In this article we will discuss about the objectives of performance appraisal. A performance appraisal is a process of evaluating an employee performance on a job in terms of its requirements.
Employee appraisal or personnel performance appraisal is a systematic evaluation of a workers performance and potential for development. A sound or objective system of employee appraisal is indispensable for an organisation.
Performance appraisal essentially helps to identify employees who are performing their assigned tasks well and those who are not and also the reasons for such performance.
Performance appraisal can be used as a basis for sound personnel policy in relation to placement, transfer, promotion, and reward. The importance or utility of performance appraisal is really very great since it facilitates the accomplishment of individual and organizational objectives.
ADVERTISEMENTS:
As employment privileges may be earned by superior performance, the appraisal plans serve as a basis for counselling employees about their strengths and weaknesses or for improving their productive efficiency and for bettering employee relations through developing mutual confidence.
Objectives of Performance Appraisal in an Organization
Objectives of Performance Appraisal
A performance appraisal is a process of evaluating an employee performance on a job in terms of its requirements. Employee appraisal or personnel performance appraisal is a systematic evaluation of a workers performance and potential for development. A sound or objective system of employee appraisal is indispensable for an organisation.
Mc Gregor says Formal performance appraisal plans are designed to meet three needs one of the organisation and the other two of the individual viz.:
(a) They provide systematic judgments to back up salary increases, transfers demotion or termination.
ADVERTISEMENTS:
(b) They are means of telling a subordinate how he is doing and suggesting needed changes in his behaviour, attitudes, skills or job knowledge. They let him know “where he stands” with the bars.
(c) They are used as a base for coaching and counseling the individual by the superior.
On the basis of merit rating or appraisal procedures of various companies in India, the main objectives of employee performance appraisal are:
(a) To enable an organisation to maintain an inventory of the number and quality of all manager and to identify and meet their training needs and aspirations.
ADVERTISEMENTS:
(b) To determine encouragement and provide a reliable index for promotion and transfers to positions of greater responsibility.
(c) To maintain individual or group development by informing the employee of his performance standard.
(d) To suggest ways of improving the employee’s performance when he is not found to be up to the mark during the review period.
Performance appraisal is an important test of personnel management. It is a judgment of the characteristics; traits and performance of employees and has a wide range of utility for example –
ADVERTISEMENTS:
(a) It uniforms the appraisal procedure so that all employees are rated in the same manner, utilising the same approach so that the ratings obtained of separate personnel are comparable.
(b) It provides information which is useful in making and enforcing important decisions about selection, training promotions, pay increases, transfers lay off discharges salary adjustments etc. This information is supplied well in advance, so that spot judgments may be avoided.
(c) It provides information in the form of records about rating which may be produced as evidence when decisions on rating are challenged in a court of law. Even arbitrators accept these in the course of grievance handling procedures as authentic records.
(d) It serves to stimulate or guide employee development Appraisal programmes provide information on the weakness of employees and enable them to gauge their aim value or accomplishment or to know what they are doing. The weaknesses provide the basis for an individual development programme.
ADVERTISEMENTS:
(e) A periodic or accurate appraisal constrains a supervisor to be alert or competent in his works.
Objectives of Performance Appraisal – Compensation, Promotion, Training & Development Programmes, Feedback, Organisational Effectiveness & Personal Development
Performance appraisal serves mainly two purposes, first is evaluation and second is developmental. The evaluation tells the employee where he stands and uses the data for personnel decisions concerning pay, promotion etc. The developmental objectives focus on finding individual strength and weaknesses, developing healthy superior- subordinate relationship, and offering appropriate counseling coaching to the employee with a view to develop his potential for future.
Various objectives are as follows:
1. Compensation decisions – To determine increments, rewards and pay raises. Managers need performance appraisal to identify employees who are performing at or above expected levels.
ADVERTISEMENTS:
2. Promotion decisions – To provide a valid database for personnel decisions concerning placement, promotion, transfer to position of greater responsibility.
3. Training and development Programmes – To enable an organisation to maintain an inventory of the number and quality of employees and to identify their training needs. Performance appraisal can inform employees about their progress and tell them what skills they need to develop to become eligible for pay raise or promotions or both.
