Performance Appraisal and its Importance

This assessment focuses on the critical analysis of the effectiveness of performance appraisals in enhancing employee performance and the requirements for managers. It discusses the overview, types, benefits, limitations, and practical perspective of performance appraisal.

FOUNDATION IN
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Overview of performance Appraisal and its importance.............................................................1
Types of performance appraisal and ways in which it can enhance performance of employees 1
Benefits of performance appraisal...............................................................................................2
Limitation and criticism towards performance appraisal............................................................3
Practical perspective of performance appraisal...........................................................................3
CONCLUSION................................................................................................................................6
REREFENCES................................................................................................................................7

INTRODUCTION
Performance appraisal is one of the best and most effective performance management
tool that can be used for enhancing performance of employees. This assessment will focus upon
critical analysis of extent to which performance appraisals are effective for organizations to
enhance their employee’s performance and for this fundamental of management and their
requirement for managers have also been explained in detail.
MAIN BODY
Overview of performance Appraisal and its importance
Performance appraisal can be defined as a kind of systematic evaluation of overall
performance of employees in order to gain understanding of their employees’ ability of their
future growth and development (Berisha Qehaja, Kutllovci and Shiroka Pula, 2017). It is one of
the best and systematic method with the help of which employee development can be done by
analysing their strength and weaknesses as this will help the organization to design their new job
can be for efficient employees. Not only this it helps in framing future development programmes.
Not only this, it helps the organization to identify major chances that are required to be brought
within selection method. It is one of the best way with the help of which communication between
employee and employer can be enhanced as it helps the employers to understand skills of their
employees, develop trust and confidence relationship between employer and employees,
maintain employee relationship and lastly it helps in boosting overall morale of the employees.
Types of performance appraisal and ways in which it can enhance performance of employees
Performance appraisals are done in many ways but majorly in performance appraisals
rewards are categorised into two types intrinsic and extrinsic rewards. Intrinsic rewards are those
rewards that are provided to employees from job itself such as feeling respected from seniors,
showing personal growth etc. Whereas extrinsic rewards are provided to employees in terms of
rewards that employees receive external to their job like bonuses, gifts increased salary,
promotion etc. Both the type of rewards and appraisals are provided to employees using different
types of performance appraisal methods which helps in increasing overall performance of
employees. Some of the most common type of performance appraisals are:
360- degree feedback
It is a kind of performance appraisal. Which is majorly about analysing performance of
employees in the eyes of those who have stake in their performance (Berisha Qehaja, Kutllovci
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and Shiroka Pula, 2017). So, with the help of this tool, all the people and seniors around the
employees are asked for feedback and only them performance review of employees is done so
that they can rewarded accordingly.
General performance appraisals
In this type of performance appraisal there is a continuously communication between
manager and employees so that their performance can be managed according to employees’
goals and objectives and at the end of year whole process is evaluated and employees are
rewarded accordingly.
Employee self-assessment
This type of performance appraisal is used least within organizations as in this employee
are asked to rate their own performance and then it is compared with assessment filled by their
managers and on the basis of this comparison employees are rewarded.
Benefits of performance appraisal
Performance appraisal provides various kinds of benefits to the organization as well as to
the employees (Kalyanamitra, Saengchai and Jermsittiparsert, 2020). Use of performance
appraisal within business can directly help business in achievement of desired goals and
objectives. Some of the main benefits of performance appraisal are:
 Performance appraisal helps the supervisors to identify insufficiencies within performance of
employees so that they can easily communicate those insufficiencies to respective employees
accordingly. So that they can provide suggestions to the employees so that they can
overcome their deficits. HR managers can also focus upon developing policers, training and
development programs accordingly so that capabilities of people can be enhanced.
 Performance appraisal helps the development of rating system so that clear view of overall
performance of employees can be done. So that compensation provision for employees can
be identified (Gulzar, Advani and Jalees, 2017).
 Another main benefit of performance appraisal is to integrate with strategic vision of
organization. It helps in conducting an appraisal to communicate goals of employees with
strategic vision of the organization. It further helps in enhancement of organizational
performance in a positive manner.
