Many healthcare organizations have formal performance appraisal systems that they use to rate the job performance of their employees. An effective performance appraisal system is very beneficial to an organization. The major benefit of performance appraisal is that it helps in directing employees’ behavior toward an organization’s goals. It also helps the management in making employment-related decisions such as promotions, rewards, and training arrangements. In addition, an effective performance appraisal system can be an important tool for motivating employees.
Employee performance appraisal is a continuous activity, but formal performance appraisal is preferred. Formal performance evaluation has various advantages. As a formal procedure, it is objective. The raters appraise the employees objectively, mainly leading to a numerical value. The numerical value assigned to every employee can be used to rank the employees and help in making decisions. The process also allows the management to give formal feedback to employees. To employees, formal performance appraisal can help to provide early warning. Therefore, an employee can have the opportunity to improve performance if it is declining before further actions. Despite the advantages, performance appraisals have their shortfalls. The process takes a lot of time and therefore can waste a lot of valuable working hours.
On the other hand, pressure to conduct an appraisal within a time frame can lead to misleading results. Performance appraisal can also interfere with work dynamics in an organization. Instead of motivating high performance, performance evaluation can affect teamwork and bring about antagonistic behavior. In addition, to secure their jobs, employees may over-focus on areas where they perform poorly, consequently leading to dropping performance in their areas of strength.
Annual performance reviews are not a good measure of success and can be counterproductive. The main objective of performance appraisal is to increase performance, but in most cases, it fails to meet its objectives. Theoretically, performance appraisal sounds right, but most organizations are not able to implement it effectively. Instead of motivating employees, it can lead to unhealthy competition in the workplace and demoralize employees that are rated low. It can also lead to a negative relationship between employees and their supervisors and therefore affect the overall performance of an organization. To benefit from performance appraisal, an organization should ensure that the appraisals are highly objective and tightly connected to the evaluation.