PERFORMANCE APPRAISAL
AND
HR DECISIONS
"... the most crucial aspect of organizational life" (Lawrie, 1990).
“…performance appraisal processes as a genuine source of competitive
advantage”(Grote, 2000)
Performance appraisal is among the most important human resource (HR)
practices (Boswell and Boudreau, 2002; Judge and Ferris, 1993; Yehuda Baruch,
1996)
The efforts of employees can determine the success and survival of an organization
(Drucker, 1994; Barney, 1995), and appraisal is potentially one way in which those
efforts can be aligned with the aims of an organization, employees can be
motivated and their performance managed (Orpen, 1997; Martin and Bartol, 1998;
Cook and Crossman, 2004).
Performance: The record of outcomes produced on a specified
job function or activity during a specified period of time
Performance Appraisal: Evaluating an employee’s current
and/or past performance relative to his/her performance
standards.
Performance appraisal procedure:
•Setting work standards
•Assessing the employee’s actual performance relative to those
standards
•Providing feedback to the employee
Uses of Performance Appraisal

Compensation
E.g.: employee’s performance is reflected in the bonus he/she receives

Internal staffing
E.g.: performance appraisal information along with job needs helps to
find the employees fill the vacant positions in the organizations

Training need analysis
E.g.: appraisal data is used to determine the employees’ need for
training and development

Research and evaluation
E.g.: transfer of learning in training programs can be assessed through
appraisal information of the employees who received training
Problems with Performance Appraisal




Don’t assess actual performance
Appraisal / Judgment Errors
 Halo effect
 Recency effect
 Central tendency
 Leniency
 Stereotyping
Poor appraisal Form
Lack of rater preparedness
Contd…

Doesn’t address diversity

High anxiety

Assessment are kept secret

Lack of accountability

Performance appraisals are annual
Prescription for Effective Performance Appraisal

Clearly define the purpose of appraisals to employees and to
managers.

Establishing performance standards

Communication

Make it an ongoing process –not just once a year

Criticize work habits and behavior and not the person

Provide effective feedback
References:

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http://www.openlearningworld.com/books/Performance%20and%20Potential%20Appraisal/
Performance%20and%20Potential%20Appraisal/Problems%20with%20Performance%20Appr
aisal.html
http://veekay-manoharv2001.blogspot.com/2007/09/problem-in-performance-appraisal.html
http://www.christieandbetro.com.au/index.php?option=com_content&view=article&id=91:perf
ormance-appraisal&catid=38:articles&Itemid=232
http://www.tlnt.com/2011/01/31/the-top-50-problems-with-performance-appraisals/
http://www.managementparadise.com/forums/human-resources-management-h-r/206359limitations-performance-appraisal.html

http://www.georgiasbdc.org/pdfs/perry09.pdf
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http://www.successfactors.com/articles/writing-effective-appraisals/
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Dessler et al, Human Resource Management, Pearson, eleventh edition,
http://www.performance-appraisal.com/intro.htm