Performance appraisal is a method of evaluating the behaviour of employees in the work spot, normally both the quantitative and qualitative aspects of job performance. Performance here refers to the degree of accomplishment of the tasks that make up an individual’s job. It indicates how well an individual is fulfilling the job demands. The purpose of performance appraisal is to update the worker on his progress, gauge his behavior and performance, praise good work, and note opportunities for improvement.
A poorly conducted appraisal could cause the worker to lose morale, but a constructive performance appraisal can encourage him to go above and beyond the call of duty. People differ in their abilities and their aptitudes. There is always some difference between the quality and quantity of the same work on the same job being done by two different people. Performance appraisals of Employees are necessary to understand each employee’s abilities, competencies and relative merit and worth for the organization.
Performance appraisal rates the employees in terms of their performance. The history of performance appraisal can be dated back to the 20th century and then to the second world war when the merit rating was used for the first time. An employer evaluating their employees is a very old concept. Performance appraisals are an indispensable part of performance measurement.
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Performance appraisal is necessary to measure the performance of the employees and the organization to check the progress towards the desired goals and aims. The latest mantra being followed by organizations across the world being – "get paid according to what you contribute" – the focus of the organizations is turning to performance management and specifically to individual performance. Performance appraisal helps to rate the performance of the employees and evaluate their contribution towards the organizational goals.
If the process of performance appraisals is formal and properly structured, it helps the employees to clearly understand their roles and responsibilities and give direction to the individual’s performance. It helps to align the individual performances with the organizational goals and also review their performance. Performance appraisal systems began as simple methods of income justification. That is, appraisal was used to decide whether or not the salary or wage of an individual employee was justified.
The process was firmly linked to material outcomes. If an employee's performance was found to be less than ideal, a cut in pay would follow. On the other hand, if their performance was better than the supervisor expected, a pay rise was in order. Little consideration was given to the developmental possibilities of appraisal, It was felt that a cut in pay, or a rise, should provide the only required impetus for an employee to either improve or continue to perform well.
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