Significance of performance appraisal

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I. Contents of getting significance of performance appraisal

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During the hiring process, recruiters and hiring managers tell employees when and how they will
receive performance appraisals. Employees trust employers to follow through on all promises -from paying employees on time to giving employees holidays off to evaluating their
performance. Therefore, conducting performance appraisals is an important consideration when
it comes to placing value on the companys human capital.
Compensation
Salary and wage increases often are based on performance appraisal results. Untimely appraisals
can throw off compensation practices and cause more work for payroll processing. In addition,
employees mark their calendars for annual increases and potential bonuses. Preventable delays in
delivering employee performance appraisals cause frustration among employees and additional
work for payroll processing clerks responsible for calculating retroactive and pro rata increases.
Satisfaction
Employees look for opportunities elsewhere whenever they feel unappreciated or when they have
reason to believe their employer doesnt think highly of the work they perform. When
supervisors procrastinate on performance appraisals, it conveys the message that employees
arent important enough to set aside sufficient time to conduct evaluations. An untimely
performance appraisal essentially says the work employees perform isnt critical to the business
model and that other matters take priority over employees. Human capital is your largest
investment and an on-time performance appraisal is the best way to demonstrate your
appreciation for an employees effort.

Improvement
Most employees perform at an average level. If you use Jack Welchs practice of differentiation,
roughly 10 percent of your workforce is operating at a marginal level. This suggests that better
than half of your workforce will need to make performance improvements at some time during
the working relationship. Untimely performance appraisals further delay performance
improvement. The sooner you let employees know how to improve their performance, the sooner
you can see the results from improvements.
Productivity
Factors such as compensation, satisfaction and performance, when combined, seriously impact
your organizations productivity. Employees who exhibit signs of low job satisfaction and low
employee morale are less productive. In turn, low productivity affects your companys business
cycles because it becomes difficult to meet customer demands. Like dominoes, untimely
performance appraisals disrupt employee productivity, which ultimately presents obstacles in
achieving organizational goals.
Liability
The failure to conduct a performance appraisal or to conduct a timely performance appraisal can
increase your organizations exposure to claims regarding unfair employment practices. If your
supervisors and managers put off the performance appraisals, employees begin to wonder why
they havent received an appraisal. When employees file formal complaints about discriminatory
employment practices, courts may take into consideration the manner and timeliness with which
supervisors evaluate employee performance.

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III. Performance appraisal methods

1. Essay Method

In this method the rater writes down the employee

description in detail within a number of broad categories
like, overall impression of performance, promoteability
of employee, existing capabilities and qualifications of
performing jobs, strengths and weaknesses and training
needs of the employee. Advantage It is extremely
useful in filing information gaps about the employees
that often occur in a better-structured checklist.
Disadvantages It its highly dependent upon the writing
skills of rater and most of them are not good writers.
They may get confused success depends on the memory
power of raters.

2. Behaviorally Anchored Rating Scales

statements of effective and ineffective behaviors
determine the points. They are said to be
behaviorally anchored. The rater is supposed to
say, which behavior describes the employee
performance. Advantages helps overcome rating
errors. Disadvantages Suffers from distortions
inherent in most rating techniques.

3. Rating Scale
Rating scales consists of several numerical scales
representing job related performance criterions such as
dependability, initiative, output, attendance, attitude etc.
Each scales ranges from excellent to poor. The total
numerical scores are computed and final conclusions are
derived. Advantages Adaptability, easy to use, low cost,
every type of job can be evaluated, large number of
employees covered, no formal training required.
Disadvantages Raters biases

4. Checklist method

Under this method, checklist of statements of traits of

employee in the form of Yes or No based questions is
prepared. Here the rater only does the reporting or
checking and HR department does the actual evaluation.
Advantages economy, ease of administration, limited
training required, standardization. Disadvantages Raters
biases, use of improper weighs by HR, does not allow
rater to give relative ratings

5.Ranking Method
The ranking system requires the rater to rank his
subordinates on overall performance. This consists in
simply putting a man in a rank order. Under this method,
the ranking of an employee in a work group is done
against that of another employee. The relative position of
each employee is tested in terms of his numerical rank. It
may also be done by ranking a person on his job
performance against another member of the competitive
group.
Advantages of Ranking Method
Employees are ranked according to their
performance levels.
It is easier to rank the best and the worst
employee.
Limitations of Ranking Method
The whole man is compared with another
whole man in this method. In practice, it is very difficult
to compare individuals possessing various individual
traits.
This method speaks only of the position where an

employee stands in his group. It does not test anything

about how much better or how much worse an employee
is when compared to another employee.
When a large number of employees are working,
ranking of individuals become a difficult issue.
There is no systematic procedure for ranking
individuals in the organization. The ranking system does
not eliminate the possibility of snap judgements.

6. Critical Incidents Method

The approach is focused on certain critical behaviors of
employee that makes all the difference in the
performance. Supervisors as and when they occur record
such incidents. Advantages Evaluations are based on
actual job behaviors, ratings are supported by
descriptions, feedback is easy, reduces recency biases,
chances of subordinate improvement are high.
Disadvantages Negative incidents can be prioritized,
forgetting incidents, overly close supervision; feedback
may be too much and may appear to be punishment.

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