Performance Appraisal and its Importance to An Organization

Estimated Reading Time: 6 minutes

Performance appraisal is a process that involves the evaluation of employees’ performance and abilities at work, with the purpose of encouraging further career growth and development. What usually happens is that supervisors get to measure employees compensation against the work they do, or their targets, and analyze factors that affect their performance. An appraisal is a process that has been helping human resource managers to improve the performance of employees while rewarding those who prove to have been doing great in their work.

Performance appraisal is an integral part of the human resource department and has proven to contribute greatly to employees’ motivation. Several methods can be used to carry out performance appraisal, and usually every organization uniquely does this as long as they get the expected results. These methods include management by objectives (MBO), behaviorally anchored rating scales (BARS), 360-degree feedback, critical incident method and the forced choice method, among others. Some organizations prefer combining two or more methods to get the best results. Whichever method you choose, make sure it’s as friendly as possible.

Importance of Performance Appraisal

1. Provides A Feedback About Performance

Most employers do know that their employees would love to know how they are doing today so that they can improve themselves, especially when in need of job satisfaction. Performance appraisal is one of the processes that help them to acquire this information and therefore do what is required of them to improve, if need be. Effective appraisal feedback can improve an employee’s future performance in a great way.

2. Improves The Overall Performance Of The Organization

One main achievement of performance appraisal is the ability to recognize a job well done by different employees. After recognizing them, it becomes easy to choose those who deserve a reward. Apart from the need to improve performance through training and development, after realizing where the problem is, the process is expected to help employees gain job satisfaction and be happy at work. This is an act that shows you care about their wellbeing. It doesn’t matter whether its monetary rewards, travel tickets, engraved plaques, shopping vouchers or trophies, but one needs to identify the persons who deserve it. This will highly motivate them to do better in the future and therefore improve the overall performance of the organization.

3. Creates The Need For Training And Development

Once performance appraisal is completed, an employer will know who needs additional training and how and when the training should be administered. The decision to conduct employee training and development can only be effective if one has already realized where the problem is. The process helps not only junior employees, but also their seniors who sometimes end up being sent for seminars and conferences to sharpen their skills, including leadership capabilities.

4. To Justify Recruitment Process

Recruitment is a process that costs every organization a lot of money and time. The tools and methods involved are expected to help the recruiters get the best candidates. It doesn’t matter whether the selected employees came from internal or external sources, the performance appraisal will help the organization to validate the entire process and the tools applied. While the organization may not fire an employee who is found incompetent, performance appraisal will help to improve recruitment tools to be used in the future.

5. Improves Communication

Sometimes, problems arise between employees and their managers because of poor communication only. For instance, a leader can give some directives to an employee without enough details, and since the employee is afraid to ask or doesn’t know how to ask, he ends up doing the wrong thing. Performance appraisal will help an employee to understand how better to do his job without missing important details. He will remain loyal when he knows that his opinions are respected too. When people are allowed to discuss everything happening at work openly, it becomes easier to solve other under-performing problems.

6. Assists In Resource Planning And Decision Making

After completion of performance appraisal, the human resource department can plan tasks in a better way and also make reliable decisions regarding employment. Through appraisal, human resource managers will easily decide on who needs a promotion, any need for transfers, or who needs to be laid-off and why. Without performing an appraisal, it can be very difficult to make these decisions, yet they are very necessary for the overall performance of an organization. Compensation decisions will also rely on performance appraisal, especially when in need to reward employees based on their performance.

Performance appraisal is one of the processes that proves the notion that you need to know where you are standing right now so as to know where you are going. People should not fear the evaluation of their performance because it is the only way that will help them improve their performance.

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