4. Feedback – To provide feedback to employees so that they come to know where they stand and can improve their job performance. Based on the feedback, they can be provided coaching, counseling and motivation.
5. Organisational Effectiveness – To test the effectiveness of recruitment, selection, placement induction and training programmes.
ADVERTISEMENTS:
6. Personal development- Performance appraisal can help reveal the causes of good and poor employee performance. Through discussions with managers, employees can improve themselves and also reduce grievances which further improve superior subordinate relationship. Performance appraisal provides way for career planning and development of employee based on their potentialities.
Objectives of Performance Appraisal according to Joseph Tiffin
Performance appraisal essentially helps to identify employees who are performing their assigned tasks well and those who are not and also the reasons for such performance. Today’s appraisals are believed to have three basic objectives- the amount of annual increment; promotion; and training.
According to Joseph Tiffin, the objectives of performance appraisal are:
(i) To prevent grievances
(ii) To improve job performance
(iii) To increase analytical abilities of supervisors
ADVERTISEMENTS:
(iv) To assist management in promotion, demotion, and transfer problems
(v) To reveal areas where training is needed.
Cummings observed that “the overall objective of performance appraisal is to improve the efficiency of an enterprise by attempting to mobilize the best possible efforts from individuals employed in it. Such appraisals achieve four basic objectives including the salary reviews, the development and training of individuals, planning job rotation and assist in promotions”.
Broadly speaking, the objectives of performance appraisal could be described as:
(i) Judgmental
(ii) Developmental
ADVERTISEMENTS:
Judgmental objectives focus on evaluation
i. Providing feedback to employees to know where they stand
ii. Developing valid data for administrative decisions concerning placement, pay, promotion, punishment, etc.
Developmental objectives focus on helping
i. Diagnosing individual and organizational strengths and weaknesses – (SWOT analysis)
ii. Counselling, coaching, career and succession planning, employee morale and motivation
ADVERTISEMENTS:
iii. Developing positive superior – subordinate relationships.
The judgmental and developmental objectives may not be always smooth to implement together. For instance, in case where subordinate’s performance does not meet the expectations, superiors have to make difficult judgements. Subordinate’s reaction is usually adverse when such evaluation is communicated and this leads to strained relations between both the parties.
A discussion between the appraiser and the appraise conducted in a spirit of cooperation and mutual understanding enables an employee to have an insight on his performance in the overall organizational set up. Employee develops clear idea as to where he stands and how he is doing on the job.
Performance appraisal thus meets the vital need of emotional security which Norman Maier considers as one of the five primary needs all employees seek to satisfy on the job. As mentioned by Maier, this need for emotional security consists of three elements the need to belong, the need to know where one stands, and the need for approval.
Performance appraisal data may be useful in human resource (manpower) development in several manners. Ambitious subordinates who are looking forward to an opportunity for advancement, usually welcome an honest appraisal even if it is adverse.
A promotion minded individual can ask for the target programmes of a position he seeks and use the information given by performance appraisal to prepare himself for the job and enhance his candidacy. Employees with strong career aspirations who have transfer value and can get jobs elsewhere also welcome an honest appraisal since it helps in their career advancement whether in this or other organization for better prospects.
ADVERTISEMENTS:
Douglas McGregor observers – “formal performance appraisal plans are designed to meet three needs/one of the organization and the other two of the individual, viz.,
(i) They provide systematic judgement to back up salary increases, transfers, demotions or termination;
(ii) They are means of telling a subordinate how he is doing and suggesting needed changes in misbehaviour, attitudes, skills or job knowledge. They let him know where he stands with the boss; and
(iii) They are used as a base for coaching and counselling the individual by the superior”.
Thus, it becomes clear that performance appraisal is an important tool of human resource management as it reflects evaluative judgements of the traits, characteristics and work performance of employees. Performance appraisal system can be put to a very wide range of utility covering the entire spectrum of human resource functions in an organization.
