Performance Appraisal and its Impact

This assignment delves into the concept of performance appraisal systems, examining their essential components, including feedback mechanisms, goal setting, and regular evaluations. It analyzes how effective performance management contributes to improved employee efficiency by identifying and addressing performance issues. The assignment also highlights the benefits of performance appraisal in fostering a culture of continuous improvement and development within organizations.

Performance Management Analysis
within HRM
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Table of Contents
Introduction......................................................................................................................................3
Individual Essay...............................................................................................................................3
References......................................................................................................................................10
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INTRODUCTION
In the present era, human resource management (HRM) deals with managing employees
by performing various HR functions such as selection and recruitment, training and
development, performance management, reward management, motivation and employee
engagement (Human resource management, 2016). Along with all functions, performance
management is the one that focuses on enhancing the performance of human resources. In order
to understand the importance of performance management in HRM, the present essay will be
prepared. With its importance, various challenges, weaknesses, strengths, tensions and
contradictions associated with performance management will also be described in this essay.
INDIVIDUAL ESSAY
Human resource management is one of the crucial functions of every organization by
which employees can be managed, recruited, developed and rewarded in an effectual manner. By
managing employees, it focuses on achieving the objectives of business effectively. As compare
to personal management, it is a new approach of management with the help of which human
resources are satisfied in a better way as its main focus is to understand and fulfill the needs of
workforce with providing healthy and safe environment to the workplace (Grubb, 2007). Now
days, HRM has become an essential part of every business entity as without this, managing
employees is not possible and this can lead them towards failure. As competition is increasing
frequent so in such situation, it is very essential for the management of commercial entities to
determine the value of employees and it is also necessary to treat them as valuable resources. In
this aspect, HRM is the best way by which workforce can be influenced to perform effectively at
workplace with full satisfaction as well as loyalty.
By using HRM, better and qualified candidates can be selected by which desired goals of
organization can be fulfilled efficiently. Along with this, it focuses on rendering training by
understanding the development needs of employees to improve the abilities and skills of them
(Schuler and Jackson, 2008). It also helps in enhancing the knowledge of individuals regarding
to perform work in a better way. Further, HRM also includes various intrinsic and extrinsic
rewards by which human resources are encouraged to enhance their efficiency of work as well as
performance. In case of HRM, motivation is also an effective function which focuses on
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reducing the ratio of employee turnover by satisfying and motivating them to a great extent. As
per the recent scenario, availability of better salary as well as safe and healthy environment are
the best ways of motivation.
However, performance management (PM) is also one of the best functions of HRM by
which performance of employees are monitored, compared, improved and enhanced. It is a type
of process with the help of which managers and human resources focus on an effective plan by
which employee performance can be increased (Performance management, 2013). It includes
various activities which emphasis on ensuring that workforce is performing effectively with full
grace and motivation. In the present era, main focus of performance management is on the work
efficacy of business entity, management, various departments and human resources. It is also
considered as a procedure on the basis of which resources, employees and systems are aligned
for the purpose of achieving priorities and strategic objectives. As now days, level of competition
among businesses is increasing continuously so getting competitive advantage is a very critical
task for every business entity. But, increased efficiency of employee performance is the best way
by which organization can get leading position in the market (Daley, 2006). In this aspect, PM is
the best technique that can lead management to enhance the level of workforce performance.
Due to this, it is the responsibilities of HR to focus on performance management in an effectual
manner.
Further, performance management is considered as an integrated and strategic approach
that influences employees to perform better by providing them proper guidance along with
including various strategies at workplace. In the process of PM, various activities re included
such as goal setting, continuous communication, review of performance, regular feedback,
coaching for improvement, development sessions and giving reward. Due to availability of
actions, it is a very complicated and broader function which consumes so much time of HR
manager and employees. In the present era, number of employees is every organization is very
high so performance management is not possible to conduct effectively without availability of a
system (Storey, 2007). So, management of mostly organizations focus on performance
management system instead of supervising. This system plays an important role in evaluating the
performance of employees and with the help of this, further actions can be taken in a frequent
manner. Availability of good performance system leads to enhance the productivity and
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performance of the overall organization through maintaining the performance of individuals as
well as teams at workplace. Further, it ensures that employees have proper understanding about
their roles and contributions in achieving the organization objectives as well as ambitions
(Espinilla and et.al., 2013). As performance management is also a type of system so it includes
various components that are needed to be considered by HR manger while dealing with
employee performance. These components are as follows:
Performance planning: It is the first step of performance management in which the
basis of performance appraisal is formed. This planning is conducted by the HR manager and
supervisor who are focused on appraising and reviewing the performance of employees. In this
planning, various standards are selected on the basis of which performance will be apprised and
reviewed.
