The Pros & Cons of Performance Appraisal

 Diterbitkan pada 10 Maret 2017

Status dapat dihubungi

VinayKumar S

Manager - Talent Acquisition at Techwave

18 artikel Ikuti

A performance appraisal is an evaluation done on an employee’s job

performance over a specific period of time. It is the equivalent of a report
card on an employee and how their manager assessed their performance
over the prior year.

Anyone who has worked in more than one department or at more than
one organization can attest to the fact that not all performance appraisal
processes are the same.

The varying systems and processes are all over the map. Unfortunately,
some are done so poorly that they are not only designed to fail, but also
to create a negative experience for both the manager as well as the
employee.

Companies and managers use a number of common appraisal methods to

assess employee performance. Each technique has pros and cons. To
determine which technique works best for your business, you need to
understand the purposes of appraising performance. A performance
appraisal should motivate an employee to better performance by helping
him understand why he needs to move away from poor performance or
toward critical objectives.

Rating Scales

The graphic rating scale and behavioral rating scale are two common
rating scale appraisal techniques. With the graphic scale, employees are
simply assigned a score on criteria important to job success. The
behavioral scale focuses on actual behaviors. Pros of ratings scales
include ease of use and understanding. Many managers and employees
are familiar with them. They offer a simple way to communicate areas of
strengths and weaknesses. A common negative of rating scales is the
assumption that they are directly tied to an employee's raise or bonus.
This can cause score inflation. Managers can also have negative bias
toward employees.

Narrative Techniques

The narrative technique and critical-independent method involve more

details analyses of job performance. You write an essay assessment of
performance with the narrative and keep a running log describing positive
and negative performance and behaviors with the critical-independent
method. A pro of these techniques is the thoroughness of detail in
analyzing employee behaviors. Additionally, you can focus on praising
positive behavior and addressing areas for correction. A concern is the
reaction of the employee, though. He might interpret the evaluation too
positively or too negatively relative to a scoring system.

Comparison Methods

The multiperson comparison method and forced distribution methods are

two common comparison appraisal techniques. These approaches
compare the subject employee's performance to peers. This allows you to
communicate to employee areas in which he over- or under-performs
relative to others in similar positions. This can motivate performance in
competitive workplaces and among competitive employees. The risks of
these methods include the potential of in-fighting and the lack of harmony
you might see in your employee ranks.

360 Feedback
A popular contemporary appraisal technique is the 360 degree feedback.
In this method, employees are evaluated by colleagues, customers,
subordinates, other interested parties an supervisors. The major
advantage of this technique is that it offers the employee a glimpse of
how others view his performance in various relationships critical to his job.
It also allows a better chance to compare different perspectives in the
evaluation process. Biased evaluators, poor alignment with goals and
negative employee feelings are among cons of this approach.

There are many varying opinions on the subject of performance appraisals

and why they are done. Some organizations do performance appraisals
because they feel obligated to do them – because everyone else does.

Some organizations do performance appraisals to make sure they have a

piece of paper in the employee’s file – in case they ever need to do
corrective action.

But successful organizations understand the importance of incorporating

performance appraisals into their performance management process and
strategy.

Advantages of performance appraisals:

· They provide a document of employee performance over a specific

period of time.

· They provide a structure where a manager can meet and discuss

performance with an employee.

· They allow a manager the opportunity to provide the employee with

feedback about their performance and discuss how well
the employee goals were accomplished.

· They provide a structured process for an employee to clarify

expectations and discuss issues with their manager.

· They provide a structure for thinking through and planning the

upcoming year and developing employee goals.

· They can motivate employees if supported by a good merit

increase and compensation system.

Disadvantages of performance appraisals:

· If not done right, they can create a negative experience.

· Performance appraisals are very time consuming and can be

overwhelming to managers with many employees.

· They are based on human assessment and are subject to rater

errors and biases.

· Can be a waste of time if not done appropriately.

· They can create a very stressful environment for everyone involved.

Finally, performance appraisals are only as good as the performance

management system it operates within. Organizations that only do
performance appraisals for the sake of doing them are wasting their time.

But organizations that incorporate performance appraisals into a

comprehensive performance management system and use them to
implement business goals have an advantage for accomplishing their
goals and ultimately their strategic plan.

https://www.linkedin.com/pulse/pros-cons-performance-appraisal-vinaykumar-s/
02 Dec

Performance Appraisal in HRM

Methods, Objective, Characteristics
By Admin

In Employee Programs
Comments

What is Performance
Appraisal?
Performance appraisal is a part of a company’s process of understanding
their employees better and giving them feedback to help them improve
their performance. While several employees find performance appraisal to
be unnecessary if done right, it can have several benefits for the
organization. Let us learn more about performance appraisal in HRM.

