The performance appraisal process has become the heart of the human resource management system in the organisations. Performance appraisal defines and measures the performance of the employees and the organisation as a whole. It is a tool for accessing the performance of the organisation.

The important issues and points concerning performance appraisal in the present world are:

The focus of the performance appraisals is turning towards career development relying on the dialogues and discussions with the superiors.

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Performance measuring, rating and review systems have become more detailed, structured and person specific than before.

  • Performance related pay is being incorporated in the strategies used by the organisations.
  • Trend towards a 360-degree feedback system
  • The problems in the implementation of the performance appraisal processes are being anticipated and efforts are being made to overcome them.
  • In India, the performance appraisal processes are faced with a lot of obstacles, the most prominent being the lack of quantifiable indicators of the performance.
    The emergence of following concepts and the following trends related to Performance appraisal can be seen in the global scenario:

    • 360 Degree Appraisal
      360 degree feedback, also known as ‘multi-rater feedback’, is the most comprehensive appraisal where the feedback about the employees’ performance comes from all the sources that come in contact with the employee on his job. Organisations are increasingly using feedback from various sources such as peer input, customer feedback, and input from superiors. Different forms with different formats are being used to obtain the information regarding the employee performance.
    • Team Performance Appraisal
      According to a wall street journal headline, “Teams have become commonplace in U.S. Companies”.
      Most of the performance appraisal techniques are formulated with individuals in mind i.e. to measure and rate the performance of the individual employee. Therefore, with the number of teams increasing in the organisations, it becomes difficult to measure and appraise the performance of the team. The question is how to separate the performance of the team from the performance of the employees. A solution to this problem that is being adopted by the companies is to measure both the individual and the team performance. Sometimes, team based objectives are also included in the individual performance plans.
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      Rank and Yank Strategy
      Also known as the “Up or out policy”, the rank and yank strategy refers to the performance appraisal model in which best-to-worst ranking methods are used to identify and separate the poor performers from the good performers. Then the action plans and the improvement opportunities of the poor performers are discussed and they are given to improve their performance in a given time period, after which the appropriate HR decisions are taken. Some of the organisations following this strategy are Ford, Microsoft and Sun Microsystems.