Performance appraisal and reviewing: At first, employees give self-rating to his or her
performance on the basis of their efforts in the past year. After self-appraisal, ratings are
rendered by the HR manger and supervisor of company (Grubb, 2007). Here, active participation
is given by HR manager as well as employees and on the basis of their discussion, they reach at
the final outcome regarding performance appraisal.
Taking feedback from personal counseling regarding performance: Here feedback is
provided by the HR manger as well as supervisor and on the basis of that, improvement areas
and various loopholes are identified. After that, further actions are taken by adopting several
processes such as personal counselling, mentoring, guidance as well as training and
development.
Rewarding performance: In this stage, human resources are publicly appraised and
recognized for their good performance. This component of performance management system is
very delicate as it may have straight impact on the achievement orientation and self-esteem of
employees.
Implementing improvements plan: In the following stage, new objectives are set for
the development of employees and fresh deadline is rendered to them for completing those goals.
Here, clear understanding is provided to the employees regarding the areas of improvement and
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deadline is given within which it is necessary for them to display improvement (Components of
performance management system, 2016).
Potential appraisal: This creates a basis for both the vertical and lateral movement of
human resources. Such type of appraisal is done by implementing several assessment tools and
competency mapping.
Performance management is conducted by almost every organization with an aim to
build a culture based on high performance for both the teams and individuals so that they can
work together for performing their responsibilities in an effectual manner. Behind this aim, there
are several objectives due to which PM is included in the functions of HRM (Bouskila-Yam and
Kluger, 2011). One of the major objectives is to develop individual with the mandatory
capabilities and commitment to work effectively within an organization. Along with this, this
function is also based on the objective that employees should be developed and trained
effectively so that they can perform according to superior standards set by the management of
company. Further, performance management focuses on guiding employees towards the right
path as by this way, commitment of employees will be more profitable for the organization.
Here, objective is also included that is related to maximize the performance of human
resource by promoting motivation, employee empowerment and reward system implementation.
Further, involving two way communication is also an objective of such approach as increase in
the level of communication eliminates the chances of stress and helps in understanding the issues
of employees (Mero, Guidice and Brownlee, 2007). Along with this, performance management
focuses on identifying various barriers that lead to decrease the performance of human resources
so this is also an objective of such approach. Along with objectives, there are several strengths,
weaknesses, challenges, tensions and contradictions that are associated with performance
management of employees as well as organization.
Strengths: One of the main strengths of performance management is that it focuses on
improving the performance of workforce and this in turn, it is helpful for business entity to attain
its goals and objectives in a proper way. It is also one of the strengths linked with PM that it
assists in creating a string relationship between management and employees as it leads to
maximize the level of communication between them (Prowse and Prowse, 2009). Further,
availability of regular communication reduces the level of stress and pressure among employees.
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By evaluating the performance of individuals, it is focused on rendering better appraisal and
rewards to everyone so that they can be satisfied and motivated properly. After monitoring
performance, training and development sessions are provided which help human resources to
generate new skills, capabilities, abilities etc.
In the process of performance management, feedback is taken on the regular basis that
assists HR manner to evaluate various issues and loopholes associated with the performance of
organization as well as individuals who are working there. Further, availability of good system
based on PM focuses on enhancing communication and by which, understanding of employees
related to organizational objectives as well as rules can be increased. Clear understanding of
goals for employees is very essential as by this, growth of business is possible only. Here,
coaching is also included with the help of which employee can be guided in a right direction and
their development needs can be fulfilled with resolving loopholes.
Weaknesses: One of the main weaknesses associated with performance management is
that it makes employees to attach emotionally as if their performance is appreciated effectively
then they can be dissatisfied to a great extent and this in turn can influence them to leave the
organization. Further, if performance is not aligned properly to promotion then this can increase
the chances of conflicts at workplace. Performance management also includes a weakness that is
related to reduce the level of creativity as in this competitive world, every employee focuses on
enhancing their level of completing more tasks instead of creativity for the purpose of getting
better appraisal (Kuvaas, 2007). Due to availability of rewarding and performance appraisal, it
leads to maximize the competition level and due to this, conflicts are also increased. Taking too
much time is also weakness of this approach and for conducting this, availability of high cost is
also necessary. Further, business can lead towards a great loss if employees are not satisfied with
the performance appraisal system of company. Not measuring the rate of retention while
performance management is also a weakness as due to this, they can’t see that their existing
employees are leaving form the organization.
Challenges: There are various challenges linked with the performance management
function of HRM. As PM deals with determining loopholes that are related to the performance of
employees so for the purpose of resolving these errors, rendering proper training is very
necessary. Before organizing training sessions, identification of development needs of the
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individuals is required otherwise it cannot be executed effectively (Bollen and Whaley, 2009).
