Concept of Performance Evaluation

Performance appraisal or merit rating is one of the oldest and most universal practices of management. It refers to the systematic evaluation of the individual with respect to his/her performance on the job and his/her potential for development, performance appraisal is concerned with determining the differences among the employees working in the organization. The term merit rating is used in modern management technology. In past, the emphasis was on evaluating the worth as a person. The emphasis was on the evaluation of personnel traits as initiative, dependability, personality etc. Today the emphasis is on measuring the results of the employee’s performance.

According to Dale Yoder, “All formal procedures used in working organizations to evaluate personalities and contributions and potentials of group members.”

According to Subbing, “Performance appraisal is a systematic appraisal of the employee’s personality traits and performance on the job and is designed to determine his contribution and relative worth to the firm.”

Features/ Characteristics of Performance Evaluation/ Appraisal
  • Appraisals are arranged periodically according to a definite plan.
  • Performance appraisal is a continuous process in every large scale.
  • The basic purpose is to find out how well the employee is performing the job and establish a plan of improvement.
  • It is a systematic description of an employee’s job relevant strength and weakness.
  • Appraisal process is always systematic in the sense that is tries to evaluate performance in the same manner using the same approach.
Objectives of Performance Appraisal
  • To evaluate the success of training programmes.
  • To forecast the need of training of the employees and to determine the nature of training.
  • To motivate the employees to do better and more work.
  • To establish harmonious relations between employees and employers.
  • To prove the justification of different rate of wages to different employees according to their abilities.
  • To reward the more efficient employees.
  • To make a comparative study of the abilities of different employees.
  • To determine a policy for promotions and transfer.
Need for Performance Appraisal Performance appraisal/evaluation is needed in order to:
  1. Provide information to diagnose deficiency in employee regarding skill, knowledge, determine training and development needs and to set new standards of work, if necessary.
  2. To prevent grievances and in disciplinary activities.
  3. Provide feedback information about the level of achievement and behavior of subordinate. This information helps to review the performance of the subordinate rectifying performance deficiencies and to set new standards of work if necessary.
  4. Provide information about the performance ranks bearing on which decisions regarding salary fixations, confirmation promotion, transfer and demotion are taken.
  5. Provides information, which helps to counsel the subordinates.
  6. Provides information for correcting placement.
Purpose/ Significance/ Benefits of Performance Appraisal/ Evaluation
  • To ‘identify misplaced’ employees so that suitable remedial action may be taken.
  • To judge whether employees are performing at the acceptable level.
  • To find out the potential of employees for promotion and development.
  • To identify the strength and weaknesses of individuals so that timely steps may be taken to improve the quality of personnel.
  • To provide a record of each employee’s performance for the purpose of incentive pay and rewards.
  • To focus attention of the effectiveness of the organization and to recognize individual achievements.
  • To let on employee know where he stands so that he are motivated to develop himself.

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