Objectives of Performance Appraisal Give feedback on employees performance To decide about promotions based on competence and performance To confirm

e To confirm the services of probationary employees To assess training and development needs To decide upon revision in pay package To inform the employees about where they stand Form a basis for salary increase, promotions and disciplinary action To improve communication To improve superior-subordinate relationship To improve the HR programs and policies To create a positive work environment Create opportunity for organizational diagnosis and development

Performance Management is a process that consolidates goal setting, performance appraisal, and development into a single, common system. The aim is to ensure that the employees performance is supporting the companys strategic aims. PM is a strategic and integrated approach to delivering sustained success to organizations by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors. (Armstrong & Baron, 2006) PM can be defined as a systematic process for improving organizational performance by developing the performance of individuals and teams. It is a means of getting better results from the organization, teams and individuals by understanding and managing performance within an agreed framework of planned goals, standards and competence requirements. Processes exist for establishing shared understanding about what is to be achieved, and for managing and developing people in a way that increases the probability that it will be achieved in the short and longer term. It is owned and driven by line management. (Armstrong, 2006).

PA and PM: Similarities and Differences (Rao & Pareek, 2003)

PA System Focus is on performance appraisal and generation of ratings Emphasis on relative evaluation of individuals Annual exercise-normally, though periodic evaluations are made Emphasis on ratings and evaluation PM System Focus is on management of performance Emphasis on performance improvement of individuals, teams and organization Continuous process with quarterly performance review discussions Emphasis on performance planning, analysis, review, development and improvement Performance rewarding may or may not be an integral part. Defining and setting performance standards is an integral part. Designed by the HR department but could be monitored by the respective departments themselves Ownership is with line managers, HR facilitates its implementation KPAs or KRAs are used as planning mechanisms Developmental needs are identified in the beginning of the year on the basis of the competency requirements of the coming year There are review mechanisms essentially to bring performance improvements It is a system with deadlines, meetings, input, output and a format Process driven with emphasis on the format as an aid Linked to performance improvements and through them to other HR decisions as and when necessary

Rewards and recognition of good performance is an important component Designed and motivated by the HR department

Ownership is department

mostly

with

the

HR

KPAs and KRAs are used for bringing in objectivity Developmental needs are identified at the end of the year on the basis of the appraisal of competency gaps There are review mechanisms to ensure objectivity in ratings It is a system with deadlines, meetings, input, output and a format Format driven with emphasis on the process Linked to promotions, rewards, training and development interventions, placements etc.

Disadvantages of poorly implemented PM system Increased turnover Use of misleading info Lowered self-esteem Wasted time and money Damaged relationship Decreased motivation to perform Job burnout and job dissatisfaction Increased risk of litigation Unjustified demands on managers and employees resources Varying and unfair standards and ratings Emerging biases Unclear rating systems