Performance appraisal in HRM is a process of analyzing an employee’s

worth as well as contribution to the job. Getting an objective evaluation of
an employee’s performance will help a company identify any existing
problems in the workplace. This will help the HR department to solve
those problems quickly and with ease.

Performance appraisals are used for an employee’s development. It helps

the management to make decisions regarding promotions, job transfer &
terminations. This systematic approach also gives employees an insight
into their current capabilities, whether they have scope to learn and grow,
“where they currently stand” with their boss & their long-term plans with
the company.

The entire performance appraisal process can be formal or informal

depending on the call that the HR department takes. Decisions regarding
the format of performance appraisals are entirely dependent upon the
particular organization.

Are you an HR professional looking to save time? Check out the StartupHR
toolkit. A complete toolkit to help you save money and resources. It comes
with the largest collection of ready to use HR documents with templates,
calculators, policies, and more!
Download Performance Appraisal
Documents
The Ultimate Guide to Accelerate Your HR
Productivity
DOWNLOAD HERE

Definition of Performance
Appraisal in HRM
Performance appraisal is a process where the employee’s performance,
contributions & skills are evaluated against his/her job requirements. This
provides a uniform platform to measure financial rewards, selection for
promotions, or assignments to important projects for each candidate.

Performance Appraisal in HRM creates a healthy competition between

colleagues. It also helps employees compare and improve upon their skills
if needed. Appraisals are usually held annually in most companies.

How Performance Appraisals

Work?
Every company has a different approach to their performance appraisal.
Some companies hold an annual review process, which may have
assessment sessions annually, semi-annually, or quarterly.

Some companies also adopt a method of one-on-one check-ins, which are

considered less formal than the annual assessments. Managers are able
to provide frequent feedback to their employees in this system. These
check-ins help the employees to periodically check their performance and
re-evaluate their goals if needed. This approach works well on agile and
collaborative projects.

Different methods are best suited for different companies. Some

organizations also base their appraisals based on the kind of projects their
employees are currently working on.

Process of Performance
Appraisal in HRM
Modern Methods & Types of
Performance Appraisal in HRM
Different companies use different methods to conduct their performance
appraisal calculations. Also, it depends on the job role and the type of
company it is. A few of the common methods doing performance
appraisals in HRM are:

1. Graphic Rating Scale Method

This method is based on the idea of rating employees based on individual
characteristics. For example, some organizations may choose to evaluate
employees based on quality and quantity of work, decisiveness &
emotional stability.
Employees are rated on a fixed scale (say 1-10), based on the extent to
which they meet each of the desired criteria. The average of all the scores
constitutes the overall score of the employee.

Graphic scales are practical; they are cost-effective and can be developed
quickly. They also help in measuring a particular objective effectively.
However, the appraisal in such cases largely depends upon individual
perspectives. This may lead to disputes or non-uniformity in evaluations.
Furthermore, personal bias can also play a role in it. You must be careful
to define each character as clearly as possible.

2. Ranking Method
The name of this method explains exactly what it is. The Human
Resources team ranks each employee on a list based on factors decided
by the human resource department. Hence, the best performers are on
the top, and the worst performers rank at the bottom.

This simple method of ranking employees can be modified in several

ways. One of these methods is the paired comparison ranking style
wherein employees are compared in pairs of two against each other. The
number of times one employee is preferred over someone else is
recorded. The top employee is the one with the highest number of
preferences.

The grading scale method can be combined with ranking. The employees
with the best overall score on the grade scale (from 1-10) rank at the top
of the list. The ranking method is preferred because it is simple, efficient,
and requires little time and money. However, personal bias and favoritism
may cause major disruptions in objective evaluation.

3. Checklist Method
Employees are evaluated by making use of a checklist in this method. The
checklist can have a variety of different factors that the human resource
department has chosen to be important. The employees are then judged
based on those factors The employers must select between the yes/no
options in those checkboxes.

Items in the checklist carry a numerical value based on their importance

to job performance Therefore, the appraisal score is calculated by adding
up the scores of all these individual factors.

For example, Behaviour Based appraisals are done by using the checklist
method. This happens by having a pre-set personality and behavioral
checkpoints. If an employee meets them then they are considered for an
appraisal.

