CHAPTER 8 : MANAGEMENT OF PERFORMANCE APPRAISAL SYSTEM

Performance appraisal is one of the major keys to effective management. It is basis for
determining who should be promoted to a higher position.

Performance appraisal is a process of evaluating an individual in order to arrive at an objective

human resource decision. It is also important for management development because if an employee’s
strengths and weaknesses are not established, it is quite difficult to determine wether development
efforts of the organization are aimed at the right direction .

Effective performance appraisal should be focused on the legitimate desire of employees for
progress in their professions.

THE PURPOSE OF PERFORMANCE APPRAISAL

1. STRATEGIC PURPOSE

The performance management system should link the employee activities with the organizations
goals and objectives. These strategies are implemented through defining results, behavior and to some
extent employee characteristics that are necessary for carrying out the predetermined goals and
objectives.

To achieve this strategic purpose, the system must be flexible because, when goals and strategies
change the results, behaviors and employee characteristics usually need to change correspondingly

2. ADMINISTRATIVE PURPOSE

Performance management information relative to performance appraisal points to the use of

evaluation in decisions for salary adjustments, promotion, retention and termination, lay off and
recognition of individual performance.

3. DEVELOPMENTAL PURPOSE

To develop employees who are effective in their jobs

When employees are not performing as well as they should, performance management seeks to
improve their performance.

The feedback given during the performance evaluation process often pinpoints the employees’
weaknesses.

The Criteria in the Development of a Measuring Instrument

The value of a performance rating depends upon the factors to be measured and the extent of its
validity and reliability.

1. VALIDITY

Ratings are valid if they are accurate measures of the employees’ performance. It refers to the
accuracy of the ratings in differentiating each employee in a group in terms of actual job performance
 The rating scale must be able to show the degree of the employees’ efficiency in the performance of
his assigned tasks or duties and responsibilities.

It is not quite easy to develop the performance rating instruments because we have set standards
against which to compare result

2. RELIABILITY
Rating may be considered reliable if they are consistent.
3. ACCEPTABILITY

refers to whether the people who use the performance measure accept it. Many very elaborate
performance measures are extremely valid and reliable yet many managers and supervisors do not
want to use them as they consume so much time.

4. SPECIFICITY

Is the extent to which the performance measure gives specific guidelines to employees about
what is expected of them and how they can make this expectation

The instrument must be able to pinpoint the employees’ performance problems or it becomes
impossible for the employees to correct their performance