Performance appraisal is used in the organizations to examine and evaluate the work behavior of the employees by comparing it with certain predetermined standards. We can also document the result of such comparison through this process. It is also used to provide employee feedback to spot the areas of improvement.
Performance appraisal is extremely important to determine the training requirements, and also to find the people for promotion, retention, transfer and expulsion. It is also needed to select people for training and development to meet the organizational objectives.
It also justifies the salary structure according to the targets and plans given by the managers. It also helps supervisors to analyze the factors for different work performances exhibited by the employees and to work upon the core issues affecting the individual performance. They are also in a better position to guide an employee to raise his performance standard by addressing critical areas.
Objectives of Performance Appraisal
Though there are varied objectives of performance appraisal, we can try to list them according to the following points:
- The prime objective of performance appraisal is to document and record the performance curve of an individual, which later on helps in determining his/her salary raise, salary structure and compensation package.
- It also helps supervisors to put their employees in the right bracket, so that they can be assigned the right jobs, according to their strengths and weaknesses.
- To identify the right people for growth and development, so that potential candidates can be polished to meet the organizational objectives.
- Another important objective of performance appraisal is to provide feedback to the employees according to their performances.
- It also helps in identifying the work habits of the individuals and influencing it for better results.
- Performance appraisal also helps in reviewing the existing training programs and the next promotions, so that better programs can be designed to yield better results.
Importance of Performance Appraisal
Performance appraisal is extremely important not only for the individuals, but also for the overall profitability of organizations. It is an investment, which helps in optimizing the human resources, so that an organization can be made more efficient and productive, in less and less cost of hiring.
Performance appraisal helps in identifying people for retention and promotion, and fire the people who are not productive and are a burden on the resources of the organization. Without an effective performance appraisal program in place, you can never get to know as to who the star performer is and who is a waste of resources. It also helps in compensation planning, so that the supervisors can better plan the right compensation packages for the employees. So, it rewards the performers and punishes the inefficient people. It raises employee satisfaction and helps retain the best employees. Various parts of the package, such as bonuses, allowances, extra benefits, perks, and incentives depend upon the performance appraisal report. It puts emphasis on merit and contribution and not to seniority and influence.
It also helps to frame training modules and kind of programs to be implemented in order to increase efficiency and productivity. Every individual has different strengths, and therefore the training programs should be framed in order to nurture the best talent and arrange the opportunities of growth for an individual, in the area where he exhibits excellent performance. Performance appraisal is an excellent motivational tool as well.
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