The checklist method makes it easy to evaluate employees as their

supervisors have to simply choose between yes/no. It also helps the
employees receive clear and direct feedback. However, it may not be easy
to design an effective checklist and assign a weight based on the
importance of factors.

4. Management by Objectives Method(MBO)

MBO is considered to be one of the most systematic methods in
performance appraisals. The idea is to give each employee a set of
objectives that have to be achieved by them. During the performance
appraisal, the supervisors will evaluate the extent to which the objectives
have been achieved.

This is a strong method of evaluation. The employees have been clearly

instructed as to what is expected of them. It also helps the company to
set benchmarks and standards for growth. However, a lot of time and
effort goes into determining the objectives and evaluating them.

5. 360-degree Feedback Appraisal

This approach is basically a group performance review. The data
regarding an employee’s behavior is collected by his/her close
subordinates. An employee’s colleagues might be able to review his/her
performance under a variety of situations and circumstances, which might
have escaped the employer. This allows for holistic, full-circle, multi-tiered
feedback regarding a person.

This method is useful as it eliminates subjectivity. It also promotes an

atmosphere of open culture, self-development and better communication.
However, every company must develop an effective system and
procedure to utilize this method.

6. General Performance Appraisal in HRM

General performance appraisal is one of the most common types of
performance appraisals. In general, a manager sets goals and targets for
an employee and urges them to achieve it. This pushes the employee to
achieve them and encourages them to grow.

The manager calls a meeting and sets certain goals for an employee.
Once the employee achieves those goals, they review it and set newer
goals. This method is an ongoing conversation between the employee and
the manager throughout the year. The manager can also recommend
development plans and key growth areas.

7. Technological Performance Appraisal

In this method of performance appraisal, the employee’s technological
capabilities are judged and also the Technological skills are kept at the
forefront of all the other skills that are not related to the employee’s job.

Here the focus is on how easily the employee adapts to new technology,
how aware the employee is of the technology around them, and how
much technical knowledge they have.
8. Sales Performance Appraisal
A salesperson is closely linked to the financials of an organization.
Therefore, this kind of appraisal has a direct impact on the sales of a
company. Here, the employee is judged based on the revenue they bring
into the company. Here the focus is on what the employee achieves in
contrast to how they are or how they behave.

The manager should discuss goals and deadlines for sales. This way an
employee can have a goal to achieve.

Performance Appraisal
Objectives
Performance appraisal can be conducted for various reasons. Human
resources is one of the most important resources that a company has.
Therefore, every company should understand where their employees
stand in terms of performance and productivity. Here are some more
objectives of performance appraisals:

1. Provide Feedback:
Appraisals are an effective way to give feedback to employees Also,
managers to communicate clearly regarding employee objectives and
expectations. An employee can learn about what he/she can do to
improve their future performance.

In addition, Some tips for employee feedback

1. Performance Outcome
2. Quarterly Reviews
3. Give feedback on a 1-2-1 basis

2. Downsize or Right-Size:
The COVID pandemic is one of the many harsh realities that might force
an organization to downsize. In such a situation, appraisals are a way to
make sure that the most productive and talented individuals can be
retained in a company. It is also an effective way to know which
employees are non-performers.

3. Promote The Right Person:

Appraisals give an organization objective and data-driven tools to make
good promotion decisions Also, It helps the most talented individuals
retain the position of the highest importance.

4. Set Goals & Measure Goals:

The annual appraisals are also an effective way to set future goals for the
employees. This ensures maximum productivity and superior
performance.

5. Improve Work Performance:

An employee can only improve if he knows how to Objectives of a good
appraisal include highlighting the specific area of improvement for every
employee.

Some tips improve performance:

1. Keep your eyes on the deadline
2. Also, Improve project evaluation skills
3. Set Goals as well as Personal Benchmarks

6. Determine Compensation Changes:

An appraisal system works as a determining factor in increasing
compensation, pay raises, etc. Also, It ensures that people who work
harder get paid better.

7. Encourage Coaching & Mentoring:

Managers are usually expected to coach their team members Also,
appraisals help the managers to identify the areas where mentoring is
required.

8. Employee Training and Development:

Individual skills are evaluated during an appraisal. Also, this helps
employees to identify if they need to acquire more skills and
competencies to contribute to the company. It also helps an organization
to plan the up-skilling training for their employees.

9. Provide a Legal Defense For Personal

Decisions:
A company can be held accountable for any decision that they take, even
firing or promoting an employee. Therefore, conducting a performance
appraisal will help the company prove a point if their decisions are ever
challenged.

