Performance appraisal is a significant way to communicate the expectation of an employers and a comprehensive feedback on how well an employee is working up to the desired level. Appraisal is done by the immediate boss and he is responsible to closely monitor the employee outcome and contribution in assigned task, to fill out an appraisal form in order to thoroughly evaluate employee’s effectiveness and conduct a personal interview with the employee to discuss about his job responsibilities. Appraisal is conducted biannually or annually depending on the policies of the management and compensation is raised accordingly .Effective Performance appraisal system can serves to create a positive market image of the employer.
Performance appraisal is a vital and predominant aspect of HRM and in increasingly competitive business environment more and more companies are now strategically embedding performance appraisal in HRM in order to acquire unbeaten competitive edge. This helps organizations to fulfill the business goals along with a justified appreciation of employees’ contribution and therefore increase the moral and dedication level of key employees. Previously companies used to implement performance appraisal as part of administrative activity but later researches have proved that success cannot be achieved and maintained without strategically aligning the personal goals of employees with the overall strategic vision of organization. Employers are now more conscious about the emotional involvement of employees and studies have shown that employer-employee relationship have very pronounced impact on the overall outcome. Positive and encouraging feedback has significant affect on future performance and also how the appreciation has been given. Managers now prefers to give appreciation publically and corrective advices in private to develop confidential and happy relations with employees (Robert, Brian, 2011).
Organizations are now aware of strategic importance of performance appraisal and researches have proven that emotional and sincere dedication of employees plays a pivotal role in achieving strategic targets and it also reduces the turnover cost; increases team coordination, knowledge sharing and strong commitment of employees to give their best. This helps the organization to create employment branding and attracts potential candidates that are required by competitor. Three important strategic roles of performance appraisals are to set the morals of employees high, precise budgeting and to set targets and objective (Schwartz, (2001).
Potential biases may obscure the process of effective performance appraisal like a personality clash between the employee and his manager, comparison among employees based on their competitive and intellectual skills, hallo effect often pollutes the appraisal, first impression also affects the appraisal, manager’s ability to judge every employee according to his job description instead of overlapping his roles and duties with others, and also the politics based on religion, lifestyle and race can be the potential biases in performance appraisal. Such biases create discrimination among employees and they feel being neglected therefore their involvement level starts to decline and so does the organization output. A comprehensive 360 appraisal is considered as more reliable and error free and currently organizations are widely using this method to improve appraisal process to promote employees.
Performance appraisal has certain strategic roles as it helps to facilitate many HR activities like promotion, compensation management, termination, increased employee productivity and other. Organizations strategically use merit based pay scale system in order to encourage high goals achievers and categorize employees into appropriate bands and pay groups. A fair and effective appraisal system is very important in order to ensure that employees would be compensated according to their qualification and professional expertise. A biased and inappropriate appraisal may lead to create resentment and discrimination issues in employees and they start to put up grievances and resignation. The turnover is the most costly issue that organizations want to reduce at its possible minimal level so as to maintain brand image and competitive advantage over competitors.
Performance is a strong tool to boost the motivation and devotion of employees by gracefully rewarding them for their hard work. This will tremendously enhances the productivity, performance and commitment level of employees and they will start to associate their name with the name of the organization and spread good words about the organization. Potential candidates will get attracted to become part of such organization. Performance evaluation can be proactively used as a mean to develop managerial and technical skills in employees by imparting training in their week areas. Employees are much concerned about their professional and career growth and performance evaluation effectively facilitates the process of employee growth and career progression. Management can easily identify the training needs of individual employee and can design training and coaching programs to improve their expertise. Performance appraisal is also very helpful to correctly place an employee in right department by evaluating his performance against the standard outcome level.
In the nutshell it can be safely concluded that organizations are now implementing advanced and more sophisticated methods to value their human capital because studies have proven the fact that most essential and crucial asset of any organization is its human resource so it is inevitable to strategically involve them in achieving goals. Organizations now value and reward key employees in order to retain them in long run. Effective Performance appraisal system can serves to create a positive market image of the employer. In today’s world of business traditional method are completely void and therefore new and biased free method are being used to evaluate employees in order to get lead from competitors in all spheres of business.
Robert L. Cardy, Brian Leonard, (2011), Performance Management: Concepts, Skills, and Exercises, M.E. Sharpe.
A.E. Schwartz, (2001), Performance Appraisal: Appraisal and Meeting, Andrew E Schwartz.
