The Effects of Performance Appraisal on Organizational & Employee Performance

Performance appraisal doesn't benefit only employees (Strauss, & Shore, 2008). Organizations that use the results of performance appraisal to identify areas of strength and opportunity can benefit as well. Performance appraisal can provide an indication of areas of training need as well as direction for leadership development, performance improvement and succession planning ( Kuvaas, 2006).

The employee performance appraisal is an important career development tool for the manager and employee (Fletcher,  2001). The manager can help guide the employee on the path to corporate advancement, and the employee gets a clearer understanding of what is expected from her in her daily job duties. Performance appraisals have a wide variety of effects on employees that managers must identify and understand ( Javotz, 2006).

Table 01 : The Effects of Performance Appraisal on Organizational & Employee Performance 

Effects on Organizational Performance	Effects on Employee Performance
Identifying Areas of Strength	Motivation
Identifying Training Needs	Clarity
Leadership Development and Succession Planning	Take Responsibility
	Teamwork

(Source : Mamatoglu , 2008)

Methods of Performance Evaluation

A comprehensive employee appraisal is often made up of several different methods of performance evaluation (Armstrong, 2010). Employer can choose to use just one evaluation process when judging an employee's performance, but when you use multiple evaluation methods employer is able to get a broader picture of the areas where the employee needs improvement and what recommendations manager should make to support employee development (Armstrong, 2010).

Self-Evaluations and Reviews

The self-evaluation is often effective when teamed up with a performance review. The employee is asked to judge his own performance by using a form that requires multiple choice answers, essay-type answers or a combination of the two. One of the benefits of a self-evaluation is that employer can compare the self-evaluation to your own appraisal and see the areas where there is a discrepancy in an understanding of employee performance. This opens up conversations that can be beneficial to employee development.

360 Evaluation

An employee's development consists of progress made within employee’s own department, and the effectiveness of employee’s interactions with the rest of the company (Mamatoglu, 2008). A 360 degree performance evaluation is one that involves input from managers in other departments that the employee works with on a regular basis. Employees are evaluated on their effectiveness within their own department based on their job descriptions, and employees are also evaluated based on how effectively employee work with the rest of the company (Mamatoglu, 2008).

Graphic Scale

The graphic scale of performance evaluation is commonly used by managers (Fox, 1991). The employee's performance in various areas of his job duties is graded on a scale. The value in a graphic evaluation system is that it allows manager to compare the performance of several employees simultaneously (Fox, 1991). The system can be done with numbers or letters, and it usually consists of a range, running from poor to excellent.

Checklist Evaluation Method

A checklist evaluation method is simplistic but effective (Mamatglu, 2008). Checklist evaluation method consists of a series of performance questions that are traditionally given the option of yes or no. An excessive number of negative responses indicates developmental training is needed for that employee. The checklist can be used as a quick way to identify employees that have deficiencies in too many performance areas (Mamatglu, 2008).

Critical Incident

Keep an ongoing log throughout the year of an employee's performance, and then use that information to fuel discussion during the employee performance review (Fox, 1991). This method of keeping a list of good and bad incidents of employee performance is known as critical incident evaluation (Fox, 1991).

Advantages and Disadvantages of performance appraisals

Table 2.0: Advantages and Disadvantages of Performance Appraisals

Advantages	Disadvantages
Documentation	Create Negative Experience
Structure	Time Consuming
Feedback	Natural Biases
Clarify expectation	Waste of Time
Annual Planning	Stressful work place
Motivation

(Source: Crawford, 2003)

References

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Guido M.J. de Koning (2004). Evaluating Employee Performance: The most effective approaches: staffing reviews and performance outcome measurement. Management journal, http://gmj.gallup.com.

Cocheu,-Ted (1986). Performance appraisal: A case in points. Personnel-Journal. 65(9), 48-55.

Herman Steensma and Lisette Otto(2000). Perception of Performance Appraisal by Employees and Supervisors: Self-Serving Bias and Procedural Justice. Journal of Collective Negotiations(formerly  Journal of Collective Negotiations in the Public Sector), 29 (4), 307-319.

Javotz, D. (2006), Appraising Employe Performance. Management Services, Autumn, 19-20 (http://www.organizedchange.com/Excite/360degreefeedback.htm). 

Kamalanabhan,-T.-J.; Kaliappan,-K.-V. (1985). An evaluation of self appraisal and performance appraisal among specialist officers in a nationalised bank. Journal-of-Psychological-Researches 29(2), 86-92.

Lee,-Cynthia (1985). Increasing performance appraisal effectiveness: Matching task types, appraisal process, and rater training. Academy-of-Management-Review.10(2), 322-331.