Performance Appraisal: Impact on Employees and Organizational Success

This report provides a comprehensive overview of performance appraisal, examining its effectiveness for organizations and employees. It begins by defining performance management and exploring various tools like feedback and employee evaluation techniques. The report then delves into the importance of performance appraisal, its types (including cost accounting and 360-degree appraisal), and the benefits and limitations of different methods. It analyzes the impact of performance appraisals on employees, including both positive and negative effects on motivation, competition, and relationships. The analysis highlights how performance appraisals can enhance overall employee performance and contribute to organizational success by identifying strengths, weaknesses, and training needs. The report emphasizes the importance of skilled managers and the use of appropriate methods to ensure accurate evaluations and positive outcomes. The report concludes by summarizing the key findings and implications of performance appraisals in the context of effective management.

FOUNDATION IN
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Overview of performance management and tools that can be used for performance
management.................................................................................................................................1
Performance Appraisal and its importance..................................................................................2
Effectivity of performance appraisals..........................................................................................3
Benefits and limitations of performance appraisal......................................................................4
Performance Appraisal types and ways in which they can enhance overall performance of
employees....................................................................................................................................5
Impact of performance appraisal upon employees......................................................................5
CONCLSION..................................................................................................................................6
REREFENCES................................................................................................................................7

INTRODUCTION
Performance appraisal is a kind of review dome by supervisors or senior management in
order to evaluate an employee’s performance, their contribution within the company, targets
achieved by them. It is one of the most important part of an organization that helps an
organization in enhancing their employees existing skills and knowledge, helps in enhancing
their overall performance, helps the employees in identifying scope of improvement so that they
can bring improvement within their performance. This assessment will focus upon critical
assessment of extent till which Performance Appraisals are effective for organization and well as
for its employees.
MAIN BODY
Overview of performance management and tools that can be used for performance management
Performance management is one of the most important things which should not be
overlooked within an organization as it can impact success and goal achievement of an
organization majorly. It is an important primary way with the help of which primary goals can be
handled, with the help of this performance management perception behaviour of employees
towards their, goal or target achievement can be achieved (Anjomshoae and et. al., 2017). There
are various kinds of tools and techniques that are commonly used for performance management.
Some of them have been explained below in a brief manner:
 Feedback tool: this tool helps in keeping a track of their employees and develop strategies for
bringing improvement within their performance from time to time.
 Employee apparition: It is also known as performance appraisal in which employees are
appreciated for their efforts and results and are rewarded accordingly for smallest progress
that they make (Pinto, 2019).
 Performance monitoring technique: Using this technique employees should continuously
monitor their employee’s performance so that they can identify and fulfil neds and
requirements of their employees in an appropriate manner. monitoring employee’s
performance and providing them with constructive feedback helps in measurement of their
performance and bring improvement within their performance.
 Employee performance evaluation technique: Performance evaluation is a kind of technique
which is used by mangers so that they can have an idea of level of performance of their
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employees. It also helps the managers to compare previous and current performance of their
employees.
Performance Appraisal and its importance
Performance appraisal is a kind of regular review which is used by organizations for
reviewing overall performance of employees as well as their overall contribution to the
organization. It is basically kind of technique or method which is used by organizations for
evaluation of employee’s achievements, skills, growth and their development within the
organization and on the basis of this evaluation they are rewarded accordingly (Islami, Mulolli
and Mustafa, 2018). There are two main types of rewards that are provided to the employees:
intrinsic reward and extrinsic rewards. Intrinsic rewards are those rewards that are provided to
employees from their job such as growth within organization, respect, appreciation and many
more. Whereas, extrinsic rewards are those kinds of rewards that are received by employees
outside their job such as appraisal, bonus, increment and many more. Provision of intrinsic or
extrinsic rewards completely depends upon evaluation method chosen for performance appraisal.
Both the type of reward helps in motivating, encouraging and increasing job satisfaction level of
employees which eventually helps in increases overall performance of employees.
