Performance Appraisal: A Better way to Rewarding Employee?

Performance Appraisal has always been the topic of discussion among employees from the date of joining to leaving the organization. New joinees tend to research before joining an organization and keep enquiring in a timely manner with the old employees once joined the organization. Every organization has its own process of following Performance Appraisal system. There does not seem to have any standard protocol defined. The question is “Should organizations stop doing performance appraisals?” The argument has been more in favor of eliminating it since it has done more damage than good. But at the same time, it is also creating an opportunity to enhance employee performance and create a greater success for the company and employee.

Organizations need not make a choice between everyone having a performance appraisal and no performance appraisal. A better alternative is to require performance appraisals only where they are necessary. In a recent survey conducted jointly by the Society for Human Resource Management and Personnel Decisions International 32 percent of the HR professionals surveyed indicated that they were “unsatisfied” or” very unsatisfied” with their organizations’ performance-management systems.

Let’s have a look at the general process of appraisal:


1. Seniors review their employee’s pay and compare it with the targets and plans.
2. Seniors analyze the factors on which employees performance are based.
3. Then the feedback is taken from the employees and they are guided for better performance.

However, one approach can be taken to eliminate unnecessary performance appraisals is to focus on identifying those managers who have the motivation, and management skills. This approach will identify who are good managers and as a result, do not need performance appraisal. This can simply be declared as performance appraisal-free.

The challenge in operating with this approach is to decide which managers need performance appraisal and which do not. One important and needed feature of an appraisal-free approach is a training course for employees regarding what they should expect from their managers reminding them that there would no formal performance appraisal. For this, a part of performance appraisal can be added to provide managers with training making sure that they have right skills.

Now, the question comes “If companies don’t do annual performance reviews, however, what will take their place?” These days, more organizations are turning to Performance Management. That is what Nicholas had advocated in 1997 with his article titled, “Don’t Redesign Your Company’s Performance Appraisal System, Scrap It!” (Corporate University Review, May-June, 1997).

According to Nicholas, it rests on the following principles:

1. Goals should be defined and agreed by both managers and employees.
2. Metrics for measuring the employee’s success in meeting those goals should be clearly articulated.
3. The goals should be flexible enough to reflect changing conditions in the workforce.
4. Employees should be able to look up to their managers as coaches.

Lastly, appraisal gives employees a reason to work hard. The better you perform accolades you receive. But, even the best performance management system cannot make their managers and employees more effective at setting goals, giving feedback, and coaching. Satisfaction and dissatisfaction will always be there with the process.

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