Performance appraisal can be used as a basis for sound personnel policy in relation to placement, transfer, promotion, and reward. The importance or utility of performance appraisal is really very great since it facilitates the accomplishment of individual and organizational objectives. As employment privileges may be earned by superior performance, the appraisal plans serve as a basis for counselling employees about their strengths and weaknesses or for improving their productive efficiency and for bettering employee relations through developing mutual confidence.
ADVERTISEMENTS:
Appraisal plans are also of great significance in the areas of career and succession planning, training and development needs analysis, human resource planning, compensation, handling grievances and disciplinary cases. An objective evaluation of employee performance constitutes an important element of job satisfaction.
Evaluation of employees is, therefore, applied formally or informally to all employees – operative, technical, professional, and executive. A good rating programme should encompass all levels and categories of employees. The results are useful in personnel research.
Performance appraisal system, if used effectively, can help the organization to improve productivity; to promote internal control through appropriate feedback and corrective actions; to diagnose individual and organizational problems; to foster positive work culture; to encourage recognize and reward achievements; and to seek an all-round human resource development.
An effective performance appraisal system has the potential to minimise many existing problems and thus to reduce nonproductive costs. This helps in overall improvement in the quality of work life (QWL).
Objectives of Performance Appraisal – Top 8 Objectives
Performance appraisal is an important tool of personnel management. It is used to recruit, retain, train and stimulate only those employees who satisfy certain criteria of efficiency and consequently to retrench or lay off those who are not upto the expected mark.
The important objectives of performance appraisal may be enumerated as follows:
1. To evaluate the performance of the employees systematically and periodically and maintain a permanent record of the same.
2. To unify the rating procedure so that all the employees are rated on the same qualities by the same method of measurement.
3. To determine whether an employee’s qualifications match with the job’s requirements.
4. To determine and justify the need or otherwise of the wage differential for certain jobs.
5. To furnish data necessary to recommend promotions, transfers etc.
6. To disclose the need for training programmes, where certain educational deficiencies are found to characterize a large number of employees.
7. To use it as a means for weeding out the inefficient employees and for rewarding properly the efficient ones.
8. To remove grievances of workers and settle disputes between workers and management and to maintain cordial relations between them on the basis of mutual confidence and better understanding
Objectives of Performance Appraisal – With Factors and Criteria
The main objectives of performance appraisal may be listed thus:
1. Offer feedback on performance to employees.
2. Identify employee training needs.
3. Document criteria used to allocate organizational rewards.
4. Form a basis for personnel decisions such as salary increases, promotions and disciplinary actions.
5. Provide the opportunity for organizational diagnosis and development.
6. Facilitate communication between employee and administrator.
7. Validate selection techniques and human resource policies to meet federal equal employment opportunity requirements.
Factors that Disturb Objective Performance Evaluation:
Several factors disturb the objective evaluation of employees.
Some of the factors are discussed below:
1. Unclear Standards:
Although the graphic rating scale seems objective, it would probably be unfair appraisals because the traits and degrees of merit are open to interpretation. For example, different supervisors would probably define “good” performance, “fair” performance, and so on differently.
2. Halo Effect:
The halo effect or error is a “tendency to rate high or low on all factors due to the impression of a high or low rating on some specific factors. For example, if an employee tends to be conscientious and dependable, we might become biased toward that individual to the extent that we will rate him high on many desirable attributes.”
3. Central Tendency:
Central tendency is “the reluctance to make extreme rating (in either direction); the inability to distinguish between and among rates; a form of range restriction”. Raters who are prone to the central tendency error are those who continually rate all employees as average. Such an evaluator makes no differentiation among the subordinates.
4. Leniency or Strictness:
Every evaluator has his own value system that acts as a standard against which he makes appraisals. Relative to the true or actual performance an individual exhibits, some evaluators tend to mark high and others low. The first is known as positive leniency error and the second as negative leniency error.
When evaluators are positively lenient in their appraisal, they overstate an individual’s performance or rate higher than it actually should be. Similarly, a negative leniency error underestimates performance, giving the individual a lower appraisal.
Robbins observes, “If all individuals in an organization were appraised by the same person, there would be no problem. Although there would be an error factor, it would be applied equally to everyone. The difficulty arises when we have different raters with different leniency errors making judgments.”
