Page 134 - DMGT406_HUMAN_RESOURCE_MANAGEMENT

Unit 8: Performance Management System

8.1 Performance Appraisal Notes

8.1.1 Meaning and Definition

It is the systematic evaluation of the individual with respect to his or her performance on the job
and his or her potential for development.

Performance Appraisal is a formal structured system of measuring and evaluating an employee's
job related behaviors and outcomes to discover how & why the employee is presently performing
on the job and how the employee can perform more effectively in the future so that the employee,
organization and society all benefit.

8.1.2 Objectives of PA

1. Compensation Decision: It can serve as a basis for pay raises. This approach to compensation
is at the heart of the idea that raises should be given for merit rather than for seniority.
2. Promotion Decision: It can serve as a guide for job change or promotion.
3. Training and Development Programme: PA can inform employees about their progress
and tell them what skills they need to develop to become eligible for pay raises or
promotions or both.
4. Feedback: It can tell an employee what he can do to improve his present performance and
go up the organizational ladder.
5. Personal Development: It can help reveal the causes of good and poor employee
performance.

Self Assessment

Multiple Choice Questions:
1. The basis for performance standards is
(i) Managers

(ii) HR plans
(iii) Employees
(iv) Compensation plans
(v) Job analysis.

2. Performance appraisals serve as building blocks of
(i) Recruiting
(ii) Career planning
(iii) Manpower planning

(iv) Selecting
(v) Job analysis.

LOVELY PROFESSIONAL UNIVERSITY 127