Performance appraisals are extremely important and vital to be focused and carried out
within an organization. It is one of the most effective way that can help in bringing improvement
within organization as well as within its employees in a positive manner. But however, there are
certain requirements before implementing performance appraisal within an organization. First of
all, managers and seniors should be skilled among and should have the capability to guide their
sub ordinates in a proper and effective manner. they should be in a position to provide guidance
to their sub ordinates or to other employees. These requirements are important because it helps
the employers to analyse their employee’s overall performance in an appropriate manner so that
as per their performance evaluation or measurement so that they can be rewarded accordingly.
This analysis further helps the managers to compare their current targets, employee’s
performance as per their pre- defined future plans.
There are various kinds of reasons because of which performance appraisal within an
organization becomes important to be carried out (Ikramullah and et. al., 2016). One of the main
reasons is to bring improvement within knowledge and skills or employees so that they can
enhance their performance as per the increasing competitive environment in which they operate.
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Another reason because of which performance appraisal is carried out within an organization is
to maintain salary raise and compensation records so that they can bring changes within
employee’s compensation packages accordingly and can bring changes within their wage
structure accordingly. But most importantly it is used so that employees’ main strengths and
weaknesses can be identified which will further help the organization in identifying correct
person for correct job so that right potential employee can be promoted and provided with future
development and growth opportunities (Idowu, 2017). Based upon employee’s performance
evaluation, they are also provided with positive and constructive feedback to employees so that
they can take initiatives to bring improvement within themselves. Lastly it further helps the
organization to identify training and development needs and requirements for the employees and
update those activities accordingly.
Effectivity of performance appraisals
Performance appraisals are one of the most effective technique which helps in
management of employee’s performance in a positive manner. it is quite effective in bringing
improvement within employees’ overall performance. It is a kind of technique which is used by
organizations for increasing self- motivational level of employees which further helps in making
their employees in participating within training and development activities organized for them
for enhancement of their overall skills, knowledge and performance so that they can fulfil their
job roles and responsibilities in an accurate and efficient manner. Not only this, it helps the
employees to achieve their desired target within defined time period. Effective performance
Appraisal method adopted by organizations make their employees realize their actual potential
and scope of improvement within their work.
Within organization, other than employees it is an important and effective method which
is focused by human resource department (Idowu, 2017). This method or technique helps the HR
management to evaluate and understand all the resources of the company are being used in an
appropriate manner and will help the business to achieve their desired target within defined time
duration. It also helps the building a future plan opinion so that top level managers can take
appropriate decisions and develop future strategic plan for the growth and development of the
organization appropriately. So that thy can compete with their competitors.
There are various kinds of performance appraisal methods that can be used by companies
to ensure that they are moving in a correct direction which will lead them towards success by
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achieving their defined objectives and maintaining overall quality level as well. These methods
and their correct applicability within the organization helps the top- level management an insight
of current position and level of the company so that they can bring required changes or
improvement within management and strategies adopted by the company (Idowu, 2017). This
clearly explains that performance appraisal is not only effective for employees but for
organization as well. But most importantly it is effective for business as with the help of this
method they can work upon increasing loyalty of employees towards the organization, work with
more dedication and continuously work upon bringing improvement within themselves, their
behaviour and within their performance.
Benefits and limitations of performance appraisal
Some of the main benefits of performance appraisal are:
 Positive feedback provided by supervisors or managers can motivate employees and can help
in increasing their focus upon their roles and responsibilities so that they can achieve their
target objectives.
 It also help employees so that they can bring improvement within their current skills,
qualities and knowledge by identifying their main strengths and weaknesses.
 It further HR department to plan training and development programs for employees so that
their overall performance can be increased.
 One of the main benefit of performance appraisal is that it helps in enhancing relationship of
employees and management and further helps in development of a positive working
atmosphere.
Performance Appraisal also has various kinds of disadvantages:
 One of the main limitation of this method is that it is a time consuming process and has a
lengthy procedure.
 It is important for evaluators to have past experience of conducing performance appraisal as
inexperienced evaluators might not carry out evaluation process in a proper mand appropriate
manner.
