Performance appraisal is the systematic and periodical approach that assesses the job performance and productivity of an individual employee aboutspecific pre-established criteria. One of the importance of performance appraisal is that it helps in the employee’s recognition and rewards. It provides the opportunity for the recognition and reward of employees to ensure that they feel valued for their work. By assessing the performance of the employees in relations to the objectives of the employer, the management can identify how to reward employees through either promotion or salary increment ( Bednall, Sanders & Runhaar, 2014 ). Performance appraisal is also useful to the employees because it provides an opportunity for self-development and sets a clear career path. It allows the employee to receive feedback on the performance and identify areas of improvement. An employee can discuss with the manager and make a training program that can help improve the skills. Furthermore, it can act as a form of motivation to the employees if it is supported by the right merit-based compensation system. The system also helps in the identification of the underperformers and then providing them with the right training required to make them increase their skills and performance. Performance appraisal is also important in improving decision-making ability. When the company has detailed information on the performance of the employees, it becomes easy for the managers to make business decisions.
One of the performance appraisal methods is the person to person comparison method. In this method, various specific factors are selected for comparison amongst the employees. These can include leadership, reliability, dependability, and initiative. A five-point scale is usually designed to rank these factors based on how the employee meets them. The factor comparison method is useful in the job evaluation merits to understand the performance of the employees. The result-based system of performance appraisal, on the other hand, involves the use of the job outcome of employees to gauge their performance ( Iqbal, Akbar & Budhwar, 2015 ). The employees who perform best are those who produce positive results and those who produce poor results are considered as low performers. Under this system, the performance is based on the factors such as how well the employee has met the set targets and the quality of the work they have completed. This method is useful as it rates the employees based on their actual performance rather than other factors. While the comparison method focusses on the certain set factors, the result-based system is more concerned with what the employee has achieved.
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The most effective method of performance appraisal is the result-based method. This method measures and rates the employees based on their abilities to meet the set goals. The method is effective because it provides the employees with the opportunity to see how they have performed about the set goals. By showing the achievement of the employees with relations to the set target, the management can make the right decision concerning the merits of the employees ( DeNisi & Smith, 2014 ). The method is also effective as it helps the management to identify employees’ performance based on their results about the set target. Instead of focusing on other factors that could not add value to the overall goal of the company, the result-based method ensures that the appraisal is done in a way that reflects the exact performance of the employees. Because the organization aims to have the employees who deliver results, this method is the best way to ensure that the productivity of the employees is improved. The method also allows the management to identify those employees who are performing below the set target and train them to improve productivity.
References
Bednall, T. C., Sanders, K., & Runhaar, P. (2014). Stimulating informal learning activities through perceptions of performance appraisal quality and human resource management system strength: A two-wave study. Academy of Management Learning & Education , 13 (1), 45-61.
Iqbal, M. Z., Akbar, S., & Budhwar, P. (2015). The effectiveness of performance appraisal: An integrated framework. International Journal of Management Reviews , 17 (4), 510-533.
DeNisi, A., & Smith, C. E. (2014). Performance appraisal, performance management, and firm-level performance: A review, a proposed model, and new directions for future research. Academy of Management Annals , 8 (1), 127-179.
