Performance Appraisal and Its Impact

Abstract:

Performance appraisal continues to be a subject of interest and importance to human resource

specialists. For decades, performance appraisal has received considerable attention in the
literature, from both researchers and practitioners alike. Performance appraisals improve the
work performance of employees by helping them realize their full potentials in carrying out their
firm's mission and also, to provide information to employees and managers for use in making
work-related decisions. They, also, provide feedback to employees and thereby serve as a vehicle
for personal and career development. This study shows the effect of employees performance
evaluation on the future performance of the employees. Performance appraisal has both positive
and negative effect on future performance of the employees. So, an organization should clarify
the performance appraisal methods to conduct an effective evaluation process. It is an invaluable
tool but in the hands of human resource management officers to continuously evaluates and
audits the performance of its employees in other to help organizations win competitive
advantage.

Key words: Employee performance Appraisal, Performance appraisal methods, employees

future performance.

Introduction:

Performance appraisal is a key in human resource management function which is viewed as a

subset of performance management. Rao (2005) argues that performance appraisal is a method of
evaluating the behavior of employees in the work place, this normally including both the
quantitative and qualitative aspects of job performance. Appraisal help to widen individuals, perk
up secretarial routine, and nourish into dealing development. Performance appraisals are also
crucial for career and succession development. Performance review designed for workforce
inspiration, position and conduct improvement, converse directorial aims, along with nurturing
optimistic associations between supervision and workforce. Banjoko (1982) asserts that there is
probably no program in the arsenal of personnel management that is difficult to effectively
implement and yet so fundamental to individual and organizational growth than performance
appraisal. In business as well as in government, effective results are crucial to survival since
improved performance is a basic criterion for individual and organization growth.

Performance appraisals usually have a positive and negative impact on employees. Employees
who receive a good score on his/her appraisal are generally motivated to perform well and
maintain his/her performance. Positive feedback on appraisal gives employee a feeling of worth
and value especially when accompanied by salary increment. If a supervisory gives employee a
poor score on his/her appraisal, the employee may feel a loss of motivation in the workplace.
This has an impact on the employee performance (Cook and Crossman, 2004).
Objective of the Study:

The objectives of this study are to show:

a) To explore the association between Performance Appraisal system of the organization and
Individual effectiveness.

b) To estimate the impact of Performance appraisal on future performance of the employees of

the organization.

c) To present some techniques for genuine employee performance appraisal and the importance
of communication in appraisal process.

Performance Appraisal:

Performance appraisal is a formal management system that provides for the evaluation of the
quality of an individuals performance in an organization. The appraisal is usually prepared by
the employees immediate supervisor.
Fajana (1997) defines that performance appraisal is a system which provides organizations with
a means of identifying not only what peoples performance levels are but which areas those
levels need to be improved if maximum use is to be made of human resource. According to
Atiomo, every organization should ensure that the individual is clearly aware of what his
functions and responsibilities are to make performance appraisal effective.

A formal definition of performance appraisal is:

It is the systematic evaluation of the individual with respect to his or her performance on the job
and his or her potential for development.

A more comprehensive definition is:

Performance appraisal is a formal, structured system of meaning and evaluating an employees
job related behaviors and outcome to discover how and why the employee is presently
performing on the job and he the employee can perform more effectively in the future so that the
employee, organization and society and all benefit.

Purpose of Performance Appraisal:

Performance appraisal serves over a dozen different organizational purposes:

Providing feedback to employees about their performance

Determining who gets promoted
Facilitating layoff or downsizing decisions
Encouraging performance improvement
Motivating superior performance
Setting and measuring goals
Counseling poor performers
Determining compensation changes
Encouraging coaching and mentoring
 Supporting manpower planning or succession planning
Determining individual training and development needs
Determining organizational training and development needs
Confirming that good hiring decisions are being made
Providing legal defensibility for personnel decisions
Improving overall organizational performance

Procedure for Evaluating Performance Appraisal

The process of performance appraisal begins before a worker is being appraised. Employees
should know what is expected of them and also know the standard at which they will be judged.
The following are the steps of performance appraisa

Performance Appraisal Methods and Basic Approaches for Communicating the

Performance Appraisal
The most commonly used performance appraisal methods include:

1. (Essay appraisal), which merely requires the rater to write a series of statements
concerning an individuals strengths, weaknesses, past performance and potential for
promotion.
2. (Graphic rating scale) in which the rater assess an individual on factors such as
initiative, dependability, cooperativeness, attitude and quantity of work.
3. (Critical incident) appraisal in which the rater is asked to keep a written record on
incidents that illustrates both positive and negative behavior of the individual being rated.
In this method, the individuals actual behavior and not personality traits, is discussed.
4. (Ranking method), which is used when it becomes necessary to compare the
performance of two or more individuals.
5. (Management by objective (MBO), approach or performance evaluation, which is based
on converting organizational goals and objective for individuals (Obserg, 1972), Maiser
(1976) suggests that the above performance appraisal method could be communicated to
the appraisee using the following methods.
6. (3600 appraisal method), this kind of method ensures that not only the superior that
appraises the subordinate but also the subordinate also appraises the superior. Colleagues
also appraisee colleagues and individuals who appraise themselves and all the appraisals
are used to arrive at the final appraisal outcome after calculating the average.

Effect of Performance Appraisal on Employee Performance

Performance appraisal which is seen as a way of providing review and evaluation of an

individual job performance has its own negative and positive effect on the employees
productivity in an organization. This system acts as a motivator to the employee to improve their
productivity. When the goals of the employee are clarified, his performance challenges
identified, the effect is to motivate the employee to achieve those goals.

Cook and Crossman, (2004), highlight that an employee whose performance is under review
often become defensive. Whenever employee performance is rated as less than the best or less
than the level at which employee personally perceives his/her contribution, the manager is
viewed as being biased. Disagreement about the contribution and performance ratings can create
a conflict ridden situation that festers for months (Mani, 2002). Nurse, (2005) states that negative
feedback from Performance Appraisal Policy not only fail to motivate the typical employee, but
can also cause employees to perform worse.

According to Mayhew (1985), company use performance appraisals to measure employee job
performance and to determine salary and wages increases. Nevertheless, performance appraisal
also brings news that causes fret over job security, status, eligibility for promotion and possible
bias or unfair ratings. It also shows the strength and weaknesses of employee on their job.

The Relationship between Performances and Employee Performance:

Performance appraisal is necessary in an organization; this is because it helps in clarifying goals
and expectations and also creates an environment for open communication. It brings about
positive feedback and advice for improvement.

Performance appraisal brings about high productivity in the sense that it creates a link between
employees expectations and how the employees work contributes to the larger organizations
success.

Appraisal helps in identifying strength and weaknesses of employee performance. Opportunity is

usually created for employees and supervisors to discuss employee goals, supervisors goals for
the larger organization and ways that the employee and supervisors can work together by further
developing skills and strength necessary to reach these goals.

Conclusion:

Organizations should face realities that performance appraisal is incomplete unless the appraisee
is told what his strengths are and weaknesses, his performance cannot improve in the subsequent
future, which obviously defeats the very objective of periodic appraisals. Performance appraisal
is a yardstick for employment decisions which helps organizations in determining promotions,
terminations and transfer of employees, determining wages and salary administration.

A performance appraisal criterion which is seen as an evaluative statement indicates what is to be

assessed and the required level of performance. It is very important that when assessing an
employee, ensure the evidence provided by the employee is sufficient enough to show
competence in all of the performance criteria. Supervisors should undergo training based on this.