Employee Performance Appraisal Systems and Methods

Subject: Employee Management
Pages: 4
Words: 858
Reading time:
4 min
Study level: Master

Performance appraisal is a process of evaluating employees’ performance in line with the organization’s mission and vision statement. Individual performance should be evaluated to enable both employees and their managers to understand what they need to do and what they are able to achieve (Varma, Badhwar and DeNisi, 2008). Therefore, a satisfactory performance appraisal system should have several characteristics, which include reliability and validity, job-relatedness, standardization, practical viability, legal sanctions and employee access to results. An appraisal system should provide information that is reliable and acceptable to everyone in the organization in order to achieve its goals. This means that the credibility of the appraisers should not be questioned by either the employees or the management. In the case of dishonesty among the appraisers, employees may feel that they have been evaluated unfairly.

The appraisal system should be related to the set job in order to achieve its obligations. This means that the system should be able to evaluate employees in accordance with their obligations. The system should function within set standards in order to remain fair to all. This is because the appraisal decisions affect all employees; therefore, they need to understand the standards at which they are being evaluated.

In addition, the system should be practical where one should not develop an appraisal system that is uneconomical and impossible to implement. The appraisal system should be in line with the labor laws to avoid conflicts with labor unions and other laws regarding employees. Finally, the appraisal system should make results accessible to employees. Since the appraisal aims at improving performance, employees should be given adequate feedback in order to make improvements where necessary.

In many organizations, appraisal systems work hand in hand with compensation packages to ensure that employees’ performances are retained at their best. In fact, after evaluating employees’ performances and giving feedback, the best performers should be rewarded. Rewards can be in the form of salary increments where employees’ salaries are increasing based on their performance. Employees whose performance keeps on deteriorating may be warned and have their salary reduced (Tripathi, 2005).

This serves as a frightfully strong motivation tool because employees ensure that they work in line with the organization’s mission and vision. In addition, the organization may come up with a reward system where employees are promoted with respect to their performance. The performance appraisal system should be able to evaluate employees in several performance dimensions. This enables managers to know exactly who deserves promotion or demotion. Depending on the appraisal decision, the management should be able to make the right choice in promoting employees. This ensures that only competent employees get to the right positions.

Gainsharing is a method used by management to motivate their employees. This happens where employees are involved in the sharing of financial gains resulting from their hard work. For instance, after an accounting period an organization may decide to share part of financial gains with their employees and they use performance results as the basis of allocating the gains (Hale and Whitlam, 2000). In fact, best performing employees earn a larger share of the gains than poor performers. This program helps companies to achieve improvement in performance measures because employees will focus on attaining the best in terms of performance. In addition, this ensures that employees focus on achieving organizational goals in order to improve results hence translating to higher share during gain sharing.

Another program is where organizations host parties to celebrate their achievements. This is vital as employees get a chance to meet their colleagues and bosses in a scenario away from their work stations. They get the chance of having fun with everything catered for by their employer. This makes employees feel appreciated by their bosses, and this motivates them so much (Varma, Badhwar and DeNisi, 2008). During these functions, employees are given a chance to address the management citing problems in their workplaces. In fact, this program helps in strengthening the feeling of brotherhood among employees and their managers hence enhancing working relationships.

The appraisal system should provide results acceptable to employees hence enabling them to develop personal development. This is because if one feels that they have been evaluated fairly and in accordance with the set guidelines, they take charge of their conduct. By doing this, employees get into every detail to ensure that they work in accordance with the organization’s mission. Credible results enhance respect among employees and the management because no one feels cheated or sidelined in the process.

This promotes integrity in the organization because everyone is able to accept the result hence embracing the process and management in general. This is where employees feel that they are equally treated regardless of their relationship with their seniors (Chitale and Gupta, 2007). In the fair allocation of gains to employees, the management proves that they promote responsible stewardship in their organization. Many organizations end up in conflicts due to irresponsible stewardship (Tripathi, 2005). This is where managers put their personal interests before those of the organization by misusing employees. For instance, managers may direct employees to put more emphasis in a given section which may be benefiting them personally.


Chitale, A. K. & Gupta, R. C. (2007). Materials Management: Text And Cases. New Jersey: PHI Learning Pvt. Ltd.

Hale, R. $ Whitlam, P. (2000). Powering Up Performance Management: An Integrated Approach to Getting the Best from Your People. London: Gower Publishing, Ltd.

Tripathi, R. (2005). Principles Of Management, 3/E. Michigan: Tata McGraw-Hill Education.

Varma, A., Budhwar, P. S. & DeNisi, A. S. (2008). Performance Management Systems: A Global Perspective. New York: Taylor & Francis.