Performance appraisals have become a primary management tool

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Performance appraisals have become a primary management tool for improving employee performance, setting total quality standards, and communicating organizational values. Although the performance appraisal serves several functions its primary purpose is to improve individual performance. Most often it is done through clarifying job requirements and standards by providing feedback to the employee regarding his or her progress toward meeting these standards by guiding future performance by formulating an action plan and allocating rewards and opportunities. An effective appraisal, therefore, accomplishes a variety of specific tasks while maintaining a positive relationship between the supervisor and the employee.

According to Dessler 2003 performance appraisal is a process by which organizations evaluates employee performance based on preset standards of the organization. It means evaluating an employee's current and or past performance relative to his or her performance standards. Stripped to its essential performance appraisal always involve setting work standards, assessing the employees actual performance relative to those standards and providing feed back to the employees with the aim of motivating him or her so that he or she can eliminate the performance deficiencies or to continue to perform above par. According to HUTCHINSON, S. and PURCELL, J. (2003) performance appraisals usually review past behavior and also provide an opportunity to reflect on past performance. But to be successful it should also being used as a basis for making development and improvement plans and reaching agreement about what should be done in the future. 

Purposes of performance appraisal.

According to Mondy, Robert, and Shane there are many reasons to appraise subordinates performance. From a practical point of view most employers still base pay and promotional decisions on the employee's appraisal. Appraisals play an integral role in the employer's performance management process. It does well to translate the employer's strategic goals into specific employee's goals if you don't do periodically review performance. The appraisal lets the supervisor and subordinate develop a plan for correcting any deficiencies and underline the things the subordinates do well. The appraisal should serve as a useful career planning tool as a purpose. According to Ravipors it provides an opportunity to review the employee's career plans in light of his or her exhibited strengths and weaknesses. The ultimate purpose of performance appraisal is to allow employees and managers to improve continuously and to remove barriers to job success. Which is it makes everyone feel better. Preparing for performance appraisal helps the employee focus on the key issue such as performance improvement, and to examine his or her performance in a more objective way. Employees can prepare by reviewing their work beforehand, identifying any barriers they faced in doing their jobs, and familiarizing themselves with their job descriptions, job responsibilities, and any job performance expectations set with the manager.

According to Davi Ngo performance appraisal is to help the subordinate employee being appraised to do better, accomplish more, and get motivated to work toward making your organization more successful. It also can be used to acknowledge a job well done, a way of showing that you actually notice and appreciate the personal commitments many of the employees make. Performance appraisal helps to identify poorly performing employee and look at what it should do in order to make them succeed, and try to find out what that employee needs to improve. In addition, there are advantages and disadvantages for performance appraisal.

Advantages of performance appraisal.

The advantages of performance appraisals can be categories in three main functional areas, (1) administrative, (2) informative and (3) motivational. The three main functional areas of performance appraisal systems are administrative, informative, and motivational. Appraisals serves as an administrative role by facilitating an orderly means of determining salary increases and other rewards, and by delegating authority and responsibility to the most capable individuals. The informative function is completed when the appraisal system supplies data to managers and appraises about individual strengths and weaknesses. Finally, the motivational role entails creating a learning experience that motivates workers to improve their performance. When effectively used, performance appraisals help employees and managers establish goals for the period before the next appraisal.

Almost universally, where performance appraisal is conducted properly, both supervisors and subordinates have the opportunity to discuss as beneficial and positive. According to Alan Kirk's appraisal offers a valuable opportunity to focus on work activities and goals to identify the current and existing problems, and to encourage better future performance. Thus the performance of the whole organization is enhanced for many employees; an official appraisal interview may be the only time they get to have exclusive, uninterrupted access to their supervisor. When it is conducted properly, performance appraisals serves as tool as showing employees how to improve their performance, setting goals for the employees, and helping managers to assess their subordinates effectiveness and take actions related to hiring, promotions, demotions, training, compensation, job design, transfers, and terminations. Competent appraisal of individual performance in an organization or company serves as a tool for improving the overall effectiveness of the entity.

Issues in performance appraisals

Even though there were many advantages of performance appraisals an organization comes across various problems and challenges of Performance Appraisal in order to make a performance appraisal system effective and successful there are also issues in performance appraisals. The problems would be lack of objectivity. The main Performance Appraisal challenges involved in the performance are they are lack objectivity. In the rating scales method, for example commonly used factors such as attitude, loyalty, and personality are difficult to measure. In addition these factors may have little to do with employee's job performance. Another problem will be errors in rating and evaluation. Any errors based on the personal bias like stereotyping, halo effect example one trait influencing the evaluator's rating for all other traits etc. may creep in the appraisal process. Halo effect occurs when the evaluator perceives one factor. For example Ted Ball accounting supervisor placed a high value on neatness which was a factor used in the company's performance appraisal systems. As Ted was evaluating the performance of his senior accounting clerk jack Hicks he noted that Jack was not a very neat individual and gave him low rating on this factor. Determining the evaluation criteria Identification of the appraisal criteria is one of the biggest problems faced by the top management. The performance data to be considered for evaluation should be carefully selected. For the purpose of evaluation, the criteria selected should be in quantifiable or measurable terms. Lack of competence top management should choose the raters or the evaluators carefully. They should have the required expertise and the knowledge to decide the criteria accurately. Another issue will be Resistance. The appraisal process may face resistance from the employees and the trade unions for the fear of negative ratings. Therefore, the employees should be communicated and clearly explained the purpose as well the process of appraisal. The standards should be clearly communicated and every employee should be made aware that what exactly is expected from him/her. The performance appraisal helps the employee to perform better in the following ways (1) motivation and satisfaction, (2) Training and Development, (3) Goals and Objectives (4) Leadership, (5) Organizational Goals (6) Job Standards

Motivation and Satisfaction.