Further, availability of training at workplace increases the cost of business entity and expert
trainers are also necessary to have. In order to maintain performance management in a better
way, there is necessary to adopt an effective culture and changes are needed to be implemented
effectively. Performance management is focused on two way communication but availability of
this type of communication on the regular basis is a very critical task. In this approach,
management commitment is the most necessary in terms of time as well as efforts and with the
busy schedule, it is very tough work for the management of company. In case of large
organization, it is not possible to achieve all the criteria and standards related to performance
management due to availability of large number of human resources at workplace. Further,
rendering appraisal as per the performance and expectations of employees is also s requirement
of business otherwise retaining employees effectively will not be possible.
Tensions: In the process of performance management, feedback is taken on the regular
basis and if negative feedback is available at workplace then it maximizes the chances of stress
as well as conflicts. In the present era, satisfying employee’s expectations according to their
performance is also a part of tension for performance management team. For evaluating the
performance of employees, data is collected about the employee’s overall achievement so
focusing on the each factors of data collection is very critical activity and securing data in an
effectual manner is also necessary otherwise it can harm the individuals as well as organizations.
Managing two way communication can also be considered as a part of tension as sometimes it
may go wrong and enhance clashes (Bernardin and Wiatrowski, 2013). Only availability of good
performance management system is not enough as with this, it is also necessary to focus on
effective reward system. There should be availability of both types of rewards as some
employees prefer monitory rewards and some are focused on satisfying by non-monitory
rewards. Thus, availability of less rewards can create tension at workplace. Due to availability of
performance management system at workplace, business entity focuses on expecting more from
staff members and by this, management pressures employees for better performance. Availability
of such situation enhances the level of tension as well as stress in the respect of employees.
Contradictions: Availability of contradiction while performance management is a usual
activity as at the time of performance appraisal, employees are focused on comparing with one
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another that can lead them towards conflict (Kuvaas, 2006). Sometimes, managers is focused on
discrimination while rendering performance appraisal due to availability of any clash with
employees. Because of discrimination, contradiction can exist between manager and employees.
In some organizations, rating scale and performance management system is not effective so it
leads to not satisfy the expectations of employees and focuses on enhancing dissatisfaction level.
From the above study, it has been concluded that performance management is one of the
essential functions of HRM that helps in monitoring, apprising and improving the performance
of human resources. In this present era, it is the most essential approach by which better actions
can be taken to understand and resolve various loopholes that are associated with employee
performance. By enhancing the level of productivity as well as performance, it assists business
entity to gain competitive advantage and fulfills the goals as well as objectives of business in a
better way. Furthermore, due to availability of regular feedback in performance management,
business deals in identifying the issues of employees that are reducing the level of work
efficiency.
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REFERENCES
Books and journals
Bernardin, H. J. and Wiatrowski, M., 2013. Performance appraisal.Psychology and Policing.
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Bollen, N. P. and Whaley, R. E., 2009. Hedge fund risk dynamics: Implications for performance
appraisal. The Journal of Finance. 64(2). pp.985-1035.
Bouskila-Yam, O. and Kluger, A.N., 2011. Strength-based performance appraisal and goal
setting. Human Resource Management Review. 21(2). pp.137-147.
Daley, D. M., 2006. Strategic human resource management. Public Personnel Management.
Current concerns, future challenges. 5. pp.120-134.
Espinilla, M. and et.al., 2013. A 360-degree performance appraisal model dealing with
heterogeneous information and dependent criteria. Information Sciences. 222. pp.459-
471.
Grubb, T., 2007. Performance appraisal reappraised: It’s not all positive.Journal of Human
Resource Education. 1(1). pp.1-22.
Kuvaas, B., 2006. Performance appraisal satisfaction and employee outcomes: mediating and
moderating roles of work motivation. The International Journal of Human Resource
Management. 17(3). pp.504-522.
Kuvaas, B., 2007. Different relationships between perceptions of developmental performance
appraisal and work performance. Personnel Review. 36(3). pp.378-397.
Mero, N. P., Guidice, R. M. and Brownlee, A. L., 2007. Accountability in a performance
appraisal context: The effect of audience and form of accounting on rater response and
behavior. Journal of Management. 33(2). pp.223-252.
Prowse, P. and Prowse, J., 2009. The dilemma of performance appraisal.Measuring business
excellence. 13(4). pp.69-77.
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Schuler, R. S. and Jackson, S. E., 2008. Strategic human resource management. John Wiley &
Sons.
Storey, J., 2007. Human resource management: A critical text. Cengage Learning EMEA.
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