where they stand, where they are going and how they are going to get there. 1. When employees know that they are heading in right direction, it develops a sense of satisfaction in them. Companies provide career development opportunities to such employees and pave their way to a successful and stable career.eval(ez_write_tag([[336,280],'businesstopia_net-box-4','ezslot_8',138,'0','0'])); Performance appraisal helps in charting progress of employees. A merit rating, performance appraisal, employee appraisal, performance review, or (career) development discussion is a method by which the job performance of an employee is evaluated (generally in terms of quality, quantity, cost, and time) by the superior manager or supervisor. It is a process in which a manager identifies the desired objectives to be achieved and gives each individual a major areas of responsibility in terms of results expected from him/her and use these measures as a guide to access the contribution of each individual employee.It is less time consuming and cost effective compared to other performance appraisal methods. Broadly, performance appraisal serves four objectives – (a) development uses, (b) administrative uses / decisions, (c) Organisational maintenance / objectives, and (d) documentation purposes. Motivating Superior Performance. To cause line managers to apply and use the plans from HR. One of these is to evaluate employees in terms of the quality of their performance. The first and most obvious purpose of employee appraisals is to measure employees’ performance. Results of performance appraisal help the employers in taking corrective actions. Performance appraisal helps motivate people to deliver superior performance in several ways. Performance appraisal is evaluating an employee’s current and/or past performance relative to his or her performance standard. For an instance, an employee might feel that his co-worker is being paid more by the company even though both of them are posted at the same job level. It is primarily done to estimate the employees’ worth. With this method you can easily find out whether the stated objectiv… They also help in identifying the employees who most deserves to be promoted. Performance appraisal helps in identifying such weak points. Is the company hiring stars, or is it filling itself with trolls? A performance appraisal is a systematic, general and periodic process that assesses an individual employee's job performance and productivity in relation to certain pre-established criteria and organizational objectives. Management should be careful that the appraisal system best fits the organization. Performance appraisal is the systematic evaluation of employees with respect to their performance on their job and their potential for development. It lets workers know how well they are doing. In this regard, performance appraisal serves another important purpose by making sure that the boss's expectations are clearly communicated. Learning Objectives O By the end of this interactive session, staff nurses will be able to: O Define performance appraisal. Performance appraisal forces managers to confront those whose performance is not meeting the company's expectations. Performance appraisal is the method of obtaining, analyzing, and recording evidence about the relative value of a staff to the organization. First, the appraisal process helps them learn just what it is that the organization considers to be "superior." Providing Legal Defensibility for Personnel Decisions. During such situation, employers can use the reports of performance appraisal to clarify the employees that they are being paid on the basis of their job performance, rather than the position they hold. We have touched on this with the concept of an employee evaluating personal performance before the formal session. As a result, they increase their chances of promotion and lower their odds of layoff. Well-managed organizations regularly assess their bench strength to make sure that they have the talent in their ranks that they will need for the future. Besides rewards allocation, organizations also use appraisals to offer growing advice to employees, as well as to know their perspectives about their positi… c. It provides an effective basis for distributing rewards. Show EXHIBIT 4 and discuss how a performance system can be useful. Validating Hiring Decisions. The employees will receive wages as per the contribution they have made. It evaluates the contribution of each employee to the accomplishment of company’s goals. Determining Individual Training and Development Needs. Senior management must clarify the purpose of performance appraisals. The process also meets all legal requirements. Performance appraisal helps to keep a record of each employee’s job performance, including what efforts they have made and what have they achieved. This helps in accurate measurement of employee’s job performance which is necessary for the company to know where it is heading towards. Some savvy organizations use the process to replace best-effort cultures with results-driven cultures; to establish and reinforce core competencies; and to … To gauge which employees are performing the best and therefore eligible for bonuses, pay rises and other rewards 3. 128. Performance appraisal of employees helps the supervisors in knowing their job performance and the right amount to pay them. Performance appraisal serves two very important purposes. An effective performance appraisal system generally serves which purposes? Six modern performance appraisal methods. Performance appraisal distinguishes excellent and poor performing employees. Performance appraisal also serves as an inspiration tool. Only when the performance of newly hired individuals is assessed can the company learn whether it is hiring the right people. This is another classic use of performance appraisal. Performance Appraisal Process: The Steps. Almost every organization believes in pay for performance. This is the most important reason for an organization to have a performance appraisal system. Determining Organizational Training and Development Needs. Some employees may have weak points as well, which if not sorted out in time, might be a liability for the company. It is essential for the employers to know what performance and achievements have been made by their employees. How can anyone improve if he doesn't know how he's doing right now? Performance appraisal provides the mechanism to make sure that those who do better work receive more pay. d. are some functions of human resource management whose effectiveness can only