CAT / FIA FBT Syllabus D. Leading And Managing Individuals And Teams - Performance of Human Resources - Notes ^{2 / 7}

An effective appraisal system can be used to assess attitudes, behaviour and performance but must have a balance of both measures of results and measures of activities.

They may be a combination of:

• quantitative measures using some form of rating scale

• qualitative measures involving an unstructured narrative report on specific factors and overall levels of behaviour and work performance.

A key issue in performance appraisal is determining what constitute valid criteria or measures of effective performance.

The problem is made more difficult because almost all jobs have many dimensions so that performance appraisal must employ multiple criteria or measures of effectiveness in order to accurately reflect the actual performance of the employee.

Beer et al. (1984) suggest four criteria for assessing performance:

1. high commitment – the workforce is motivated and understanding, and are willing to interact with management about changes within the organisation. 

   Improved commitment may lead to more loyalty and better performance for the business. 

   It can also benefit the individual through enhanced self worth, dignity, psychological involvement, and identity

2. high competence – the capacity of employees to learn new tasks and roles if the circumstances require it and the organisation’s ability to attract, keep, or develop employees who have valuable skills and knowledge

3. cost effectiveness – can be evaluated in terms of wages, benefits, turnover, absenteeism, strikes, etc.

4. higher congruence – the internal organisation, the reward system, and the ‘input, throughput, and output’ of personnel, which need to be structured in the interests of all stakeholders.

Appraisal systems are often misunderstood and mismanaged.

Appraisals are central both to human resource management and performance management.

Understanding their role, objectives, benefits and purpose is important to all employers.

Careful preparation and understanding is required if the appraisal process is to be successful, worthwhile and relevant.

Appraisal systems exist to improve organisational efficiency by ensuring that individuals perform to the best of their ability, develop their potential, and earn appropriate reward.

This in turn leads to improved organisational performance.

Appraisals have three main purposes

These are often misunderstood.

1. The first is to measure the extent to which an individual may be awarded a salary increase compared with his or her peers. 

   This is the reward review component.

2. The second purpose of an appraisal is to identify any training needs and, if appropriate, to provide training and development to enable an individual to help the organisation to achieve its objectives.

   This is the performance review component.

3. Finally, appraisals are also important to aid an individual's career development by attempting to predict work that the individual may be capable of in the future. 

   This is the potential review component.

Employees often question the value and usefulness of the time and effort taken up by an appraisal.

However, it establishes key results that an individual needs to achieve within a time period while also comparing the individual's performance against a set and established standard.

The employee is not the only beneficiary - the organisation benefits through identifying employees for promotion, noting areas for individual improvement, and by using the system as a basis for human resource planning.