Performance appraisal can have a significant effect on levels of employee motivation and satisfaction for better as well as for worse. Performance appraisal provides employees with recognition for their work efforts. The power of social recognition as an incentive has been long noted. In fact, there is evidence that human beings will even prefer negative recognition in preference to no recognition at all. If nothing else, the existence of an appraisal program indicates to an employee that the organization is genuinely interested in their individual performance and development. This alone can have a positive influence on the individual's sense of worth, commitment and belonging. The strength and prevalence of this natural human desire for individual recognition should look at in doing the appraisal. Absenteeism and turnover rates in some organizations might be greatly reduced if more attention were paid to it. Regular performance appraisal is good for organizations as it motivates employees to perform better.


Training and Development

Performance appraisal offers an excellent opportunity which is the best that will ever occur for a supervisor and subordinate to recognize and agree upon individual training and development needs. During the discussion of an employee's work performance, the presence or absence of work skills can become very obvious even to those who normally reject the idea of training for them. Performance appraisal can make the need for training more importantly and relevant by linking it clearly to performance outcomes and future career aspirations. From the point of view of the organization as a whole, consolidated appraisal data can form a picture of the overall demand for training.

Appraisal can be used to monitor the success of the organization's recruitment and induction practices. For example, how well are the employees performing who were hired in the past two years. Appraisal can also be used to monitor the effectiveness of changes in recruitment strategies. By following the appraisal yearly which is related to new hires and given sufficient numbers on which to base the analysis it is possible to assess whether the general quality of the workforce is improving, staying steady, or declining if it is increasing it will improve employee's performance.

Goals and Objectives

A performance appraisal system allows an employee to periodically receive feedback regarding his or her performance as well as his or her goals and objectives. An employee wants to know how well he/she matches up to the goals that have been set by the company. A performance appraisal will provide this information by being as objective as possible. The best way to do this is using some type of measurement. If an employee is expected to close five sales per day and someone is only closing two sales per day, then the performance appraisal should outline this information. The employee should be told about the variance and then management or the immediate supervisor should provide feedback. The feedback should give the employee some insight about what is causing the variance and how it can be corrected.


A performance appraisal system should measure an employee on the ability and desire to take on leadership functions, whenever possible. Every job does not require this of an employee. When an employee is allowed to lead a team meeting or share the best demonstrated practice for completing a function with the team, it makes him feel like he is contributing and it increases confidence and self-worth. Taking on leadership functions allows the employee to develop, grow and ultimately assume larger leadership responsibilities. So it will make sure the employee will increase his performance in order to take the leadership in the organization which he wants to do so.

Organizational Goals

According to Chaitali Khan the main purpose of a performance management system is to align employee and departmental goals to organizational goals. This means that the performance management system must first have the commitment of the top library managers for example it must be implemented from the top down. For example for a library performance management begins with the chief librarian or senior executive linking her goals or objectives to the strategic goals of the organization. These are the goals for the library. The chief librarian then ensures that her direct reports develop their goals in relation to the library's overall goals. In a multi-departmental library, managers develop their goals, and thus their departmental goals, to correspond to the organizational goals. Staff members within each department then develop their objectives for the year, in cooperation with their managers. Using this pattern for planning, all activities and objectives for all employees should be directly related to the overall objectives of the organization.

Job Standards

This provides an opportunity for clearer articulation and definition of performance expectations. Effective performance appraisal systems contain two basic systems operating in conjunction. Which are an evaluation system and a feedback system. The main aim of the evaluation system is to identify the performance gap. This gap is the shortfall that occurs when performance does not meet the standard set by the organization as acceptable. The main aim of the feedback system is to inform the employee about the quality of his or her performance. However, the information flow is not exclusively one way. The appraisers also receive feedback from the employee about job problems, etc. One of the best ways to appreciate the purposes of performance appraisal is to look at it from the different viewpoints of the main stakeholders: the employee and the organization. 

From the view point of an individual a performance appraisal should be about his self-analysis, his work analysis, how to improve himself and the rewards for doing well. On a whole Employee appraisal system is about mutual goals, it emphasizes on individual growth as well as organization growth, helps to improve the productivity of the employees and employee retention in the organization and profitability.

According to Cash, M. (1993) from the organization's viewpoint, one of the most important reasons for having a system of performance appraisal is to establish and uphold the principle of accountability. For decades it has been known that organizational failure is non-alignment of responsibility and accountability. Non-alignment occurs where employees are given responsibilities and duties, but are not held accountable for the way in which those responsibilities and duties are performed. There can be several individuals or work units appear to have overlapping roles.

The overlap allows indeed actively encourages each individual or business unit to pass the blame to the others. Ultimately, in the severely nonaligned system, no one is accountable for anything. In this event, the principle of accountability breaks down completely. Organizational failure is the only possible outcome. In cases where the non-alignment is not so severe, the organization may continue to function, albeit inefficiently. Like a poorly made or badly tuned engine, the non-aligned organization may run, but it will be sluggish, costly and unreliable. One of the principal aims of performance appraisal is to make people accountable. The objective is to align responsibility and accountability at every organizational level. So that employees will be accountable for what they are doing as a results by doing this will help them to perform better in the future.


Performance appraisal increases the performance of the employees because of the following reasons. It motivates the employees to perform better in order to get more reward because the reward is based on the performance appraisal of the employees. Also the employee will know his strengths and weaknesses. So he will take measure to improve his skills next time in order to be competent. This provides a performance history which is not dependent upon human memory, and which may be useful in the full range of personnel decisions, including compensation decision making. It also reviews past and present performance, identifying strengths and weaknesses. So performance appraisal is a tool of increasing employee performance.