The performance appraisal process is defined as a process under which periodic assessment is undertaken to evaluate the performance of an employee. The input by an employee is compared with the output as per pre-defined performance goals.
Meaning of performance appraisal process
If an employee manages to garner higher ratings, it indicates netter performance by the employee and thus better growth of the organization.
In case an employee gets lower ratings, the organization can then help him to improve his performance by offering him training to improve his skills and knowledge.
More and more organizations are leaning in favor of conducting a performance appraisal process because it will help them to accomplish the business goals at a faster pace.
The performance appraisal process should be calculated over some time so that both the employer and employee can have a better idea about his performance on an annual basis.
The performance appraisal process is a formal interaction between an employee and his manager that takes the form of a structured interview to examine and discuss strengths and weakness.
This is undertaken to improve current skills and knowledge and offer further opportunities for improvement, development, and growth.
Objectives of the performance appraisal process
The purpose of a performance appraisal process is as follows-
- Identifying the strength and weakness of an employee
- Opening communications between employees and managers
- Strengthening the relationship of an employee with his superior
- Offering clarity in terms of expectations and organizational goals
- Encouraging superior performance
- To assess the potential for growth and development in an employee
- Identify whether the employees need further training
- Encouraging employees to take part in coaching
- To offer constructive feedback to the employees
- Counseling average and poor performers
- Identify performance gaps if any
- To obtain the necessary information that will help the company in allocating organizational rewards, compensation packages, salary raise, and wage structure
- Supporting manpower planning
- Improving the overall performance of an organization
- Reducing the grievances of an employee
12. Advantages of the performance appraisal process
The advantages of the performance appraisal process are as follows-
- It becomes easier to maintain a record of individual performance over some time, and this helps the company to make proper evaluations
- The performance appraisal process includes comparative ratings, and this helps the company to reward its better workers
- It helps the management to decide about important issues like transfers, raise and promotions
- The statistics derived from performance appraisal process helps the company to screen its recruitment process
- The performance appraisal process helps the company in identifying the right talent for specific jobs so that they can place the employees in particular areas depending on their know-how
- It becomes easier for a business entity to find those employees who are working above the set standards and also those who are unable to find their rhythm
- The performance appraisal process acts as an opportunity for the management to hold discussions with its employees about their performances
- It is also an opportunity for the employee to discuss and clarify issues and expectations with his manager
- The performance appraisal process determines the effectiveness of a training period and whether it has proved successful or not
- The feedback helps the employee to know whether they have completed their goals or not
- A performance appraisal process is a motivational tool that can prompt the employee to make viable changes so that he can do better in the coming days
- It encourages healthy competition between the employees as they try to garner better scores than their co-workers
5. Disadvantages of the performance appraisal process
The disadvantages of performance appraisal process are as follows-
- The performance appraisal process is time-consuming as the evaluation process is an ongoing one
- If not conducted in an appropriate manner it can prove a negative experience for the employee
- As the process is dependent on human assessment, it is subjected to bias and errors and thus lacks reliability
- It proves stressful if the results are not in your favor
- The performance appraisal process should be conducted with the help of pre-designed guidelines otherwise it will prove a complete waste of time and effort
Types of the performance appraisal process
The different types of performance appraisal process are as follows-
1. Critical incident method
In this type of performance appraisal, process-specific incidents are identified and described. It deals in particulars about the time when an employee was at his best and even when he performed below par.
- Performance of every employee is evaluated based on the logs placed in the evaluation form
- The logs are maintained by the manager who is charged to record important incidents
- At the end of a specific term, these recorded logs are used as a basis for performance evaluation
- The critical appraisal method harps more on negative aspects than the positive ones
- It involves close supervision which the employee may not feel comfortable with
- Recording all the incidents diligently of every employee is a chore that the manager may find tedious and boring
- It is a time-consuming process
2. The paired comparison analysis method
There are several relevant options in this paired comparison analysis performance appraisal method. All the options are set in the form of comparisons with others on the list, and the calculations are derived after looking at the highest scores.
- It is easy to choose the necessary option when priorities are not clear
- This method is generally used when you do not have objective data at your fingertips
- The method is not fully accurate
3. Weighted checklist method
In this type of performance appraisal process, the job of an employee is under scrutiny, and evaluation is based on effective and ineffective behavior of the employee on his job.
- The manager who is responsible for the evaluation process can be biased
- He has the opportunity to offer biased weights to the questions
- It is a time-consuming method as assembling and analyzing a number of statements takes time
- The weighted checklist method is considered expensive
4. Essay evaluation method
In the Essay evaluation method, the manager figures out both the strong and weak behavioral points of an employee.
- It is a non-quantitative technique
- It is less structured
- It is an open-ended and flexible process
- It is difficult to implement
- The Essay evaluation method is considered a time-consuming process
- The evaluation is subjective and prone to bias and errors
- It is considered uneconomical
5. Graphic rating scales method
In Graphic rating scales method, it is the duty of the management to check on the performance level of an employee simply.
- It enables quantitative comparison
- It is less time consuming compared to other types of the performance appraisal process
- Less validity in ratings
6. Management by objectives method
In this type of performance appraisal process, a list of objectives is set up by a manager to assess the performance of an employee on a regular basis.
- The emphasis is on the future and not on the past, and thus the performance appraisal process is all about the constructive end
- Emphasis is on short-term goals
- It is assumed that the employee is the best person to know about himself
- It is not easy to facilitate active participation by every employee
- The long-term goals are avoided under this process
- Goals remain rigid
7. Behaviourally anchored rating scales method
The Behaviourally anchored rating scales method is considered formatted and is a mix of critical incident technique and rating scale.
- Identifying the effectiveness and ineffectiveness of the performance of an employee takes time.
- It is difficult to develop
8. 360-degree performance appraisal method
This type of performance appraisal process includes allowing co-workers, peers, clients, supervisors, and customers to fill out a questionnaire which offers detail about that particular employee.
- Improves credibility
- Is a correct assessment
- Is time-consuming
9. Performance ranking method
This type of performance appraisal method is used to assess the performance from highest to lowest levels of an employee.
- Comparisons are made between the employees
- There are no set criteria for comparisons
10. Forced ranking method
In this type of performance appraisal method, the employees are ranked in terms of allocations.
- The process identifies the most and least talented employee in the group
- The onus is on sustaining and improving the performance of a team
- Leads to unhealthy competition
- Results in discrimination
- Discourage teamwork