10. Encouraging Coaching & Mentoring:

Teaching and coaching are part of managing employees. It is part of being
a good manager. Performance appraisals will help them understand where
an employee is lacking therefore where they can train and help
employees to do better.

11. Improving Overall Organization’s

Performance:
Last but not least, performance appraisals will help the company to learn
more about the employees and their requirements. It will help the
employees to understand where they are lacking and where they are
doing well. This will help them learn and grow quickly.
Characteristics of an Effective
Performance Appraisal
System:
When you are trying to adopt an effective appraisal system for your
company, there are certain factors to be kept in mind. However, what
works for someone else may not be right for your company. A good
appraisal system satisfies these characteristics according to your
requirements.

1. Clear Objectives
Employee performance appraisals should have a clear goal. There must
be a predefined set of factors to evaluate employees based on their skill
sets Which obviously must be clear what the managers aim to get out of
these appraisals.

2. Well Defined Performance Criteria

Employees must have a clear idea of what they are being evaluated. Good
appraisal systems have a set of procedures and standards for the
performance of each individual. For instance, a fresh graduate cannot be
evaluated against someone with years of experience.

3. Accuracy & Reliability in Results

An effective performance appraisal also helps a company to make clear,
data-driven & informed decisions. The data (or results) of any appraisal
must be reliable and valid, and they must be presented in an
unambiguous manner. Accurate insights will also help a company gain the
trust of its employees.

4. Post Appraisal Interview

Post appraisal interviews are important because they help the employees
to get direct feedback from their superiors or managers. These interviews
also help the managers decide if any training or skill development
programs are needed. Employee grievances can also be addressed during
this interview.

5. Time-Saving
A good appraisal system is one that saves time as well as cost. Also, this
helps a company to get the maximum benefit. Instead of wasting all their
time on managerial tasks, HR personnel could focus on other important
jobs.

6. Continuous Feedback
Modern appraisal systems have done away with the annual performance
review model. Instead, that model has been replaced with a system
wherein managers give continuous (read- periodical) feedback to their
employees. Also, this helps the employees fill in their weaknesses from
the start and improve upon them.

7. Focusing on What Matters

A good appraisal system evaluates employees on various factors.
However, an employee’s work performance and competency are of
utmost importance. Subjective factors, such as personal behavior, attitude
& personality come secondary to an employee’s skill set.

8. Match Your Goals

Appraisal systems should be designed according to the functioning of your
company. For instance, if you are using a 360-degree feedback approach,
feedback should be taken from only those who have worked closely with
the employee overtime. It’s good to practise to be innovative with
appraisals so they match your company’s working policy.

Advantages & Disadvantages

of Performance Appraisal
It is often wondered why do HR departments conduct performance
appraisals. The performance appraisal process is a complicated one. It
needs to be done in a way that truly brings changes to the way
the company functions. While it gives the managers a clear idea about
their employees it is a tedious task that sometimes doesn’t bring any
results or changes. Therefore, the question comes up as to whether you
should conduct a performance appraisal in your company or not.

Let us discuss the advantages and disadvantages of performance

appraisal in HRM:
Advantages of Performance
Appraisal are:

1. Find The True Potential of The Employee

Performance appraisal helps the HR department and the company learn
about the strengths and weaknesses of an employee. This process can,
therefore, be used to truly learn about the employee’s interests and
potentials. This analysis also helps the HR department to choose the right
employees for a job. The HR department can even suggest the employee
switch to a department that fits them better.

2. Promotes Employee Development

The quickest way to improve an employee’s performance is by providing
them with specific feedback. The performance appraisal process includes
giving employees feedback about their strengths as well as weakness. The
employees can use this information to develop themselves further.

3. Acts as a Motivator
Employees crave feedback. When they receive that it can act as a
motivator for them. Knowing their weaknesses can help employees give
their best and improve upon the areas they’ve missed out on. After all this
can work as a boost to the entire office or team.

4. Focused Employee Training & Development

Planning and development programs are important for any organization.
The performance appraisal can show exactly where a majority of the
employees lack in terms of training as well as in development. The HR
department can then create programs according to those gaps. This will
be more beneficial for the employees and will be a successful program
of training and development.

5. Improves Employee, as well as Management

Relationship
In general, the performance appraisal gives employees an opportunity to
truly share and discuss the problems that they are facing in their role. This
builds a healthy environment for both the manager and the employee.

