Importance of Performance Appraisal

A major challenge for every business owner or manager is to have employees who are passionate about what they do and constantly strives to perform at their best. Many managers take the integrated approach known as Performance Management, to manage the performance, consisting of setting goals, training employees and then appraising and rewarding them (hrm). It can be explained as a process that consolidates goal setting, performance appraisal and development into single, common system, the aim of which is to ensure that the employee’s performance is supporting the strategic aims. (hrm book 315).. A performance management system would be only effective when the employees in Mambo are clear about their duties and job standards and the organizational goals so that they work with their full potential to meet organizational objectives. Mambo should develop a well planned performance management system as it will provide information on taking decision about the promotion and salary of the new as well as currently employed staff members. Moreover it would provide the senior management (Brett and Simone) to review the employee’s work related behaviour and developing a plan for correcting any deficiencies both for manager and employee as well. During the implementation of the performance management system the organisation has to expressly pay attention to fostering and improving the behavioral factors of performance management, in order to increase the chances of better result by the use of performance management system. A key element of Performance Management System is Performance Appraisal as it identifies, evaluates and develops employee performance to meet employee and organizational goals Brett and Simone have to choose an appraisal method so that actual performance can be measured as to what has been set in the organisation. Selecting one appropriate method from many is not easy as. It is The classification of appraisal methods helps make it more straightforward. If conducted properly appraisals can achieve a number of benefits for all parties. The organization, the manager and the appraisee can: establish current levels of performance and benchmark across departments or functions; identify ways of improving performance, individually and collectively; set clear goals for the future; assess potential and desire for development; establish the appropriate means of motivation; and improve communication throughout. Mambo would be benefited in reviewing the performance of the employees by using the balance scorecard method as it is a measurement –based management system that translates organizational vision and strategy into action. (hrm 321). Under the balanced scorecard system, financial measures are the outcome, but do not give a good indication of what is or will be going on in the organization. Measures of customer satisfaction, growth and retention is the current indicator of company performance, and internal operations(efficiency, speed, reducing non-value added work, minimizing quality problems) and human resource systems and development are leading indicators of company performance(hrm 321) A performance measurement system such as the Balanced Scorecard allows an agency to align its strategic activities to the strategic plan. It permits — often for the first time — real deployment and implementation of the strategy on a continuous basis. ( balance score card, bsc,and performance management, David Chaudron, oct 2000 (www. articles911. com/Performance_Management/Balanced_Scorecard) By this approach Mambo can track and improve its strategic performance and results by developing, measuring, collecting and analyzing the data from both internal business processes and external business processes and can get feedback needed to guide the planning efforts. This meth od not only analyses how the organisation has been doing, but also how well it is doing (â€Å"current indicators†) and can expect to do in the future (â€Å"leading indicators†). It provides a clear picture of reality. As their current strategy is to focus on the global competition they are about to face from the existing players of the market they need to integrate the performance appraisal into an ongoing culture of communication where regular feedback is part of a culture of success. Ultimately, goal of Brett and Simone, when conducting performance appraisals should be to impart a true appraisal of the employee’s performance (including behavior and attitude) from management’s perspective. Employees typically are anxious at the prospect of receiving negative comments on their work, and managers may be uncomfortable offering that criticism. When done correctly, however, appraisals can be positive experiences that motivate staff members to reach their potential and achieve their professional goals. In addition to assessing past performance, appraisal meetings provide an ideal opportunity to look at future objectives. Encourage employees to stret ch their abilities, yet make sure goals are realistic. Performance evaluations allow employer to reinforce expectations and communicate with your staff one-on-one about their career objectives and simultaneously provides an overview to establish the standards of remunerating employees. An increasingly large number of corporations have explored how rewards, particularly money, could be linked to desired behavior and/or performance outcomes to improve effectiveness. This has led to widespread and growing development of pay for-performance plans. â€Å"Pay for performance† refers to any compensation system that links pay and performance. A pay-for-performance system is only as successful as the performance management program on which it depends. There are two categories of pay merit pay and variable pay. The type of performance evaluation most often associated with merit pay plans are appraisals that focus on individual performance and typically use a combination of quantitative and qualitative performance elements thus Brett and Sim one must use the concept of merit pay, which would link the individual performance with the mission of the organization. pay for Performance: Your Performance Management Program Is the Foundation, jay Schust, april 2007 , http://www. work911. com/cgi-bin/links/jump. cgi? ID=773) However attracting, motivating and rewarding employees is about much more than wages and salaries. Mambo should establish a clear line of sight between business strategies and total reward philosophies so that an effective strategy can be formulated for attracting, motivating and retaining employees(hrm 373) Total rewards refer to monetary and non monetary rewards made up of salaries/wages and benefits an employee get for performing a certain job. As the employees with high salary and incentives are less likely to quit the organisation and work with their full potential to reach organizational goal. (hrm 373), thus Brett and Simone should make an effective pay structure for the employees. They should offer bonus on top of the salaries to the employees, if they achieve the desired targets set by the company. This can be done during performance appraisal by balance score card approach as it measures the performance of employees in terms of strategic improvement of the organisation. Title: The effect of performance management on the organizational results of a bank Author(s): Andre A. de Waal, Vincent Coevert Journal: International Journal of Productivity and Performance Management ISSN: 1741-0401 Year: 2007 Volume: 56 Issue: 5/6 Page: 397 – 416 DOI: 10. 1108/17410400710757114 Publisher: Emerald Group Publishing Limited title Performance appraisal across organizational life cycles. Chen, Hai-Ming1 Kuo, Tung-Sheng Human Systems Management; 2004, Vol. 23 Issue 4, p227-233, 7p sorce Time to Reappraise Performance Appraisals. Find More Like This Receivables Report for America's Health Care Financial Managers; Jun2007, Vol. 22 Issue 6, p10-11, 2p By Lauren Stiller Rikleen .( balance score card, bsc,and performance management, David Chaudron, oct 2000 (www. articles911. com/Performance_Management/Balanced_Scorecard Developing Effective Performance Reviews. By Max Messme, business source complete, .( Getting the most from appraisals — from both sides of the desk. Find More Like This Yemm, Graham1 Source: Management Services Management Services, Spring2005, Vol. 49 Issue 1, p36-37, 2p, 2c; )