15 December 2019

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Performance Appraisal: Tapping the HR Potential

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Performance appraisal means systematic evaluation of the personality and performance of each employee in an organisation, by his supervisor or some other person trained in the techniques of merit rating. Performance appraisal is also known as performance evaluation, progress rating, merit rating, merit evaluation, etc.

The comparison of performance with job requirements helps in finding out the merit of individual employees in a work group. It is a formal programme in an organisation which is concerned with not only the contributions of the members who are part of the organisation, but aims at spotting the potential also.   

Difference between performance appraisal and performance management

Both the terms are closely related but there is a hair line difference between the two. While performance appraisal is a process involving various techniques to judge the current or past performance related to the set standards and goals, performance management is the process of getting assured that whether the employees are working towards organisational goals. Thus the latter demands the confirmation of adherence while the former checks the extent of this adherence.

Objectives behind performance appraisal

Performance appraisal is carried out  by organisations due to two major reasons- administrative and self improvement. If we consider administrative objectives, then performance appraisal can be a very good tool at chalking out various strategic plans which involve promotions, transfers, determination of wage and salary, training and development programmes and even conduction of research on personnel.

Talking of self-improvement, performance appraisal brings out the shortcomings and deficiencies of the employees. It also helps to spot out a person’s ability to see an organisation problem, devise ways of attacking it, translating his ideas into action and carry his plans through the results.

Benefits of performance appraisal

There are numerous benefits of performance appraisal programme which justify its existence in an organisation:

  • It helps the supervisor to evaluate the performance of his employees periodically and systematically and assign that work to individuals for which they are best suited.
  • It helps in guiding and mentoring of employees. Based on rating results, employees can be guided constructively.
  • The ability of the staff is determined and can be rewarded by special incentives.
  • It works as a sound base for drafting personnel policy in relation to transfers and promotions. If a person is doing better than others, he can be recommended for promotion and if not, he may be transferred to some other job suited to him.
  • Performance appraisals help evaluate the effectiveness of training programmes by which they can be modified or replaced accordingly.
  • Performance appraisal ratings work as a motivational factor for employees to better their performance.
  • Systematic appraisals prevent grievances and develop confidence amongst employees if they are convinced of the impartial rating system.

Effectiveness of performance appraisal programme

The effectiveness of performance appraisal programme depends upon how well it is executed and is aligned with the individual and organisational goals and objectives. The effectiveness of this programme can be judged by the following criteria:

  • A well structured and formally designed performance appraisal programme should be in place so that it remains consistent through out the units and is simple and easy to understand.
  • The employees should be made aware of the programme policies, targets and behaviors so that he or she knows what is expected out of his job.
  • Appraisal can be formal and informal as well. The former is undertaken periodically while the latter can be conducted when the supervisor feels the need for it.
  • The effectiveness is also counted by who does the appraisal or who is the rater- peers or supervisor, because normally people don’t like to be rated by those who are working at the same level and it might give rise to conflicts and idea mismatch.
  • Effectiveness is also judged by considering how many variables are included in the rating programme like the quality and quantity of work produced, timeliness, use of organisational resources, extent of need for supervision, interpersonal impact and potential to perform better in the future based on current appraisals.


Performance appraisal identifies the potential of employees to occupy higher position in the organisation hierarchy and undertake higher responsibilities like planning function, leadership, etc. and could be noted as the best predictor of future success as a manager.




Last Updated ( Monday, 05 July 2010 16:10 )  

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