Performance Appraisal Tutorial | Necessity of Performance Appraisal

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Necessity of Performance Appraisal

Performance-appraisal systems can become a key component of a business’s performance-management program. It works not only as an evaluative process but also serves as an organizational communication tool. Though detested by employees and employers, performance management conducted with effective participation and with appropriate mindset, accomplishes the same goals, and more. Performance management also supplies additional advantages to the manager, the employee and the organization who seek performance evaluation.


Merits of Performance Appraisal

It is an investment for the organization which can be substantiated by the following advantages.

  • Promotion: Helps the supervisors to chalk out the promotion plans for performing employees. In this regards, non-performing employees can be terminated or demoted in case.
  • Compensation: Helps in chalking out compensation packages for employees. Merit rating is possible through performance appraisal. Compensation packages which include bonus, salary revisions, perks, allowances and perquisites are dependent on performance appraisal. The criterion normally is merit rather than seniority.
  • Employees Development: The systematic procedure helps the supervisors to frame training requirements and programs. It also helps in framing future development programs depending on the employee’s skill gaps.
  • Selection Validation: Performance Appraisal helps the supervisors to understand the validity and pitfalls of the selection procedure. Future modifications in selection methods can be made in this regard.
  • Communication: For an organization, effective communication between employees and employers is very important. It works as a two- way tool. Communication can be sought to create trust, confidence and a great working environment.
  • Motivation: Through evaluating performance of employees, a person’s efficiency can be recognized on achievement of goals. This not only works as a motivational tool for performers but also helps improve his performance in the future

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