Performance appraisal means evaluating an employee’s current and/or past performance relative to his or her performance standards. Stripped to its essentials, performance appraisal always involves (1) setting work standards, (2) assess essential, performance relative to those standards, and (3) providing feedback to the employee with the aim of motivating him or her to eliminate performance deficiencies or to continue to perform above par.
Performance appraisal is a formal measure or rating of an employee’s job performance compared with established job standards. It provides an opportunity to hear feedback and to develop plans for future growth. Performance appraisal should be an integral part of a company's human resources management program because it:
1. Provides feedback on the success of previous training and discloses the need for additional training
2. Aids in developing plans for impovement based on agreed-on goals, strengths, and weaknesses
3. Identifies growth opportunities
4. Documents present job performance to provide managers with information to make decisions on salary, promotion, demotion, transfer, and termination
5. Provides the opportunity for formal feedback
Each organization has its own performance appraisal system. How often a person is evaluated and how the person is appraised differ in each organization. A company may require a manager to rate an employee once or twice a year. Ideally , the more frequent the contact, the greater the opportunity to clear up misunderstandings, offer guidance, and give encouragement and support.
Companies differ on how they appraise employees. A company may use a subjective or an objective appraisal system. A subjective performance appraisal system is based on the personal viewpoint of the manger. In objective performance appraisal system, the specific performance areas are identified for the employee, as are the results expected.