What is Performance appraisal

The human resource of any organisation holds utter importance, and keeping them in check is a task every organisation engages in. Performance appraisal is one such process which involves a systematic evaluation of the accomplishments and performance of an employee and assessment of his or her potential for the future improvement. Its functions are

• to asses the worth or ability of an employee in performing the tasks
• justify rewards given to employees
• differentiate between low and high level performance

Gathering and analysing information about an employee leads to efficient administration of the organisation, and also helps in improving the performance of the employee. There are various methods of performance appraisal. Most methods include a few basic steps  that include explanation of the purpose of the appraisal to both the supervisors and the subordinates, filling of appraisal forms by the managers, submission of the same to the personnel, and finally using it for employment decisions and employee improvement. It is important that the appraisal process is unbiased, and the results are discussed with the subordinate by the managers.

But there are a few limitations encountered during performance appraisal, which hamper the validity and reliability of the assessment. A few of them are, the halo effect, personal bias, inflation of ratings, central tendency, leniency tendency and strictness tendency.

Interestingly, for the first time, all the directors of listed companies of India were subjected to formal appraisal recently. This was in accordance with the Companies Act, 2013 and the amendments to the Listing Agreement; the objective of it being an improved and better corporate governance and management.

Performance appraisal is a crucial human resource activity which strengthens the human resource of an organisation. It motivates the ones who do well in the assessment to do even better, and gives the much needed feedback to the ones who do not, so that they refine their efforts too. Thus performance appraisal is an integral part of the management of any organisation.

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