Critically Assess the Effectiveness of Performance Appraisal System



This paper assesses the effectiveness of performance appraisal system on employer, employees and the organization, the conclusion is that, compared with what has long been mention of as a good organizational practice, several claims indicated that performance appraisal has helped organization to have a better performance and good relationship between the employees and the employers, although, even the practice has been under criticism in one way or the other and several criteria has to be formulated to really meet the organizational purpose of conducting such system.

1. Introduction

Performance appraisal process is a step-by-step system that an organization can adopt to promote exceptional performance (Stephanie Lyster & Antigone Eteoklis 2004), performance appraisal is mainly use for the purpose of improve performance of individual, it is kind of systematic way of evaluating individual with respect to his or her performance or his/her potential for development, performance appraisal is highly interesting topic. This basically provides information that is relevant for many personal or organization decisions including increase in wages, transfer, training programs and recommendation for promotion and of course as well as for performance feedback and employee development (Kafry, Jacobs & Zedeck, 1980)

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Performance appraisal systems always involves many or multiple conflicting goals (Kane & Lawler, 1979; McGregor, 1957; Meyer Kay, & French, 1965)(Jeanette N, Kevin Murphy & Richard E, 1989) for instances, if an organization feel like using performance appraisal as a tools for recommendation for promotion and as well as they can also use it as instrument for guiding employee development. Many organizations are using performance appraisal for basically promotion recommendation rather than using it to focus on comparisons between employees and of course individual comparisons are necessary to determine the level of employees training and development needs (Drenth, 1984). The worldwide use of system can be accredited to academics, human resources specialist and consultant who declare that performances appraisal critically tools needed for effective human resource management, this in other words, based on the fact that an effectively designed and administered performance appraisal system can give the organization, the employers and the employees a myriad of benefits

2. Conducting Effective Performance appraisal System

There are many method and criteria use in quantifying how to better assess the effectiveness of performance appraisal, in the past many performance appraisal is done under merely observation of actual performance under standard conditions (Bernadin & Beathy, 1984), perhaps, it is not surprising that there are many criteria use nowadays to assess predictor effectiveness such criteria can also be use for appraisal, in selecting criteria to ascertain a performance appraisal system, it is vital to first consider the purpose and the goals of appraisal in the organization, Smith made a suggestion that any framework for selecting criteria should definitely emphasize that the criteria choice depends on the goals of the performance appraisal system (smith, 1976), moreover, the framework should acknowledge that different people or employers involved in the performance appraisal system may have overlapping, similar or different objective when evaluating the effectiveness of the system. Different objectives may leads to different conclusion on what part of performance appraisal should be checked and which criteria should be taken to examine those aspects, for instances, three different constituencies can classified who have interest in evaluating effectiveness of performance appraisal system (Kevin R murphy, Frank E Saal 1990) e.g:

Raters responsible for conducting the appraisals process

Ratees who are being evaluated by the performance appraisal system

The organization that support and promote the performance appraisal system

Within each of the listed constituency, different individual may also have different interest and aims when evaluating the performance appraisal system, in a nut shell, raters who are responsible for evaluation many ratees might have different notions of the effectiveness of the performance appraisal system than the rater who are required to evaluate only one ratee.

We can simply look at effectiveness of performance appraisal in an organization perspective; an organization's goals or an employer's goal for performing the appraisal system may include higher company profits, increase employees productivity, compatibility with other organizational functions (production or compensation) and defensibility in court against charge of discrimination. The employer may have different objectives for performance appraisal system, raters may concentrate on how easy the system is to use, on positive rates behaviors toward the performances appraisal system, on the absences of role manipulation or overloading and also on improvements in rate work motivation (Kevin R. Murphy 1990). Ratees or employees aims and objectives may consists of a performance appraisal system which can be trusted, that provides fair access to rewards and of course which provides accurate and accurate feedback which can be used for direct future performance.

3. Effectiveness of Performance Appraisal system for Employers & Employees

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In this report, I have to focus my attention into certain approach of performance appraisal effectiveness to surround a broader range effectiveness criteria which includes a measures that may emulate the principal interests of employers - whether employees productivity improved, in addition, I tempt to look at the correct measure of performance appraisal effectiveness which really differs depending on the individual making that determination is an employer who might concentrate on firing decisions or correctness of promotion or an employees (person being evaluated) by the system who might focus on the accuracy and representativeness of critical incidents provided during the performance appraisal interview. Given all this criteria, it is easier to evaluate the effectiveness of performance appraisal in the aspect of employers to employee's relationship, however, there are certain goals that should be meet in evaluating effectiveness of performances appraisal, the performance appraisal can also be divided into several segment like - input into the performance appraisal system (rater selection, rating purpose, rating training, instruction) and appraisal of system such as giving feedback, monitoring performance, completing the rating instrument and lastly, output of the system which can simply be generalized outcome result of the all performance appraisal system such as personnel decision, performance rating and feedbacks (Kevin R Murphy, Frank E. Saal, 1990) all of this aspect of the system provide array of information for evaluating the effectiveness of performances appraisal system for both employers and employees in an organization.

I believe that performance appraisal system can help an organization significantly and as well, help the employer and employees of such organization, for instances, it can enhance the quality of employer's decisions such as promotion, reward allocation, transfer and of course layoff, secondly, performance appraisal can also increase the quality of the employer's decision by helping he/she to focus their attention to a particular area where help is really needed in terms of effort and job allocations for example, if an employee is not performing very well in one sector, he or she can perform very well in another sector of the company, so the performance appraisal somehow helps the employer's decision whether to layoff or just transfer the individual to another section where he/she will be very productive. And this in turn, helps the employees not to lose his/her own job but to discover his/her potentials to meet the employer's targets.


At the end of an effective performance appraisal system, the employers and employees, should be able to identify the purpose and what they have gain in introducing such techniques to evaluate workers performances, a thorough, well conceived performances appraisal system should provides many benefits to the organization at large, the employer, as well as to the employees alike including:

Indentifying area of needing improvement

Provide a standard