5. Bias:
Individual differences among ratees in terms of characteristics like age, race, and sex can affect their ratings, often quite apart from each ratee’s actual performance. In one study, for instance, researchers found a systematic tendency to evaluate older ratees (over 60 years of age) lower on “performance capacity” and “potential for development” than younger employees.
The ratee’s race and sex can also affect the person’s rating. However, here the bias is not necessarily consistently against minorities or women, as it seems to be in the case of older workers. In one study, high-performing females were often rated significantly higher than were high-performing males. Similarly, low-performing blacks were often rated significantly higher than were low-performing whites.
6. Similarity Error:
This type of error occurs when the evaluator rates other people in the same way he perceives himself. For example, the evaluator who perceives himself as aggressive may evaluate others by looking for aggressiveness. Those who show this characteristic may be benefited while other may suffer. This error also washes out if the same evaluator appraises all the people in the organization.
7. Social Differentiation:
Sometimes the evaluator’s style of rating behavior impedes rating. Pigou has classified raters as “high differentiators” or low differentiators. He observes, “Low differentiators tend to ignore or suppress difference perceiving the university as more uniform than it really is. High differentiators, on the other hand, tend to utilize all available information to the utmost extent and, thus, are better able to perceptually deny anomalies and contradictions than low differentiators”. What should be rated?
The seven criteria for assessing performance are:
i. Quality- The degree to which the process or result of carrying out an activity approaches perfection.
ii. Quantity- The amount produced, expressed in monetary terms, number of units, or number of completed activity cycles.
iii. Timeliness- The degree to which an activity or a result produced.
iv. Cost effectiveness- The degree to which the use of the organization’s resources (e.g., human, monetary, technological, material) is maximized in the sense of getting the highest gain.
v. Need for supervision- The degree to which a job performer can carry out a job function without supervisory assistance.
vi. Interpersonal impact- The degree to which a performer promotes feelings of self- esteem, goodwill and co-operation among co-workers and subordinates.
vii. Training- Need for training for improving his skills knowledge.
The above criteria relate to past performance and behaviour of an employee.
Objectives of Performance Appraisal – With Decisions
The main objectives of employee performance appraisal are:
1. To enable an organisation to maintain an inventory of the number and quality of all managers and to identify and meet their training needs and aspirations;
2. To determine increments rewards, and provide a reliable index for promotions and transfers to positions of greater responsibility;
3. To maintain individual and group development by informing the employee of his performance standard;
4. To suggest ways of improving the employee’s performance when he is not found to be up to the mark during the review period.
5. To identify training and development needs and to evaluate effectiveness of training and development programmes.
6. To plan career development, human resources planning based on potentialities.
Following decisions are mainly included in managerial decisions:
(i) Wages and salary decision
(ii) Employees training decision
(iii) Employees promotion decision
(iv) Employees transfer decision
Basis of all these decisions is performance appraisal.
Objectives of Performance Appraisal
The various objectives for conducting performance appraisal are listed as under:
i. To help employees overcome their weaknesses and improve upon their strengths by discovering how and where each person needs improvements, and arranging for individualized development programmes.
ii. Check and evaluate the performance standards for people; poor performance may indicate inadequate standards.
iii. Spot individuals who are ready for promotion, salary increases or newer assignment and responsibilities.
iv. Keep job description updated as per the changing market conditions.
v. Obtain evidence about employees who are not performing well and should be terminated.
vi. Verify the effectiveness of compensation plan, training, supervision, recruitment, territory assignments and operating procedures.
Some objectives of performance appraisal are as follows:
(j) Once the strengths and weaknesses are identified, the employee can be encouraged to overcome his weaknesses and leverage his strengths to optimize his performance.
(ii) An employee’s areas of weakness are also the areas for improvement or development. These are the shortcomings in the individual’s performance, which need to be improved upon.
(iii) Performance standards and specific goals are set at the beginning of the appraisal period. These targets motivate the employee to perform better.
(iv) The evaluation of employee performance helps to understand the strengths and weakness of the employee.
(v) Rewarding a good performer and punishing a bad one encourages employees to perform better.