6. Promotion & Transfers

It is difficult to make the correct decision about who to promote and who
to transfer without any data. The performance appraisal can be useful for
learning in which talents should be rewarded and which need to be
pushed to do better. It ensures that the decision is made based on facts
and figures rather than personal biases.
7. Mentoring From Superiors
Managers are a crucial part of any appraisal system. They are the ones
handling the administrative as well as feedback work in an appraisal.
Good managers are good mentors, meaning that they are able to guide
their employees to reach their maximum potential. Managers must not
only focus on the weaknesses, but they must highlight employees’
strengths too.

Disadvantages of The
Performance Appraisal Are as
follows:

1. Consuming Process
First and foremost, performance appraisal is a time-consuming process. It
requires resources, time and costs the company money. It requires the HR
department to create the forms, ask everyone to fill them as well as
analyze the results for specific feedback while going through the correct
procedures.

Sometimes, the organization has to hire professional experts from outside

the company to conduct the evaluation process. The evaluation
processes must be designed and also, implemented clearly &, because of
this, the performance appraisal process becomes expensive for the
company.

2. Personal Bias or Incorrect Ratings

It is possible that managers, in order to not look bad, give a decent rating
to all employees. This can be the case with managers that try to avoid
conflicts or arguments. Furthermore, personal bias can play a huge role in
the ratings. Also, if a manager has a liking for an employee they will rate
them better and visa versa. This can be the case even if they are a good
employee. Generally, employers simply give an average out feedback to
employees. This means the over performers and underperformers both
aren’t rated correctly.

3. Horn & Halo Effect

The horn and halo effect is a human tendency to see only the good or the
bad in a person. For example, an employer might just see that the
employee is never on time and will rate the employee low on all the
brackets because of that. However, he might not notice that the employee
works for long hours every day and completes the work on time. This can
affect an employee’s overall ratings.

4. Spillover Effect
This refers to human behavior. It means that while judging the employee
for performance appraisal it is possible that the manager simply marks an
employee high because of their past performances instead of their current
ones. They rank the employee by taking into account the overall overview
that they have of the employee.

5. Attitude of Evaluator
The mindset and the mood of the manager is also a cause of concern. If
the manager has high expectations they might mark their employees
lower. Thereby, making the team look lower than others on average. Also,
this makes the process of evaluation and improving the performance in
the organization a difficult task to achieve.

Frequently Asked Questions

(FAQ’S)

1. When Does an Organization Conduct

Performance Appraisal?
Ideally, an appraisal is a continuing and ongoing process conducted
together by meetings at regular intervals. In the entire working year, the
managers are engaged with the employee to achieve goals, note the
progress, and also give feedback. Appraisals usually take place every 6 or
12 months. The appraisal duration and procedure may vary from
organization to organization. There’s also a case where if the company is
experiencing a good amount of growth they may conduct quarterly
reviews, to keep the employee closer to the organization’s goals.

2. What is a 360-Degree Appraisal?

360-degree appraisal is a performance assessment tool that an

organization uses to gives 360 degree feedback to the employees. A
normal appraisal includes just the employee and his manager, but in the
case of the 360-Degree appraisal, there is the involvement of employees,
managers, colleagues, and coworkers, and every aspect of the employee’s
work is considered.

3. What Should You Not Say in a Performance

Review?

There are few things you should never say in a performance review which
are, that wasn’t my fault, yes, yes, yes”, this isn’t fair, this isn’t fair, I’m
not good at that, etc. These phrases will definitely give a wrong
impression of you as well as affect your review.

4.What Should be Included in Performance

Appraisal?

These 3 major elements that should be included in performance appraisal

are performance analysis, employee potential, and also employee
deficiencies. Managers should consider relevant information for the
reviews. Weakness, as well as strengths of the employee, should be taken
into consideration. Most importantly managers should give proper time to
the process and conduct it for namesake.

5. How Many Types of Appraisals are there?

1. The following are various Appraisals.

2. The 360-degree appraisal.
3. General performance appraisal.
4. Technological performance appraisal.
5. Employee Self-Assessment.
6. Promotion as well as Sales Performance Appraisal.

Conclusion
There you have it, the complete guide to performance appraisal in HRM.
Performance appraisals are only as good as their implementation and the
system in which they are performed. If it is done simply for the sake of
doing it, then there truly is no advantage to it. However, if the process is
implemented correctly then it can truly help the organization be more
productive, more focused and also will help authority figures to make
better decisions.
https://www.startuphrtoolkit.com/performance-appraisal-in-hrm/