Performance appraisal is an important tool of HR management, and is used for a variety of purposes including:
- To appraise the quality of performance of different employees. It includes knowledge of the work, ability to do the work efficiently, spirit of coordination, dependability, punctuality, enthusiasm, self-confidence, leadership qualities etc.
- The appraisal procedure is standardized so that the management may rate all employees on the same qualities by the same method of measurement.
- Performance appraisal is also useful in training especially deciding the type and nature of training programmes for employees.
- It helps in placement of employees properly and also finding the ‘misfit’ who may be transferred to the right place.
- Performance appraisal also forms an unbiased and systematic basis for increase in wages of employees as well as identifying employees who may be considered for promotion.
To the employee, a properly designed performance appraisal system can:
- Help each employee understand more about their role and become clear about their functions
- Be instrumental in helping employees to better understand their strengths and weaknesses with respect to their role and functions in the organization
- Increase mutuality between employees and their supervisors so that every employee feels happy to work with their supervisor and thereby contributes their maximum to the organization
- Act as a mechanism for increasing communication between employees and their supervisors
- Help employees internalize the culture, norms and values of the organization, thus developing an identity and commitment throughout the organization;
- Help prepare employees for higher responsibilities in the future by continuously reinforcing the development of the behaviour and qualities required for higher-level positions in the organization
- Be instrumental in creating a positive and healthy climate in the organization that drives employees to give their best while enjoying doing so; and
- Assist in a variety of personnel decisions by periodically generating data regarding each employee.
