From the stand point of administration, appraisal programs provide input that can be used for the entire range of HRM activities. For example, research has shown that performance appraisals are used most widely as a basis for compensation decisions. This is also directly related to a number of other major HR functions, such as promotion, transfer, and layoff decisions. From the stand point of individual development, appraisal provides the feedback essential for discussing strengths and weaknesses as well as improving performance. Regardless of the employee’s level of performance, the appraisal process provides an opportunity to
identify issues for discussion, eliminate any potential problems, and set new goals for achieving high performance. Purpose of performance appraisal DEVELOPMENTAL ADMINISTATIVE Provide performance feedback Identify individual strengths/ o weaknesses Recognize individual performance Assist in goal identification Evaluate goal achievement Identify individual training needs Determine organizational training needs Reinforce authority structure Allow employees to discuss concerns Improve communication. Document personnel decisions Determine promotion candidates Determine transfers and assignments Identify poor performance Decide retention or termination Decide on layoffs Validate selection criteria Meet legal requirements Evaluate training programs/progress Personnel planning Make reward/compensation decisions TERMS USED IN PERFORMANCE APPRAISAL Terms involved in performance appraisal are:- 1. Rater: The person who evaluates the employees is called the Rater or Appraiser. 2. Ratee : The employee who is rated is called the Ratee. 3. Rating : The process of performance appraisal is called Rating. CHARACTERISTICS OF PERFORMANCE APPRAISAL 1. Performance appraisal is a link between organization’s strategy and results 2. Performance appraisal is directed toward a purpose 3. Appraisal can be beneficial for the organization, the employee and manager 4. Appraisal can serve administrative or developmental purposes. Designing a scheme for each purpose is always advisable 5. Providing an employee with feedback can enhance his performance 6. Appraising all category of employees is a common practice among organizations 7. Mangers, employees or a combination of raters can conduct appraisal. Employees can also carryout self-assessment. 8. Appraisal has four complementary stages, starting with planning and ending with review of performance
9. Different methods can be used for appraisal. Each method has its advantages and disadvantages and serve different purposes 10. Appraisal results can be communicated through different style. Using a certain style is heavily dependent on the situation.