Why Do We Need Performance Appraisals?
chillibreeze writer — Rita Nandy
Performance Appraisal is an objective system to judge the ability of an individual employee to perform his tasks. A good performance appraisal system should focus on the individual and his development, besides helping him to achieve the desired performance. This means that while the results are important the organization should also examine and prepare its human capital to achieve this result. This holds true even for new inductees.
There is a strong linkage between induction, training and appraisal. In a large number of firms worldwide, a new recruit is expected to discuss his schedule of work in achieving his induction objective. This schedule of work becomes a part of his job for the next few months.
Objectives of Appraisal
Almost all organizations practice performance appraisal in one form or another to achieve certain objectives. These objectives may vary from organization to organization or even within the same organization from time to time. It has been found that there are two primary objectives behind the use of this methodology. One is to use it as an evaluation system and second, to use it as a feedback system.
The aim of the evaluation system is to identify the performance gap. This means that it helps determine the gap between the actual performance of the employee and that required or desired by the organization.
The aim of the feedback system is to inform the employee about the quality of his work or performance. This is an interactive process by which the employee can also speak about his problems to his superior.
An effective performance appraisal system should emphasis individual objectives, organizational objectives and also mutual objectives. From the viewpoint of individual objective the performance appraisal should talk about
a) What task the individual is expected to do?
From the organizational view point a performance appraisal should generate manpower information, improve efficiency and effectiveness serve as a mechanism of control and provide a rational compensation structure. In short the appraisal system establishes and upholds the principle of accountability in the absence of which organization failure is the only possible outcome.
Finally, talking about mutual goals, the emphasis is on growth and development, harmony, effectiveness and profitability.
Methods of Performance Appraisal
In order to achieve the objectives, a variety of performance appraisal methods have been developed. The choice of method depends on organizational ethos, its objectives, size, product and technology.
The most traditional method is the Confidential Report method where the supervisor makes an evaluation of his subordinate on the basis of certain characteristics like loyalty, intelligence, conduct, character etc. In some other methods like Graphic Rating scale and the Ranking Methods though the process is simple it is plagued with subjectivity. In the Critical Incidents method a balance sheet of on-job-behavior for each employee is generated which can then be used at the end of the year to see how well the employee has performed.
In 1961 Peter Drucker popularized the Management by Objectives (MbO) method. In this method the subordinate in consultation with the supervisor chalks out short term objectives followed by specific actions that he has to carry out. The goals are finally set and are action oriented. The goals set should be specific, measurable, achievable, review able and time bound and most importantly it should be aligned with the goal of the organization. At the end of a specified time period, the activities are jointly reviewed by both the subordinate and his supervisor. Depending on the performance of the subordinate, the goals are modified or redesigned for the next period of time.
The MbO is thus a performance oriented system. A well thought out MbO system provides multiple benefits. It establishes a link between the performance of the individual and the organization. It is easy to implement because those who carry out the plan also participates in setting it up. Each employee becomes aware of the task he has to perform. This leads to better utilization of capacity and talent. It promotes better communication and information sharing. It provides guidelines for self evaluation as well as evaluation by the superior against set tasks and goals. It facilitates guidance and counseling.
But most organizations engage in a retrospective performance appraisal. In this process some objectives that were agreed upon in the beginning of the year are dragged out and the appraisee and the manager discuss and debate about how well each of these objectives was achieved.
This procedure has many flaws. It does not address the basic human needs in the motivation process. Feedback should be as immediate as possible, it should focus on actual things and the individual involved should be given the opportunity to correct his behavior. But the traditional procedure is too late. It is difficult to remember events a month old let alone events that had occurred over ten months ago.
Performance Management and Performance Appraisal
Many people mistake performance appraisal for performance management. Actually, performance management is a much bigger system, and is much more valuable to managers and companies (and employees) than performance appraisal. The essential components or parts of an effective performance management system include:
Performance Management is an ongoing process of measuring and adjusting performance continually focusing on behaviors throughout the year. It is a continuous process not an event. It is not the same as performance appraisal, which is an assessment of the employee’s performance by both the employee and his superior jointly, with the purpose of allocating a score that may be used for both development and salary or promotion purposes.
Performance Management includes Performance Appraisal as one of its elements. Performance Management should became part of day to day workplace behavior. Some organizations have adopted an online Performance Management system. Going online with performance management puts ownership of the process in the hands of the individual as opposed to the traditional manager driven system. It allows direct communication between the individual and the manager via online journals at times convenient to both. It links performance with the individual’s learning and development plans and also to the organizational goals, values and competencies.
In fact performance appraisal is the least important component of a performance management system. To quote Robert Bacal ‘If all you do is appraisal -- if you don't do planning and have ongoing communication, collect data, and diagnose problems, you are wasting your time.’ In fact it's even worse than that. If all you do is performance appraisal, you will almost be guaranteed that morale will suffer, performance problems will increase, and the manager's job will become much harder.
A growing number of front running organizations like Ford, Microsoft and Sun Microsystems, have adopted a performance appraisal model in which best-to-worst ranking methods are used to identify poor performers. The identified poor performers are then given a time period during which they have to show an improvement in their performance. In cases where the employee fails to improve his performance he is asked to leave the organization gracefully and a severance package is offered to him. If the employee refuses to leave then his service is terminated and no compensation is offered. This system is called “rank and yank strategy”. Advocates of this system feel that it continually motivates employees to better their performance since nobody would like to be included in the poor performance band. But the flip side of this strategy is that employees become too competitive and team spirit is not nurtured.
Effective organizations are not build merely on investment and returns but more on the quality of the workforce, its commitment to the organizational goals and investments made to attract train and retain superior human capital. An integrated Performance Management system is essential to get the best out of its people. Employee performance is linked to company performance. This helps in achieving the organizational goal and creates a performance culture in the company. Invention, creativity, diversity of perspectives is fostered. Employees act as one company one brand.
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