PSYCH-105 Industrial Psychology
Chapter 17: Performance Appraisal
Process of Performance Appraisal
1. Objective of performance appraisal
Objective of appraisal includes effecting promotions and transfer, assessing training needs, awarding pay hike and the like.
2. Establishing performance standards
The next step in the process of performance appraisal is the setting up of standards which will be used as the base to compare the actual performance of the employees. This step requires setting the criteria to judge the performance of the employees as successful or unsuccessful and the degrees of their contribution to the organizational goals and objectives. The standards set should be clear, easily understandable and in measurable terms.
3. Communicating the standards
Once set, it is the responsibility of the management to communicate the standards to all the employees of the organization. The employees should be informed and the standards should be clearly explained to them. This will help them to understand their roles and to know what exactly is expected from them.
4. Measuring the actual performance
The most difficult part of the performance appraisal process is measuring the actual performance of the employees i.e., the work done by the employees during the specified period of time. It is a continuous process which involves monitoring the performance through the year. This stage requires the careful selection of the appropriate techniques of measurement, taking care that personal bias does not affect the outcome of the process and providing assistance rather than interfering in an employee’s work.
5. Comparing the actual with the desired performance
The actual performance is compared with the desired or the standard performance. The comparison tells the deviations in the performance of the employees from the standards set. The result can show the actual performance being more than the desired performance or, the actual performance being less than the desired performance depicting a negative deviation in the organizational performance. In includes recalling, evaluating and analysis of data related to the employees’ performance.
6. Discussing results
The result of the appraisal is communicated and discussed with the employees on one-to-one basis. The focus of this discussion is on communication and listening. The results, the problems and the possible solutions are discussed with the aim of problem solving and reaching consensus. The feedback should be given with a positive attitude as this can have an effect on the employees’ future performance. The purpose of the meeting should be to solve the problems faced and motivate the employees to perform better.
7. Decision making
The last step of the process is to take decisions which can be taken either to improve the performance of the employees, to take the required corrective actions, or to take the related HR decisions like rewards, promotions, demotions, transfer etc.