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Performance Appraisal : Definition, History, Purpose, Objectives, Characteristics and Limitations Explained.

 

 The employer/employee relationship has become more vital in present business world. Not like early businesses, soft HR practices play a significant role comparing hard HR practices to maintain the said business relationship positively towards the ultimate business targets.   

Early employees had to work as slaves as per employer’s given instructions and orders(dictating). Work environments were  not ease to employees. Manual work force was high due to less technology. Many employees had to stay in the same job or same position for a longer time period.

At present, employee friendly working environment has been created mainly due to soft HRM practices. So employees can participate decision making and open to feedback.  Further employees can expect work-life balance, job satisfaction, career development and many more motivational factors from their employers.

Performance appraisal is one of the key components under soft HRM which improves employee performance, enhanced communication, career growth opportunities, and better decision-making for both employees and employers.  

                    What is performance in HRM?

Performance means, how well employees do their duties and responsibilities to achieve the organizational goals. This relates an employee’s productivity, efficiency, quality of work and overall contribution to the organization.

Performance is a fact of life. In work or in play, indeed any activity where we input even momentary attention, performance can be felt or at least deduced if necessary. Yet of all the concepts that reside in the business research at the moment, the idea of performance itself if probably one of the least understood or certainly the one where the greatest leap of intuition is used.  (Folan P, Browne J & Harinder J, 2015)  

 What is performance appraisal ?

 

                     Performance appraisal is a tool which regular review  of an employee’s job performance and their contribution to the organization. It is also known as annual review, employee appraisal, performance review. A performance appraisal evaluates an employee’s skills, achievements and growth.

In other words

Performance appraisal is a structured, formal system used by organizations to measure and evaluate an employee's job-related behaviors and outcomes. (techthug99, 2020)

 The history and origin of performance appraisal.

Performance appraisal has roots in ancient times.                                                                                         

        Eg- Wei Dynasty emperors rating family members’ performance          in 221 AD.

Then the evidence of formalized appraisal system can be traced back to Robert Owen’s New Lanak Textile mills in Scotland in the 1800 s where a color display was used as a means to distinguish an employee’s performance (Grint 1993). The goal was motivated and improve performance, encourage competition and possible reward for good work performance.

After that, during World War 1 the US military introduced a merit rating system to identify soldiers for transfer or discharge based on performance, making an early formalization of performance appraisal.

By mid - 20 th century, formal performance appraisals became more common, with companies using personality-based systems for measuring performance. 

In 1960s the focus shifted towards measuring objectives and goals, with a greater emphasis on self-appraisal.

In 1970s a criticism arose regarding the conduct of appraisals, leading to legal challenges. 

Then during 1980s -early 2000s companies focused on employee motivation and engagement, leading to a more holistic approach to performance management. 

At present performance management continues to evolve, with many companies adopting 360-degree feedback systems and leveraging technology for data collection and feedback. 

 

 Purpose of performance appraisal

The primary purpose of performance appraisal is to evaluate employee performance against established goals and expectations, providing feedback for improvement, and informing decisions related to compensation, promotions, and development,

 Other purposes 

I) Asses an employee’s strengths and weaknesses

II) Identify areas for improvement and development

III) Set goals and objectives for the future

IV) Provide feedback and recognition for good performance

V) Make informed decisions about promotions, raises and other HR-related matters.  

          in other words

        The goal is to understand an employee's current performance and identify ways to improve their effectiveness, benefiting the employee, the organization, and society. It involves evaluating an employee's performance over a specific period against established standards and targets, considering factors like initiative, teamwork, dependability, and decision-making skills (techthug99, 2020) 

 

Objectives of performance appraisal

Main objective of performance appraisal is, evaluating the job performance of an employee to increase their future potential and value to the organization. In addition to this main objective, the followings are some other objectives of the performance appraisal.

* Providing feedback

* Improving communication

* Understanding training needs

* Clarifying roles and responsibilities

* Determining how to allocate rewards

 

Characteristics of performance appraisal (Tapomoy deb, 2008)

* A data generation system

* A tool for strategy formulation and implementation

* An integration device for HR system

* A legally defensible document

* A motivational tool  

the effectiveness of performance appraisal hinges on a constellation of key characteristics. Clarity of objectives, fairness and objectivity, a developmental orientation, regularity and timeliness, open communication, and alignment with organizational goals are all crucial elements that contribute to a valuable and impactful performance evaluation system. (Baird, Tung, and Su, 2020) 

 

Limitations of performance appraisal

* more time consumption

* potential for bias

* vague standards

* difficulty in accurately assessing subjective qualities, which can lead to inaccurate assessments and negatively impact employee morale and development. 

while performance appraisal remains a widely used HR tool, it is essential to acknowledge its inherent limitations. Subjectivity and bias, administrative burden, potential for anxiety, lack of continuous feedback, a narrow focus on individual performance, and reliance on rater skills are all factors that can hinder its effectiveness. (Babar et al., 2022) 

 In conclusion, performance appraisal remains an indispensable tool for organizational effectiveness. It provides crucial feedback for employee development, informs key HR decisions, and, when strategically implemented with methodologies like Management by Objectives as explored by Aprilia et al. (2022) 

References

                    Techthug99 (2020). What Is Performance Appraisal? Definition, Methods, Objectives, Limitations, Challenges. [online] Geektonight. Available at: https://www.geektonight.com/performance-appraisal/.

Aprilia, H. D., Sari, U. A., Mukti, C. I. P., Saptiani, F., & Ningtias, A. C. (2022, December). Performance Appraisal with Management By Objective. In Iapa Proceedings Conference (pp. 158-173).

Baird, K., Tung, A., & Su, S. (2020). Employee empowerment, performance appraisal quality and performance. Journal of Management Control, 31(4), 451-474.

Babar, S., Obaid, A., Sanders, K., & Tariq, H. (2022). Performance appraisal quality and employee performance: the boundary conditions of human resource strength and religiosity. Asia Pacific Journal of Human Resources, 60(4), 788-813.

Jun 29, 2018 — Abbott, J.R., and Bernardin, J.R. (1983). The development of a scale of     self-efficacy for giving performance feedback. · Adams, J.S. (1965).

Aguinis, H. (2009). Performance management (2nd ed.). Upper Saddle River, NJ: Pearson Prentice Hall. Ashford, S.J. & Cummings, L.L. (1983). Feedback …

Armstrong, M. and Taylor, S. (2014). Armstrong’s handbook of human resource management practice, 13 th edition. London: Kogan.

Deb, T 2008, Performance appraisal & Management, Concepts, antecedents and implications, New Delhi.