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Performance Appraisal: A Critical factor in Human Resource Management

Posted by | June 15, 2021 | Career Tips / Blog

In real life situations, performance appraisal is a daily activity as it is also to organisations. We evaluate our activities daily, weekly, monthly or yearly to see our achievement and, challenges, correct our mistakes and set new targets.

More so in organisations. The continued success of organisations is dependent on its employees who in all thinking is the primary resource.  Their development and retention is a critical success factor if it must meet with its present and future requirements and surpass same.

Performance appraisal sometimes referred to as performance evaluation or personnel evaluation, is very important in Human Resource Management, a tool that places high in people Management. Other factors / functions which contribute to employee development are staff orientation and career development and all these add-up to enhance organizational effectiveness.

Infact, performance appraisal is a fulcrum on which major HR activities revolve.  Many informed decisions such as promotions, wage hikes, transfers, terminations, job rotation, job enlargement, succession planning etc emanates from this. Again, allocation of organizational resources is facilitated by performance appraisal too.

What is Performance Appraisal?

“Performance appraisal is the process by which an organization obtains a feedback about the effectiveness of its employees”. It is the evaluation of employee’s job performance and contributions to the organisation. In other words, it is a mechanism through which employees and the organization obtain feedback and provides organisation with assessment data for present and future use. It is the measurement of performance against set and agreed target over a given period of time so as to obtain to obtain feedback.

The purpose of Performance Appraisal stems from the need to improve organizational efficiency by ensuring that employees perform to the best of their ability and also develop their potentials for improvement. A good performance appraisal or management system is designed to serve two (2) main purposes:

  1. Evaluative purpose and
  2. Developmental purpose

Evaluative Functions: This function helps to promote or reward higher performance while at the same time assists to determine low performance.

Development Function: On the other hand, this performance appraisal function is useful in determining training needs of the subordinates while at the same time motivates them to higher performance.

Unfortunately, many people lay more emphasis on the evaluative function to the neglect of the developmental function.

A good organization should have a well laid down policy on employee performance management and the potential of each employee to access his/ her future development.

Performance appraisal must be seen as a result-oriented machinery for the growth of individual and company and not as firing squad or punitive measure. You should note that organisations decide on what performance appraisal system to be adopted based on its laid down policy, suitability and operational modus.

Performance appraisal is either open or closed. The open system is profound in the private sector while the closed system is more practiced in the public sector.

Performance appraisal can be classified under two broad systems: Individual and Multi-Person Appraisal Systems.

Individual Appraisal Method:

In the individual appraisal method, employee’s performance is studied over a given period. This is aimed at identifying their strengths and weaknesses. Examples of these are Annual Confidential Reports, Essay Evaluation, Management by Objectives (MBO) and Check List Methods.

  • Confidential Reports:

Perhaps, this is the oldest method. It is a report prepared by employee’s senior/ supervisor wherein he/ she highlights the subordinate’s strength and weaknesses in the past year. The flaw about this method is that the feedback on the report prepared is not disclosed to the employee for whom this has been written because every report is kept confidential.

  • Critical Incident and Checklist Techniques:

In the critical incident technique, the superior studies and analyze the subordinate’s best and worse incidents of behavior in the past year; analyzing the most critical incidents while in the checklist method, the supervisor is given a paper that has set of statements that are expressive and purpose in nature, and the answers to which are either YES or NO. Here, the usual and typical questions are whether/ or not the performance was satisfactory and whether or not the standards were met.

Multiple Persons Appraisal Methods:

The multi-person appraisal method compares the performances of the employees in a particular department and are pitted against one another to identify the best performers and the worst performers. Examples of multi-person appraisal methods are Ranking System, Paired Comparison, Forced Distribution, Performance Tests and 360-Degree Appraisal.

  • Paired Comparison Method:

In this technique, the superior compares each individual to all the other individuals working in the team and the subordinates are all ranked on the basis of criteria and traits analyzed. The comparison method could be from the best to the worst or the worst to the best.

  • Management by Objective (MBO)

The Management by Objective (MBO) is the well-known technique for setting goals, then judging how they are met; it emphasizes on tangible and measurable goals. The Key Result Areas (KRA) and the means to attain maximum results are concentrated upon. This system gives the superior the opportunity of knowing his/ her team’s KRAs and the results expected at the end of the year/ or given period. In this method, the job is delegated and the authority, responsibility and relationship is defined.

In this method, both the supervisor and the subordinate discuss, negotiate and agree the goals to be attained over a period. The objectives/ target are expected to adhere to the SMARTER rules – Specific, Measurable, Agreed, Realistic, Time-bound, Ethical and Recorded.

  • 360-Degree Method:

The 360-degree appraisal method involves various stakeholders – the employee’s immediate supervisor, other supervisors who are not the bosses but comes in contact with the employee/ appraisee on a daily basis, the top management, and the employee’s subordinates as all provide data/ information on his/ her performances.

All 360-degree of employee working and working styles are analyzed involving the whole cycle of individuals with whom the employee comes in contact or interacts with on the course of work. The feedback from the appraisal is passed on to the employee for increased performance.

Why do we conduct Performance Appraisal?

Performance appraisal aims at regularly assessing and reporting on subordinate’s performances, attainment, abilities and potentials for future development. It further seeks to:

  • Clarify the Key Result Areas (KRA) of the job and provide basis to agree on targets and standards of performance for a given period;
  • Assess performance of employees and agree on how to foster continuous improvement;
  • Provide opportunity for a formal recognition and documentation of performances (the subordinate has opportunity to bring certain achievements or constraints being experienced on the job to the attention of the boss, his/ her career plans and aspirations);
  • Generate information for management’s decision-making on issues like promotion, transfers, succession planning, job rotation, job redefinition, disengagement etc;
  • Determine employee potentials and provide guided development;
  • Provide opportunity for identifying individual training and developmental needs;
  • Take stock of skills and talents available, strength and weaknesses of employees in the organization
  • Provide feedback to employees on how organization view their (employee) performances;
  • Improve communication by compelling superiors and subordinates to hold periodic dialogue/ meeting and provide feedback;
  • Provide basis for reward decisions – merit increases, reassignment and expatriation
  • Generate data/ information upon which workplans, budgeting and HR Planning can be based
  • Inform job distribution/ redesign, job enlargement, career planning and development;
  • To provide a ready tool for evaluating the effectiveness of selection and placement decisions;
  • Identify training and development needs for individual employees and entire teams/ divisions within the organization;
  • Provide a good criteria for assessing the success or otherwise of previous training and development efforts
  • Help in determining salary related decisions;
  • Serve as a counseling forum;
  • Emphasize the strength and weaknesses of employees;
  • Improve motivation

Conclusion:

Without mincing words, it must be stated that performance appraisal is key to the success of organisations as managers constantly make judgments about their subordinates based on performance appraisal and are expected to provide periodic feedbacks.

To make feedback a powerful instrument in performance appraisal and in improving the level of satisfaction, performance appraisal must not only be based on an objective criteria, but such criteria should have been jointly put in place and agreed between the supervisor and subordinate as employees who are involved in actually setting their own goals tend to perform at higher levels.

Contributed by Agolo Uzorka, CEO/ Lead Consultant, Eugene + George Consulting Limited

Agolo Uzorka
Agolo Uzorka
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