be analyzed when the performance of employees are appraised. This is another classic reason for having a performance appraisal system. Would the organization be better off sending all of its managers and professionals through a customer service training program or one on effective decision making? Performance appraisal works as a mirror to employees and it clearly shows what they are professionally and where they stand. O Give the objectives and purpose for a performance appraisal. To make sure employees are working to the required standard 2. A performance appraisal procedure allows the organization to communicate performance expectations to every member of the team and assess exactly how well each person is doing. Performance appraisal gives companies the tool they need to make sure they have the intellectual horsepower required for the future. Performance appraisal helps to keep a record of each employee’s job performance, including what efforts they have made and what have they achieved. For employees, it can impart a better understanding of their job, skills and limitations, and provides an opportunity for self-reflection. A solid record of performance appraisals greatly facilitates legal defensibility when a complaint about discrimination is made. Performance is defined as the execution of an action; something accomplished; the fulfillment of a promise, claim, or request (www.merriam-webster.com, 2012).. Such charts can be used by the employers to determine whether or not to promote their employees. Also, open communication helps in strengthening the employer-employee relationship or superior-subordinate relationship. The value of annual reviews has increasingly been challenged in recent years in favour of more regular conversations, but even so, performance appraisal remains a crucial aspect of the performance management cycle. All employees may not be an all-rounder. Improving Overall Organizational Performance. Providing Feedback. Determining Compensation Changes. An effective performance appraisal system depends on several components of appraisal, but it generally serves two purposes: 1) to inform incumbents where they stand, and 2) to further develop and guide individuals to perform better. Finally, performance appraisal encourages employees to avoid being stigmatized as inferior performers (or, often worse, as merely "average"). Providing feedback is the most common justification for an organization to have a performance appraisal system. Such actions may be counseling or warning the poor performers to improve performance and to prevent the occurrence of undesirable results. Encouraging Coaching and Mentoring. (source-wisestep) Performance Appraisal. A performance appraisal is a formal process used to assess an employee's effectiveness and productivity and serves both administrative and developmental purposes. Academic library - free online college e textbooks - info{at}ebrary.net - © 2014 - 2021. They should also be told how well they have done their duties and how can they improve their performance. Cite this article as: Palistha Maharjan, "Purposes of Performance Appraisal," in, https://www.businesstopia.net/human-resource/purposes-performance-appraisal, Challenges and Issues in Human Resource Management, Personnel Management v/s Human Resource Management, How to Motivate Employees at the Workplace, Intrinsic and Extrinsic Rewards with Examples, Steps Involved in Effective Recruitment Process, 10 Common Behavioral Interview Questions and Answers, 10 Common Interview Questions and Answers, 4 Major Types of Interview You Should Be Prepared for, How to Answer Behavioral Interview Questions, Disability Discrimination in the Workplace, Pregnancy Discrimination in the Workplace, Nationality Discrimination in the Workplace. It is said that performance appraisal is an investment for the company which can be justified by following advantages: Promotion: Performance Appraisal helps the supervisors to chalk out the promotion programmes for efficient employees. Setting and Measuring Goals. They should be made clear about how near they are to do their expectation. A properly carried out performance appraisal is a tool to determine what necessary steps are to be taken in order to help the employees in improving their performance. With the right performance appraisal method, organizations can enhance employee performance within the organization. Companies need to determine who and where their most talented members are. Going back to the types, there are different variations of performance appraisal systems. The purpose of a basic performance appraisal system is to recognize and sustain strong performance and motivate employees to improve in areas where their job performance fails to meet the company's standards. If the performance appraisal procedure includes a requirement that individual development plans be determined and discussed, individuals can then make good decisions about the skills and competencies they need to acquire to make a greater contribution to the company. Performance appraisal identifies the areas where coaching is necessary and encourages managers to take an active coaching role. Every employee wants them to be told about their duties; what the organization really wants them to do. Performance appraisal works as a helping hand to the company in making the right decision as it is a source of the company’s complete statistical data. (Select all that apply.) The basic purpose of performance appraisal is to identify employees worth and contribution to the company. 20 Effective or Successful Job Search Strategies & Techniques. Performance reviews, also called appraisals, form part of a holistic approach to managing performance. Each of the following steps is vital to the overall success of both you as the supervisor/coach and your staff member(s)/team. Important factors include – attendance, efficiency, attitude, quality of work, amount of work are just a few important factors. Facilitating Layoff or Downsizing Decisions. If one of these is challenged, the company must be able to demonstrate that the decision it made was not based on the individual's race or handicap or any other protected aspect. Managers are expected to be good coaches to their team members and mentors to their protégés. performance appraisal 8.2 Identify the necessary characteristics of accurate performance management tools 8.3 List and briefly discuss the purposes for performance appraisals 8.4 Identify and briefly discuss the options for “what” is evaluated in a performance appraisal 8.5 Briefly discuss the commonly used performance measurement