Importance of performance appraisal

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I. Contents of getting importance of performance appraisal

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A performance appraisal program (PA program) is important to employees professional
development, to meeting the companys or firms goals or objectives and, ultimately, to
contributing to the companys or firms bottom line. No employer, whether a small CPA firm, a
Big Four firm, a nonprofit organization, a government institution or a private or public company,
should be exempt from having a formal PA program. Other benefits that could be derived from
having a PA program include enhanced communications, an opportunity to effectively address
performance problems, and improved employee morale.
Before creating a PA program, there are several factors to consider. The employer should first
determine the objectives for the program. Second, the employer should develop a plan and
timeframe for launching the program. Finally, the employer should prepare for any obstacles that
might appear, and regularly consider ways to improve the program.
Purpose
The primary reason for having a PA program is to monitor employees performance, motivate
staff and improve company morale. Monitoring employee performance requires routine
documentation, which is accomplished through completing a performance appraisal form. When
employees are aware that the company is mindful of their performance and that they could be
rewarded with merit increases and promotions, they are motivated to work harder. Morale is
improved when employees receive recognition or reward for their work

An effective PA program will assist the company in achieving its goals and objectives. Not only
will training needs be identified and addressed during a PA review, but hidden talent can be
discovered as well. Through identifying these training needs, staff can perform their jobs at the
highest level and be in a better position to address clients, members and customers concerns
and questions. A well-developed staff is more likely to be proactive, productive and resourceful,
all of which helps give the company a competitive edge, from improved customer relations to
increased profits.
Getting off the Ground
Before the PA program is up and running, a performance appraisal form should be designed with
input from managers. It should be able to sufficiently measure performance, be simple enough
for all employees to complete, and not take more than an hour to finish. In implementing the PA
program, top management should give the plan its blessing; employees should understand how it
works, and the staff at large should be encouraged to view the program as a valuable human
resources tool.
Pitfalls
Pitfalls of a PA program will be evident if the managers are not adequately trained to monitor,
interview and grade their staff. Grading that does not accurately reflect the employees work
performance could land a company in hot water, as performance evaluations often are used as
evidence in wrongful termination cases. Further still, supervisors who let personal bias creep into
their employee evaluations could be setting the stage for a lawsuit.
Enhancing the PA Program
The PA program should be reviewed at least annually to determine if it is meeting managements
expectations. Areas to consider when reviewing the PA form should include the grading system,
to see that core skills and soft skills are evaluated effectively; sufficient space for employee
comments; and categories that correctly address and measure all of the employees
responsibilities and job descriptions. Additionally, the form should include a future goals section
and a self-evaluation section.
The second part of this article, to be featured in next months issue, will focus on how employees
and managers should complete the performance evaluation form.

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III. Performance appraisal methods

1. Essay Method
In this method the rater writes down the employee
description in detail within a number of broad categories
like, overall impression of performance, promoteability
of employee, existing capabilities and qualifications of
performing jobs, strengths and weaknesses and training
needs of the employee. Advantage It is extremely
useful in filing information gaps about the employees
that often occur in a better-structured checklist.
Disadvantages It its highly dependent upon the writing
skills of rater and most of them are not good writers.
They may get confused success depends on the memory
power of raters.

2. Behaviorally Anchored Rating Scales

statements of effective and ineffective behaviors
determine the points. They are said to be
behaviorally anchored. The rater is supposed to
say, which behavior describes the employee
performance. Advantages helps overcome rating
errors. Disadvantages Suffers from distortions
inherent in most rating techniques.

3. Rating Scale

Rating scales consists of several numerical scales

representing job related performance criterions such as
dependability, initiative, output, attendance, attitude etc.
Each scales ranges from excellent to poor. The total
numerical scores are computed and final conclusions are
derived. Advantages Adaptability, easy to use, low cost,
every type of job can be evaluated, large number of
employees covered, no formal training required.
Disadvantages Raters biases

4. Checklist method
Under this method, checklist of statements of traits of
employee in the form of Yes or No based questions is
prepared. Here the rater only does the reporting or
checking and HR department does the actual evaluation.
Advantages economy, ease of administration, limited
training required, standardization. Disadvantages Raters
biases, use of improper weighs by HR, does not allow
rater to give relative ratings

5.Ranking Method
The ranking system requires the rater to rank his
subordinates on overall performance. This consists in
simply putting a man in a rank order. Under this method,
the ranking of an employee in a work group is done
against that of another employee. The relative position of
each employee is tested in terms of his numerical rank. It
may also be done by ranking a person on his job
performance against another member of the competitive
group.
Advantages of Ranking Method
Employees are ranked according to their
performance levels.
It is easier to rank the best and the worst
employee.
Limitations of Ranking Method
The whole man is compared with another
whole man in this method. In practice, it is very difficult
to compare individuals possessing various individual
traits.
This method speaks only of the position where an
employee stands in his group. It does not test anything
about how much better or how much worse an employee
is when compared to another employee.
When a large number of employees are working,
ranking of individuals become a difficult issue.
There is no systematic procedure for ranking
individuals in the organization. The ranking system does
not eliminate the possibility of snap judgements.

6. Critical Incidents Method

The approach is focused on certain critical behaviors of

employee that makes all the difference in the
performance. Supervisors as and when they occur record
such incidents. Advantages Evaluations are based on
actual job behaviors, ratings are supported by
descriptions, feedback is easy, reduces recency biases,
chances of subordinate improvement are high.
Disadvantages Negative incidents can be prioritized,
forgetting incidents, overly close supervision; feedback
may be too much and may appear to be punishment.

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