Page 105 - DMGT106_MANAGING_HUMAN_ELEMENTS_AT_WORK

Unit 5: Appraising and Evaluating People in the Organization

5.1.3 Purpose of Performance Appraisal Notes

Organizations use performance appraisals for three purposes:
(a) Administrative: It commonly serves as an administrative tool by providing employers
with a rationale for making many personnel decisions, such as decisions relating to
pay increases, promotions, demotions, terminations and transfers.
(b) Employee Development: It provides feedback on an employee’s performance. Appraisal
data can also be used for employee development purposes in helping to identify
specific training needs of individuals.
(c) Programme Assessment: Programme assessment requires the collection and storage of
performance appraisal data for a number of uses. The records can show how effective
recruitment, selection and placement have been in supplying a qualified workforce.

A performance appraisal, employee appraisal, performance review, or
(career) development discussion is a method by which the job performance
of an employee is evaluated typically by the corresponding manager or
supervisor.

5.2 Process of Performance Appraisal

Performance appraisal is planned, developed and implemented through a series of steps.
(a) Job Analysis, Job Description and Job Specification
Performance appraisal is a process not to be undertaken in isolation of various human
resources functions. It begins with job analysis, job description and job specification.
These help in establishing the standard of performance.
(b) Establishing Standards of Performance

Appraisal systems require performance standards, which serve as benchmarks against
which performance is measured.
(c) Communicating Performance Standards to Employees

Performance appraisal involves at least two parties; the appraiser who does the appraisal
and the appraise whose performance is being evaluated.
(d) Measuring Actual Performance

After the performance standards are set and accepted the next step is to measure actual
performance. This requires choosing the right technique of measurement, identifying
the internal and external factors influencing performance and collecting information
on results achieved.
(e) Comparing Actual Performance with Standards and Discuss the Appraisal with
Employees
Actual performance is compared with the predetermined performance standards. Actual
performance may be better than expected and sometimes it may go off track. Deviations
if any from the set standards are noted. Along with the deviations, the reasons behind
them are also: analysed and discussed.

(f) Initiating Corrective Action, if Any
The last step in the process is to initiate corrective action essential to improve the
performance of the employee. Corrective action is of two types:

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