Effective performance appraisal systems contain two basic systems operating in conjunction:
an evaluation system and a feedback system.
The main aim of the evaluation system is to identify the performance
gap (if any). This gap is the shortfall that occurs when performance does not
meet the standard set by the organization as acceptable.
The main aim of the feedback system is to inform the employee about the
quality of his or her performance. (However, the information flow is not
exclusively one way. The appraisers also receives feedback from the employee
about job problems, etc.)
One of the best ways to appreciate the purposes of performance appraisal is
to look at it from the different viewpoints of the main stakeholders: the employee
and the organization.
From the employee viewpoint, the purpose of performance appraisal
(1) Tell me what you want me to
(2) Tell me how well I have done
(3) Help me improve my performance
(4) Reward me for doing well.
From the organization's viewpoint, one of
the most important reasons for having a system of performance appraisal
is to establish and uphold the principle of accountability.
For decades it has been known to researchers that one of the chief causes
of organizational failure is "non-alignment of responsibility and
accountability." Non-alignment occurs where employees are given responsibilities and duties,
but are not held accountable for the way in which those responsibilities
and duties are performed. What typically happens is that several individuals
or work units appear to have overlapping roles.
The overlap allows - indeed actively encourages - each individual or business unit to "pass the buck"
to the others. Ultimately, in the severely non-aligned system, no one is
accountable for anything. In this event, the principle of accountability breaks down completely.
Organizational failure is the only possible outcome.
In cases where the non-alignment is not so severe, the organization may
continue to function, albeit inefficiently. Like a poorly made
or badly tuned engine, the non-aligned organization may run, but it will be sluggish,
costly and unreliable. One of the principal aims of performance appraisal is to make people accountable. The objective is to align responsibility
and accountability at every organizational level.
Other Uses and Benefits
For more information, see the section entitled,
"Benefits of Appraisal"
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