Cite this article as: Palistha Maharjan, "Purposes of Performance Appraisal," in, https://www.businesstopia.net/human-resource/purposes-performance-appraisal, Challenges and Issues in Human Resource Management, Personnel Management v/s Human Resource Management, How to Motivate Employees at the Workplace, Intrinsic and Extrinsic Rewards with Examples, Steps Involved in Effective Recruitment Process, 10 Common Behavioral Interview Questions and Answers, 10 Common Interview Questions and Answers, 4 Major Types of Interview You Should Be Prepared for, How to Answer Behavioral Interview Questions, Disability Discrimination in the Workplace, Pregnancy Discrimination in the Workplace, Nationality Discrimination in the Workplace. This is another classic reason for having a performance appraisal system. Performance appraisal helps motivate people to deliver superior performance in several ways. The basic purpose of performance appraisal is to identify employees worth and contribution to the company. Only when the performance of newly hired individuals is assessed can the company learn whether it is hiring the right people. Counseling Poor Performers. To make sure employees are working to the required standard 2. With the right performance appraisal method, organizations can enhance employee performance within the organization. However, this is not enough to get good output from them. But how can pay decisions be made if there is no measure of performance? Determining Compensation Changes. Providing Legal Defensibility for Personnel Decisions. 20 Effective or Successful Job Search Strategies & Techniques. This way, performance appraisal works as a bridge of communication between the employers and employees. The process also meets all legal requirements. are some functions of human resource management whose effectiveness can only be analyzed when the performance of employees are appraised. Facilitating Layoff or Downsizing Decisions. For an instance, an employee might feel that his co-worker is being paid more by the company even though both of them are posted at the same job level. Show EXHIBIT 4 and discuss how a performance system can be useful. A performance management system serves a two fold purpose: (1) to improve employees work performance by helping them realize and use their full potential in carrying out their firms missions and (2) to provide information to employees and managers for use in making work related decisions. Finally, performance appraisal encourages employees to avoid being stigmatized as inferior performers (or, often worse, as merely "average"). But such methods often fall short in the monitoring of targets and real-time administration offered by performance management. Second, since most people want to be seen as superior performers, a performance appraisal process provides them with a means to demonstrate that they actually are. Broadly, performance appraisal serves four objectives – (a) development uses, (b) administrative uses / decisions, (c) Organisational maintenance / objectives, and (d) documentation purposes. O Give the objectives and purpose for a performance appraisal. It evaluates the contribution of each employee to the accomplishment of company’s goals. Based on observed job-related behavior. A merit rating, performance appraisal, employee appraisal, performance review, or (career) development discussion is a method by which the job performance of an employee is evaluated (generally in terms of quality, quantity, cost, and time) by the superior manager or supervisor. The performance appraisal process is commonly used to make sure that every member of the organization sets and achieves effective goals. Such charts can be used by the employers to determine whether or not to promote their employees. Performance appraisal serves over a dozen different organizational purposes: - Providing feedback to employees about their performance, - Facilitating layoff or downsizing decisions, - 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.