Performance Appraisal Essay

Introduction

To attain high competitive advantage in an extremely dynamic environment, it

is imperative for organizations to integrate effective management tools. One of
the areas that organization management teams should focus on relates to
improving their human capital.

In order to attain this, organizations should formulate strategies aimed at

influencing the employee’s work lives and careers (Grote 15). Performance
appraisal is one of the most effective management instruments that firms can
integrate in their effort to influence the employees energy in order to achieve
their strategic goals.

This arises from the fact that if well implemented, performance appraisal
enables employees to be focused towards organizational values, mission and
vision. In this paper, the concept of performance appraisal is comprehensively
evaluated.

Meaning and definition

Performance appraisal refers to a formal management system that is used by
organizations in the evaluation of individual employee performance.
Performance appraisal can be defined as the systematic, impartial and
periodic rating of the employees’ on the basis of their present and potential
excellence in their job.

Alternatively performance appraisal can also be defined as the quantitative

and qualitative aspect of evaluating the employees’ behavior (Chandramohan
124).

In most cases, it is the employees’ immediate supervisors who are charged

with the responsibility of preparing the appraisal form used in evaluating the
employees’ performance. The appraisal form usually contains a number of
questions that assesses the employee performance on different dimensions.

Origin of the topic

The concept of performance appraisal was first conceived in the United States
in 1813 by General Lewis Cass. However, the performance appraisal was
formally introduced by Taylor & Lord, a New York City department store in
914.

Prior to WWI, most organizations evaluated their employees’ on the basis of

personality and traits rather than their accomplishments (Grote 2). However,
after the First World War, businesses adopted divergent merit systems in an
effort to evaluate their performance.

The past decades have been characterized by incorporation of diverse

systems of evaluating the employee’s performance. During the 1950s, Peter
Drucker introduced the concept of Management by Objective (MBO).
Additionally, Douglas McGregor developed the concept of Theory X and Y.

As a result, most organizations shifted from trait assessment and formulated

evaluation procedures that were based on goals. Over the years, the concept
of performance appraisal has undergone significant development (Grote 3).

According to Grote (3), approximately 75% -90% of all organizations have

formulated a formal performance appraisal procedure. Currently, it is generally
accepted that the one of the most effective way of measuring the employees’
performance is by evaluating their results and behaviors.

Importance of the topic to managers/ organizations

Performance appraisal has increasingly been regarded as an indispensable

management tool. This arises from the fact that there are numerous benefits
associated with performance appraisal to both managers and organizations
(Chandramohan 124).
Through performance appraisal, managers are able to make effective
decisions with regard to different personnel aspects. According to
Chandramohan (124), performance appraisal serves four main purposes.
These relate to developmental purpose, organizational maintenance,
administrative purposes and documentation purposes.

With regard to developmental purpose, performance appraisal enables

organizations to focus on their employees’ development through integration of
strategies such as competency development initiatives and training. The
resultant effect is that organizations are able to enhance their employees’
future performance which contributes towards their career path.

Performance appraisal enables organizations to attain this through provision

of performance feedback. According to Bhattacharyya (57), the feedback
provided forms the basis upon which the employee improves his or her future
performance.

Additionally, managers can assess the employees’ strengths and weaknesses

thus becoming more aware of areas to focus when formulating the training
and development program (Snell & Bohlander 347). The resultant effect is that
they are able to improve the employees’ productivity.

By evaluating the employees’ performance, firms’ management teams can be

able to develop an effective reward system. For example, organizations are
able to make effective promotion decisions based on the employees’
capabilities.

Performance appraisal results into improvement of management/subordinate

relationship. This arises from the fact that increases the rate of interaction
between the employees and the management team.

Performance appraisal is one of the management tools that managers rely in

the process of executing various human resource management roles such as
staffing.
For example, some situations such as economic realities may force
organizations to undertake downsizing. During this process, managers rely on
performance appraisal to ensure that they only retrench marginal performance
and retain the most talented employees (Grote 5).

According to Snell and Bohlander (347), the data obtained by conducting

performance appraisal can be used to undertake human resource planning
such as determining job worth. Additionally, the data can also be used to
validate selection tests.

Organizations also use performance appraisal to document human resource

management actions that can lead to legal actions. Different governments
have formulated directives aimed at ensuring affirmative action and equal
employment opportunities within organizations.

To protect themselves from possible legal actions for example on the basis of
discrimination, it has become imperative for organizations to maintain
accurate employee records. Through performance appraisal, organizations
are able to attain this (Snell & Bohlander 347).

Review of literature
According to Sims (80), performance appraisal entails the process through
which organizations assess their employees’ contribution towards the
organization after a specific period. Different terms have been used to
describe performance appraisal.

Some of these include performance review, performance evaluation,

employee evaluation, annual review and employee appraisal. According to
Harvard Business School (4), performance appraisal is a system that is used
to support organizational employees in their on-the-job performance.

