Optimizing Employee Performance Through Appraisal Systems

Defining Performance Appraisal

A method by which an employee's job performance is documented and evaluated. Performance appraisals are an integral part of career development, consisting of regular reviews of employee performance within organizations.

Human Performance in Organizations

This area of work is based on job analysis. It evaluates the quality of an employee's performance through internal comparisons or against comparable rating standards. After all information is gathered, feedback is generated, and coaching for workers takes place.

Three Steps in Performance Appraisal

1. Identification

   Determining which areas of work the manager should examine when measuring performance. This is usually based on job analysis. An appraisal system measures performance that directly affects organizational success.

2. Measurement

   Making a managerial judgment of performance quality. All managers should maintain comparable rating standards to ensure fairness and consistency.

3. Management

   This is the overriding goal of any appraisal system. It should encompass past-oriented activity and evaluation, as well as a future-oriented view of what workers can improve.

The Performance Appraisal Cycle

The performance appraisal cycle illustrates continuous employee development through these sequential steps:

1. Establishing clear goals and performance standards.
2. Assessing the employee’s actual performance relative to those standards.
3. Providing feedback to the employee and taking corrective action to address any performance deficiencies.

Crucially, performance appraisals must add value to the firm, not merely serve as a measurement unit.

Purpose of Performance Appraisal

Performance appraisals serve two main purposes: Administrative, which looks at the past, and Developmental, which looks at the future.

Administrative Purpose of Appraisals

Administrative purposes are served whenever appraisals form the basis for a decision. This is based upon results and root causes for performance, such as salary reviews, promotions, or an employee's track record.

Developmental Purpose of Appraisals

Developmental purposes focus on the necessary actions to improve performance and strengthen job skills. Examples include changes in organization or processes, adjustments to job design, direct feedback to the employee, or targeted training and development actions.