Performance appraisal is the process of determining and communicating to an employee how he or she is performing on the job and establishing a plan for improvement.
- When properly conducted, performance appraisals lets the employees know how well they are performing.
- It influences their future levels of effort and task direction. Effort is enhanced if the employee is properly reinforced.
- Performance appraisals are used to help in administrative decision making in issues such as promotions, firings, layoffs and pay increases.
- Performance appraisal information can also provide the needed input for determining both individual and organization training and development needs. This is because the appraisal will identify an individual’s strengths and weaknesses.
- Performance appraisals also help to encourage performance improvement. In this regard they are used as a means of communicating to employees, how they are doing and suggesting needed changes in behaviour, attitude, skills or knowledge.
- Performance appraisals are an important input in human resource planning and in selection procedures for internal recruitment and promotions.
- The performance appraisal records can be used to protect organizations in cases of unfair dismissal.
It is important for employees to be genuinely involved in the design of an appraisal scheme, the evaluation of performance and the objective setting process. Employees need to have a clear understanding of the purpose of the process i.e. Is it evaluative or developmental?
The following should be key principles in design of a performance appraisal scheme.
- It should create motivation to change or improve behaviour.
- It provides recognition for successful performance.
- It should provide guidance on what skills, competencies and behaviours are required to meet expectations.
- It should be simple, clear and easy to read.
- It must be seen as providing business benefits and to be relevant to day to day tasks and local needs.
- It must make realistic demands on employees and manages time and other resources.
- It must be perceived to be fair.