Traditionally, the threat of punishment and economic rewards in order to

motivate the employees to achieve the formulated organizational goals formed
the basis of performance appraisal. However, currently performance appraisal
is undertaken for motivational and developmental processes.

Additionally, performance appraisal should be considered as a dynamic

process which is aimed at improving the organization’s performance. As a
result, the process of performance appraisal should be an considered as an
ongoing process and not an annual process.

Grote (1) asserts that the process of performance appraisal should follow a 4-
phase model which includes performance planning, performance execution,
performance assessment and performance review. The chart below illustrates
these four phases.

Source: (Grote 3)

Bhattacharyya (54) is of the opinion that performance appraisal is one of the

most important elements of performance management. It is not possible to
conduct performance management without integrating performance appraisal.
The chart below illustrates performance appraisal as an element of
performance management. Performance appraisal enables organizations to
understand their position with regard to performance relative to that of their
competitors.

Considering the dynamic nature of environment within organizations operate,

it has become imperative for organizations to incorporate the concept of
performance appraisal in their effort to attain employee performances and
management goals.

Through performance appraisal, organizations are able to develop and sustain

their competitive advantage. Performance appraisal takes diverse forms such
as formal or informal, open or confidential and oral or documented. In their
operation, organizations adopt formal and documented systems of
performance appraisals (Sims 80).

Bhattacharyya (55) is of the opinion that the process of performance appraisal

contributes towards improvement in the level of performance both at the
organizational and individual level. However, in order to attain these benefits,
it is paramount for organizations to develop effective performance appraisal
systems.

For example, a particular performance appraisal system that contributes to

some of the employees being rewarded while the others are left out may
increase the level of de-motivation.

In the process of designing a performance appraisal system, firms’

management teams should ensure that they take into consideration more than
one objective. The appraisal system should focus on issues such as rewards,
promotion, employee development and mentoring and development.

Discussion

To effectively conduct performance appraisal, management teams should

consider a number of steps. The first step entails establishing performance
standards by writing down the job description. The second step entails
communicating the standards to all the employees so as to ensure that they
understand the basis of the performance appraisal.

The third step involves actual measurement of the employees’ performance.

During this step, it is important for firms to undertake short term reviews rather
than annual reviews. The fourth step involves comparing the employees’
performance with the established job standards.

The next step entails discussing the results of the appraisal process with the
employees. Finally, the managers should rely on the findings to initiate the
necessary collective actions (Bhattacharyya 55). The chart below illustrates
the process of performance appraisal.

Source: (Bhattacharyya 59).

When conducting performance appraisal, effective techniques should be used.

There are different appraisal techniques suggested by scholars. Some of
these include peers, subordinates, supervisors, customers and self-appraisal.
Organizations should select appraisal techniques that best fit their needs.

However, more than one appraisal methods should be incorporated in order to

improve the validity and reliability of the results. An example of performance
appraisal system that should be taken into account is the 360-degree. This
system enables organizations to collect information about the employee from
different sources such as from colleagues, direct reports, suppliers, customers
and team members (Shaw 23).

Conclusion

Performance appraisal is one of the oldest concepts in management. Over the

years, the concept of performance appraisal has undergone significant
development. For example, it has shifted from being based on personality and
traits to goals. Currently performance appraisal is also conducted on the basis
of results.

From the above analysis, it is evident that performance appraisal is one of the
most important management activity. If well implemented, performance
appraisal can benefit both employees and the organization.

Through performance appraisal, organization management teams are able

make effective decisions with regard to various personnel aspects. For
example, they are able to formulate effective employee training and
development programs, formulate reward systems, and undertake HR
planning.

Through performance appraisal, organizations are able to formulate and

implement effective employee motivation strategies thus increasing their
productivity. The resultant effect is that the effectiveness with which the
organizations attain their goals is increased.

On the other hand, performance appraisal enables employees to attain their

personal and professional development goals. This is due to the fact that it
enables employees to understand their strengths and weaknesses.

Additionally, the training programs implemented by organizations enhance

their career paths. However, attainment of the above benefits is dependent on
the effectiveness with which organizations have implemented the performance
appraisal system.

As a result, the above steps should be taken into account when conducting
performance appraisal. Additionally, the most appropriate performance
appraisal technique should be used.

Works Cited

Bhattacharyya, Dipak. Performance management systems and strategies,

Sydney: Pearson Education India, n.d. Print.

Grote, Richard. Performance appraisal question and answer book: A survival

guide for managers, New York: American Management Association, 2002.
Print.

Harvard Business School. Performance appraisal: Expert solutions to

everyday challenges, London: Pocket Mentor Series, 2009. Print.

Shaw, Douglas. Performance measurement, management and appraisal

sourcebook, Amherst, Mass.: Human Resource Development Press, 1995.
Print.

Sims, Ronald. Managing organizational behavior, Westport, CT: Quorum

Books, 2002. Print.

Snell, Scott and Bohlander, George. Managing human resources, New York:

South-Western Publishers, 2012. Print.