 Negative feedback provided to employees can discourage them which can impact upon their
overall performance in both positive and negative manner.
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Performance Appraisal types and ways in which they can enhance overall performance of
employees
There are various kinds of methods that can be used by organization for performance
appraisals of their employees as well as for their performance assessment and evaluation. Each
of them has their own benefits and shortcomings and is used for different outcomes and
purposes. Some of the commonly used method that can be used by organization for evaluation
and appraisal of employees have been explained in brief below:
 Cost accounting method: this method is used for evolution of an employee’s performance
on the basis of monetary benefits incurred by them. This helps the organization in
understanding cost of retaining the employee within an organization and benefits that an
organization will get from retaining those employees.
 360- degree appraisal: This method is used for evaluation of an employee’s skills, abilities
and behaviour is analysed by people around them like supervisors of the employee, sub
ordinates, colleagues, clients, peers even customers (Idowu, 2017). All of this information
collected for an employee. It is one of the most effective method to understand performance
and behaviour employees and what people around them think of them. This method is
effective because even if supervisors of an employee is partial, their personal point of view
does not come in between of the employee’s performance review.
 Employee self- appraisal: It is a kind of performance appraisal method in which an
employee is asked to rate their own performance with the help of a common questionnaire
and their managers are also asked to rate their performance by rating the employees on the
basis of same parameters. When this process is completed both the parameters and rating are
cross checked and analysed and on the basis of this evaluation employee is rewarded. It is an
effective way that helps organization in understanding of position where an employee sees
them and where their managers sees them.
Impact of performance appraisal upon employees
Performance appraisal directly impact overall performance of employees in both positive
and negative manner. performance appraisal provides employees an opportunity of self-
evaluation so that they can understand and get to know their strengths and limitations in a proper
and appropriate manner. So that they can work upon bringing improvement within their overall
performance. It also helps in providing an opportunity to employees so that they can prove their
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capability and efficiency to their supervisors. It also helps in motivating employees so that they
can put much more efforts in achieving desired objectives in order to achieve desired appraisal,
promotion. But many times, performance appraisal creates an undesired competition among
employees which can affect their satisfaction and motivational level. Due to this unwanted
competition relationship between co-workers can get impacted which can further impact their
performance in a negative manner.
CONCLSION
From the above assessment it has been summarized that management plays an important
role within an organization as it helps the organization in managing and organizing their
resources in an effective and appropriate manner. It has been analysed that performance appraisal
is one of the most important function of management that helps in measurement and evaluation
of overall performance, behaviour, skills and attitude of employees towards their work, role and
responsibilities for achievement of desired target and goal in an appropriate manner.
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REREFENCES
Books and Journals
Anjomshoae, A., and et. al., 2017. Toward a dynamic balanced scorecard model for humanitarian
relief organizations’ performance management. Journal of Humanitarian Logistics and
Supply Chain Management.
Idowu, A., 2017. Effectiveness of performance appraisal system and its effect on employee
motivation. Nile Journal of Business and Economics. 3(5). pp.15-39.
Ikramullah, M., and et. al., 2016. Effectiveness of performance appraisal. Personnel Review.
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.
Mone, E.M., London, M. and Mone, E.M., 2018. Employee engagement through effective
performance management: A practical guide for managers. Routledge.
Pinto, J., 2019. Key to effective organizational performance management lies at the intersection
of paradox theory and stakeholder theory. International Journal of Management
Reviews. 21(2). pp.185-208.
Singh, S.K., and et. al., 2016. Determinants of organizational performance: a proposed
framework. International Journal of Productivity and Performance Management.
Singh, S.K., and et. al., 2016. Determinants of organizational performance: a proposed
framework. International Journal of Productivity and Performance Management.
Sohel-Uz-Zaman, A.S.M., 2018. Understanding the Fundamentals of Talent Management for
Effective Business Application. International Journal of Economics, Finance and
Management Sciences. 6(3). p.98.
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