How Performance Appraisal Should Work in an Organization

Performance appraisal is the process of evaluating how effectively employees are fulfilling their job responsibilities and contributing to the accomplishment of organizational goals.

To appraise performance effectively, a manager must be aware of the specific expectation for a job, monitor the employee’s behavior and results, compare the observed behavior and results to expectations, and measure the match between them.

In most cases, a manager should also provide feedback to employees, a process that can produce strong reactions.

Performance appraisals are extremely important to an organization, although they may be difficult to conduct. They tell organizations whether their selection methods are right.

They demonstrate where training, development and motivational programs are needed and later help to assess whether these have been effective. As a matter of fact, many organizational policies and practices are evaluated, in large part, through their impact on performance.

Performance appraisals, after all, are the basis on which managers make decisions about compensation, promotion, and dismissal.

They also use feedback about people’s performance to recognize them for a job well done and motivate them.

In short, without a good judgment of the employee’s performance, managers find it very difficult to identify and encourage organizational effectiveness.

It is because formal performance appraisals are so important that most organizations systematically carry them out.

Appraisals may be done in two ways; informally and formally:

Informal Performance Appraisal

Informal Performance Appraisal means the continual process of having feedback about workers’ or employees’ performance. This kind of appraisal can be conducted on a day-to-day basis. The manager spontaneously mentions that a particular piece of work was performed well or badly.

On the other hand the employee may himself/herself follow the steps taken by the manager’s office in order to find out how a particular piece of work was received.

Because of the close connection between the behavior and the feedback on it, informal appraisal is an excellent method of encouraging desirable performance and discouraging undesirable work.

In order to be effective, an organization’s employees must come to see informal appraisal not as a mere casual matter but as an important activity and an integral part of the culture of the organization.

Formal Systematic Appraisals

Formal systematic appraisal is usually done on a half-yearly or an annual basis. This kind of appraisal serves mainly four major purposes;

  1. to keep employs informed formally as to how their current performance is being rated;
  2. to identify employees who deserve merit raises;
  3. to identify employees requiring further training, and
  4. To locate employees deserving promotion.

It is important for managers to differentiate between the current performance and the potential performance of employees.

Managers in many organizations fail to make this distinction because they assume that a person with the skills and ability to perform well in one job will automatically perform well in a different or more responsible position.

This is why people are often promoted to positions in which they cannot perform adequately.

Who is responsible for formal performance appraisals? In answer to this question, four basic appraisal approaches have evolved in organizations.

The first approach, a manager’s rating of an employee, is by far the most common. However, other approaches are becoming more popular, and can be a valuable supplement to appraisal by a single person.

The second most frequently used appraisal approach is a group of managers rating an employee.

Employees are rated by a committee of managers or by a series of managers who fill out separate rating forms. Since it is based on a number of views, this approach is often more reliable and effective than appraisal by a single manager. It is, however, time-consuming and often dilutes the employee’s sense of accountability to his immediate supervisor.

The third method of appraisal is a peer group rating a colleague. An individual colleague is rated separately and on paper by fellow workers on the same organizational level.

Rating bosses by the employees is the fourth approach.

This approach is used in some colleges or universities mainly in the USA, where faculty are asked to evaluate their dean by using a number of performance criteria. But this is now being increasingly used in businesses in the states responding to the furor of dynamic challenges.

Importance of Appraising Managers

Managerial appraisal is a major key to the success of management itself. It should be the basis of determining who is promotable to a higher position.

It is, of course, important to management development because if a manager’s strengths and weaknesses are not known, it would be difficult to know whether development effort is being made in the right direction.

Appraisal is, or should be, an integral part of a system of managing. Knowing how well a manager plans, organizes, staffs, leads and controls is really the only way to ensure that those occupying managerial positions are actually managing effectively.

In order that any organization, business, government agency, a charitable organization or even educational institution, can reach its goals effectively and efficiently, ways of accurately measuring management performance must be found out and implemented.

Appropriate Method of Appraising Managers

The most appropriate standards to be used for appraising manners as managers are the basic principles of management.

Appraising a manager broadly is done by using only the basic functions of the manager. These are important no doubt, but these are too broad to be used as standards of appraisal.

According to Koontz and O’Donnel, the best approach is to use the basic techniques and principles of management as standards.

Since they are considered to be basic, definitely they are more specific and more applicable than evaluations based on such broad standards as work habits, integrity, co-operation, intelligence, judgment or loyalty. At least they shed more light on evaluating a manager as manager.

An appraisal program is designed by Koontz and O’Donnel involving classifying the common managerial functions of the manager and then attaching a series of questions with each function to reflect the most important fundamentals of managing in each area.

For instance, in respect of planning, the following check questions were designed to rate a manager.

  • Does he set for his departmental unit both short-term and long-term goals in verifiable terms that are related in a positive way to those of his superior and his company?
  • Does he understand the role of company policies in his decision-making and ensure that subordinates do likewise?
  • Does he check his plans periodically to see whether they are consistent with current expectations?
  • In choosing from among alternatives, does he recognize and give primary attention to those factors which are limiting or critical to the solution of a problem?
  • Also, in the area of organizing, such questions are asked as the following. Does the manager delegate authority to his subordinates on the basis of results expected of them?
  • Does he regularly teach his subordinates, or otherwise make sure that they understand the nature of line and staff relationships?
  • Does he distinguish in his operations between lines of authority and lines of information?

The other areas of managing are dealt with similarly for a total of seventy-three check points over the five areas of planning, organizing, staffing, directing, leading, and controlling.

The practice of performance appraisals is extremely important to an organization

Performance appraisal is the process of evaluating employees’ effectiveness in fulfilling their responsibilities and contributing to the accomplishment of organizational goals.