A performance appraisal, employee appraisal, performance review, or (career)

development discussion[1] is a method by which the job performance of an employee is

evaluated (generally in terms of quality, quantity, cost, and time) typically by the corresponding
manager or supervisor[2]. A performance appraisal is a part of guiding and managing career
development. It is the process of obtaining, analyzing, and recording information about the
relative worth of an employee to the organization.

Aims
Generally, the aims of a performance appraisal are to:
• Give employees feedback on performance
• Identify employee training needs
• Document criteria used to allocate organizational rewards
• Form a basis for personnel decisions: salary increases, promotions, disciplinary actions,
bonuses, etc.
• Provide the opportunity for organizational diagnosis and development
• Facilitate communication between employee and administration
• Validate selection techniques and human resource policies to meet federal Equal
Employment Opportunity requirements.
Methods
A common approach to assessing performance is to use a numerical or scalar rating system
whereby managers are asked to score an individual against a number of objectives/attributes. In
some companies, employees receive assessments from their manager, peers, subordinates, and
customers, while also performing a self assessment. This is known as a 360-degree appraisal and
forms good communication patterns.
The most popular methods used in the performance appraisal process include the following:
• Management by objectives
• 360-degree appraisal
• Behavioral observation scale
• Behaviorally anchored rating scales
Trait-based systems, which rely on factors such as integrity and conscientiousness, are also
commonly used by businesses. The scientific literature on the subject provides evidence that
assessing employees on factors such as these should be avoided. The reasons for this are two-
fold:
1) Because trait-based systems are by definition based on personality traits, they make it difficult
for a manager to provide feedback that can cause positive change in employee performance. This
is caused by the fact that personality dimensions are for the most part static, and while an
employee can change a specific behavior they cannot change their personality. For example, a
person who lacks integrity may stop lying to a manager because they have been caught, but they
still have low integrity and are likely to lie again when the threat of being caught is gone.
2) Trait-based systems, because they are vague, are more easily influenced by office politics,
causing them to be less reliable as a source of information on an employee's true performance.
The vagueness of these instruments allows managers to fill them out based on who they want
to/feel should get a raise, rather than basing scores on specific behaviors employees
should/should not be engaging in. These systems are also more likely to leave a company open to
discrimination claims because a manager can make biased decisions without having to back them
up with specific behavioral information.
[edit] Criticism
Performance appraisals are an instrument for social control. They are annual discussions,
avoided more often than held, in which one adult identifies for another adult three improvement
areas to work on over the next twelve months. You can soften them all you want, call them
development discussions, have them on a regular basis, have the subordinate identify the
improvement areas instead of the boss, and discuss values. None of this changes the basic
transaction... If the intent of the appraisal is learning, it is not going to happen when the context
of the dialogue is evaluation and judgment.
—Peter Block[3]
Typical Reasons for Employee Training and Development
Training and development can be initiated for a variety of reasons for an employee or group of
employees, e.g.,:
• When a performance appraisal indicates performance improvement is needed
• To "benchmark" the status of improvement so far in a performance improvement effort
• As part of an overall professional development program
• As part of succession planning to help an employee be eligible for a planned change in
role in the organization
• To "pilot", or test, the operation of a new performance management system
• To train about a specific topic (see below)
General Benefits from Employee Training and Development
There are numerous sources of online information about training and development. Several of
these sites (they're listed later on in this library) suggest reasons for supervisors to conduct
training among employees. These reasons include:
• Increased job satisfaction and morale among employees
• Increased employee motivation
• Increased efficiencies in processes, resulting in financial gain
• Increased capacity to adopt new technologies and methods
• Increased innovation in strategies and products
• Reduced employee turnover
• Enhanced company image, e.g., conducting ethics training (not a good reason for ethics
training!)
• Risk management, e.g., training about sexual harassment, diversity training
Process of performance appraisal:

ESTABLISHING PERFORMANCE STANDARDS

The first step in the process of performance appraisal is the setting up of the standards which
will be used to as the base to compare the actual performance of the employees. This step
requires setting the criteria to judge the performance of the employees as successful or
unsuccessful and the degrees of their contribution to the organizational goals and objectives. The
standards set should be clear, easily understandable and in measurable terms. In case the
performance of the employee cannot be measured, great care should be taken to describe the
standards.

COMMUNICATING THE STANDARDS

Once set, it is the responsibility of the management to communicate the standards to all the
employees of the organization.

The employees should be informed and the standards should be clearly explained to the. This
will help them to understand their roles and to know what exactly is expected from them. The
standards should also be communicated to the appraisers or the evaluators and if required, the
standards can also be modified at this stage itself according to the relevant feedback from the
employees or the evaluators.
MEASURING THE ACTUAL PERFORMANCE

The most difficult part of the Performance appraisal process is measuring the actual performance
of the employees that is the work done by the employees during the specified period of time. It is
a continuous process which involves monitoring the performance throughout the year. This stage
requires the careful selection of the appropriate techniques of measurement, taking care that
personal bias does not affect the outcome of the process and providing assistance rather than
interfering in an employees work.

COMPARING THE ACTUAL WITH THE DESIRED PERFORMANCE

The actual performance is compared with the desired or the standard performance. The
comparison tells the deviations in the performance of the employees from the standards set. The
result can show the actual performance being more than the desired performance or, the actual
performance being less than the desired performance depicting a negative deviation in the
organizational performance. It includes recalling, evaluating and analysis of data related to the
employees’ performance.

DISCUSSING RESULTS
The result of the appraisal is communicated and discussed with the employees on one-to-one
basis. The focus of this discussion is on communication and listening. The results, the problems
and the possible solutions are discussed with the aim of problem solving and reaching consensus.
The feedback should be given with a positive attitude as this can have an effect on the
employees’ future performance. The purpose of the meeting should be to solve the problems
faced and motivate the employees to perform better.

DECISION MAKING

The last step of the process is to take decisions which can be taken either to improve the
performance of the employees, take the required corrective actions, or the related HR decisions
like rewards, promotions, demotions, transfers etc.

PURPOSE OF PERFORMANCE APPRAISAL:

Typically, Performance Appraisal is aimed at:

 To review the performance of the employees over a given period of

time.

 To judge the gap between the actual and the desired performance.

 To help the management in exercising organizational control.

 To diagnose the training and development needs of the future.

• Provide information to assist in the HR decisions like promotions, transfers etc.

 Provide clarity of the expectations and responsibilities of the functions to be
performed by the employees.

 To judge the effectiveness of the other human resource functions of the organization
such as recruitment, selection, training and development.

 To reduce the grievances of the employees.

•  Helps to strengthen the relationship and communication between superior –

subordinates and management – employees

Objectives Of Performance appraisal:

• To review the performance of the employees over a given period of time.
 • To judge the gap between the actual and the desired performance.

• To help the management in exercising organizational control.

• Helps to strengthen the relationship and communication between superior –

subordinates and management – employees.

• To diagnose the strengths and weaknesses of the individuals so as to identify the

training and development needs of the future.

• To provide feedback to the employees regarding their past performance.

• Provide information to assist in the other personal decisions in the organization.

• Provide clarity of the expectations and responsibilities of the functions to be

performed by the employees.

 To judge the effectiveness of the other human resource functions of the organization
such as recruitment, selection, training and development.

 To reduce the grievances of the employees.