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Limitation and criticism towards performance appraisal
There is no doubt that performance appraisal is an important part of an organization for
enhancement of performance of employees. But there are various kinds of limitations of
performance appraisal that are equally important to be focused upon. Some of the main
limitations and criticisms of performance appraisal are:
 Performance appraisal programs demands too much from supervisors and management.
Annual performance appraisal requires at least once supervision of performance of
employees (Ahuja, Padhy and Srivastava, 2018). But many times, it becomes important for
supervisors to supervise their employee’s performance at least once in every quarter. It is
quite a time- consuming task for supervisors as they need to focus upon performance each
and every employee in a proper manner so that no partiality is done. So, it can be said that
one of the main limitations of this process is that it is a time- consuming process.
 Ambiguity in standards is another limitation of this process. If standards are not clear then in
such case supervisors can follow different standards for different employees. This can work
as a reason for partiality in evaluation of employee’s performance.
 If there is no particular way and steps of doing Performance appraisal then it can become one
of the main reasons of criticism as well (Islami, Mulolli and Mustafa, 2018). It is one of the
main reasons of criticism because each employee has their own skills and qualities and are
from different background and experience.
Practical perspective of performance appraisal
Impact of performance appraisal upon employees
There are various kinds of studies that clearly explain that there are many methods
though which performance appraisal within an organization for employees can be carried out.
These performance appraisal methods directly impact employees of an organization in many
different ways. It has been observed that performance appraisal majorly impacts motivational
level and satisfaction level of employees. Performance appraisal is a kind of unfavourable
competition which is faced by all the employees. It works as a performance improvement
indicator as employee get to know their weakness, skills and qualities they need to learn or need
to bring improvement in. Many times, some employees take this performance appraisal as a
chance or opportunity of bringing improvement within their knowledge, skills and qualities so
that they can grow within their professional career.
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Appropriate and effective performance appraisal methods help the employees learning
goal oriented, can help in developing desire of learning new skills can become more concerned
about demonstrating their skills so that their work is evaluated in a positive manner. This further
helps them in avoiding or tackling negative comments or judgement that are passed by others.
But impact of performance appraisal is not always positive, many times negative comments or
lower rating provided by supervisors or seniors can demotivate employees and make them loose
their focus (Du Plessis and Van Niekerk, 2017). It is important for organizations to focus upon
presenting performance appraisal results to employees in a proper manner so that it only
motivates then and enhances their overall satisfaction level and does not demotivate them or
lower their overall morale as it will not only impact employees performance but overall
performance of the company will also get impacted.
Developing effective tool in order to appraise performance of employees
For many organizations’ performance appraisal works as a developing tool as it helps
them to assess overall performance of their employees (Iyiola, Olatoye and Oyekanmi, 2020).
Appropriate and effective development of performance appraisal helps the employees in
understanding importunate of their roles and responsibilities in an accurate manner and also
helps them in adjusting themselves in a proper manner so that they can use all of their skills,
knowledge and qualities accurately and achieve desired results and pre- defined goals in an
appropriate manner.
Many studies have been carried out in this field that has helped in identifying effectivity
of each of these methods and these studies also explained that 360 degree feedback and
employee self- assessment are two most commonly used performance appraisal methods that are
used by organizations that further helps them in development of an effective tool or strategy that
can help in enhancing overall performance of employees in a positive and appropriate manner
(Schulze and et. al., 2016). many organizations use both the methods of appraisal of performance
of all the employees. As it is one of the best methods that help companies in developing an
effective tool for evaluation of performance of all the people working within the organization in
a proper and appropriate manner.
Performance appraisal and job motivation
As it has already been discussed that there are various kinds of studies that have taken
place in this section that clearly helps in explaining impact and effect of performance appraisal
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upon employees and upon organization. Most of these studies clearly explains that there is a
direct relationship between performance appraisal and job motivation. Performance appraisal
system within organizations is developed in such a manner that it helps the organizations in
enhancing job motivation within employees (Gulzar, Advani and Jalees, 2017). Feedback
provided to employees through performance appraisal directly helps employees to build strong
relationship with the organization. This opportunity also helps in increasing job motivational
level of employees. However, each researcher has their own point of and have shown different
results associated with relationship between job motivation and performance appraisal.
