The administrative goals of performance appraisals provide input for HR activities such as compensation planning, making personnel decisions such as promotions or redundancies, and evaluating training programs. Appraisals are commonly used to make compensation planning decisions, especially in performance-related pay situations. Equal employment opportunity legislation has meant that companies must maintain detailed records of their performance appraisals as a method of documenting their HRM decisions to defend themselves should an employee sue them. This legislation has meant that employers need to keep records to justify the nondiscriminatory nature of their HR decisions . Performance appraisal programs can be formal and informal but their success depends on the purpose for it, attitude of the administrative staff and connection to organizational goals. The appraisals result in data which must be analyzed in context with the company’s business objectives so that overall performance of the staff can be improved. There are many reasons why formal appraisal programs sometimes fail and these include perceived bias of the rater, lack of management support and unclear performance standards. Very often this is the main reason why programs fail. Sometimes, there is insufficient support from the top management. If the general managers are not well trained to give feedback and access performance, then the program can fail too. Some managers believe that the process is a waste of time. These attitudes need to be dealt with before attempting an appraisal process. In order to develop an effective appraisal program, the initial discussions must be between the HRM and the line managers. Input from the line managers is vital since they have first-hand experience with their employees, their abilities and performance. Also, their ideas for developing the aims of the program would be important.
The first step in creating a good appraisal program is to establish the performance standards . This is critical. The standards should be obtained from the job analysis of essential job functions. To determine the performance standards the four elements that must be considered are strategic relevance, criterion deficiency, criterion contamination and reliability of the standards over time. Strategic relevance refers to the extent the performance standards are connected to the strategic goals of the company. For example, if a company states that all customer queries will be responded to within 24 hours; then it is reasonable to expect this to be a performance criterion in the appraisal of customer service representatives. Criterion deficiency refers to making sure that the performance standards reflect all the employee’s responsibilities and criterion contamination ensures that factors beyond the control of the employee that can affect performance are not used in the appraisal.
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