Assessment should not be confined to past performance alone. Potentialsof the employee for future performance must also be assessed. A formal definition of performance appraisal is: It is the systematic evaluation of the individual with respect to his or herperformance on the job and his or her potential for development. A more comprehensive definition is: Performance' appraisal is a formal structured system of measuring andevaluating an employee’s job related behaviors and outcomes to discover howand why the employee is presently performing on the job and how theemployee can perform more effectively in the future so that the employeeorganization and society all benefit. The second definition includes employees’ behavior as part of theassessment. Behaviour can be active or passive--do something or do nothing.Either way behaviour affects job results. The other terms used forperformance appraisal arc: performance rating, employee assessment.Employees performance review, personnel appraisal,
Performance evaluation employee evaluation and (perhaps the oldest of theterms used) merit rating. In a formal sense, employee assessment is as oldas, the concept of management and in aninformal sense; it is probably as old asmankind. Nor performance appraisal is donein isolation. It is linked to job analysis asshown in Fig.PerformanceFig. Relationship of Performance Appraisal and Job AnalysisJob analysis sets out requirements, which are translatedinto performance standards, which in turn from the basisfor performance appraisal. OBJECTIVES OF PERFORMANCE APPRAISALData relating to performance assessment of employeesarc recorded, stored. and used for seven purposes. The mainpurposes of employee assessment are: 1. To effect promotions based on competence andperformance. 2. To confirm the services of probationary employees upontheir completing the probationary periodsatisfactorily.3. To assessthetraining and development needs ofPerformanceAppraisalPerformanceStandardsJob AnalysisDescribes the job-relevantstrengths and weaknesses ofeach individualTranslate job requirements I into levels of acceptable or I' unacceptable Describe work and personnel requirement of a particular job
employees. 4. To decide upon a pay raise where (as in theunorganized sector) regular pay scales have not beenfixed. 5. To let the employees know where they stand insofar astheir performance is concerned and to assist them withconstructive criticism and guidance for the purpose oftheir development. 6. To improve communication. Performance appraisalprovides a format for dialogue between the superior and thesubordinate, and improves understanding of personal goalsand concerns. This can also have the effect of increasing thetrust between the rater and the ratee.