Subekti and Setyadi., (2016) explains that many organizations set their goals with their
performance appraisal system that not only helps the enhancing job motivation within employees
but also helps them to remain focused towards their goal. Supervisors or managers also provide
training to their sub-ordinates in such a manner so that they can understand their responsibilities,
ways in which performance appraisal system words and ways in which they will be graded. This
helps the employees to adopt themselves within their roles in an adequate manner which not only
motivates them but also helps in achieving desired goals and objectives associated with
performance appraisal system. Whereas, Van Woerkom and Kroon, (2020) explains that,
performance appraisal method works as a motivational method that helps in motivating
employees and encourage them for learning, self- assess their performance so that valid results
can be obtained in a proper and accurate manner. this further helps employees to learn and
develop new skills that are not only beneficial for them in achieving desired organizational goals
and objectives.
Extent till which performance appraisals are effective
Effect of performance appraisal is directly seen upon overall motivational, satisfaction
level of employees as well as upon their moral. Performance appraisal is effective for
organizations as well, as it helps them to analyse their business productivity, business operations
so that they can get to know that they are investing their resources correctly, they are not wasting
their time upon inefficient employees and upon time consuming activities. It helps in enhancing
overall performance of the employees but also helps in enhancing overall success of the
organization (Mone, London and Mone, 2018). Enhanced overall performance of the employees
also helps the company in making sure that their desired aim, objectives and goals can be
achieved within a fixed defined time period without degrading overall quality level of the
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organization. Effective performance appraisal helps in providing an insight to the experts of each
department of an organization so that they can analyse current position of the company and its
staff members and bring changes within the same accordingly. These changes are not only
related to work done by employees, but it is also related to changes within organizational culture,
structure, environment.
CONCLUSION
From the above assessment it has been summarized that performance appraisal helps an
organization making employees realize area and scope of improvement within their current
performance, things they need to work upon in order to enhance their performance and achieve
desired aim and objectives.
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REREFENCES
Books and Journals
Ahuja, K.K., Padhy, P. and Srivastava, G., 2018. Performance Appraisal Satisfaction &
Organizational Commitment. Indian Journal of Industrial Relations. 53(4).
Berisha Qehaja, A., Kutllovci, E. and Shiroka Pula, J., 2017. Strategic management tools and
techniques: A comparative analysis of empirical studies. Croatian Economic
Survey. 19(1). pp.67-99.
Du Plessis, T. and Van Niekerk, A., 2017. Factors influencing managers’ attitudes towards
performance appraisal. SA Journal of Human Resource Management, 15(1), pp.1-10.
Gulzar, S., Advani, A. and Jalees, T., 2017. Impact of Performance Appraisal on Employee
Retention: A study on Banking Sector of Pakistan. Journal of Independent Studies &
Research: Management & Social Sciences & Economics. 15(1).
Islami, X., Mulolli, E. and Mustafa, N., 2018. Using Management by Objectives as a
performance appraisal tool for employee satisfaction. Future Business Journal. 4(1).
pp.94-108.
Iyiola, A.T., Olatoye, O.A. and Oyekanmi, T.T., 2020. Impact of Performance Appraisal
Strategy on Employee Productivity: Evidence from Selected Nigerian Banks. Journal of
Management and Social Sciences. 9(1). pp.770-783.
Kalyanamitra, P., Saengchai, S. and Jermsittiparsert, K., 2020. Impact of Training Facilities,
Benefits and Compensation, and Performance Appraisal on the Employees' Retention:
A Mediating Effect of Employees' Job Satisfaction. Systematic Reviews in
Pharmacy. 11(3).
Mone, E.M., London, M. and Mone, E.M., 2018. Employee engagement through effective
performance management: A practical guide for managers. Routledge.
Schulze, M., and et. al., 2016. Energy management in industry–a systematic review of previous
findings and an integrative conceptual framework. Journal of Cleaner Production, 112,
pp.3692-3708.
Subekti, A. and Setyadi, D., 2016. The implication of financial compensation and performance
appraisal system to job satisfaction and motivation also employee performance in PT
Pupuk Kalimantan Timur Indonesia. International Journal of Business and
Management Invention. 5(2). pp.16-27.
Van Woerkom, M. and Kroon, B., 2020. The Effect of Strengths-Based Performance Appraisal
on Perceived Supervisor Support and the Motivation to Improve Performance. Frontiers
in Psychology. 11. p.1883.
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