Performance appraisal systematically evaluates an employee's current and past performance as well as future potentials. It helps to identify employee's job related behavior and outcomes. Organizations usually undertake appraisal for administrative and developmental purposes. Main uses are as follows:
1. Administrative Uses Of Performance Appraisal
Under administrative use, performance appraisal provides a basis for a decision about the employee;s work conditions, promotions, terminations, and rewards.Administrative uses of performance appraisal comprise the following aspects:
A. Promotion
Performance appraisal serves as a basis for promotion of employees by communicating required skills, efficiency and potentials of the employees. It is the common interest of employees to get promoted into position where they can utilize their abilities effectively. It is mismanagement to promote the employees into such position where they cannot perform effectively. Hence, performance appraisal provides relevant information on promotion decision.
B. Transfers
Transfer decision is concerned with the transformation of employees from one work unit to another. It is conducted when the employees are not performing will in the organization. Performance appraisal provides reliable and relevant information for transfer decisions.
C. Remuneration Administration
Performance appraisal serves as a basis for administrating the remuneration of employees. It means, by assessing the current and past performance of an individual a decision regarding reward and punishment will be made.
D. Training And Development
Performance appraisal provides a basic ground for determining needs of individuals. It indicates the performance deficiencies in employee, if any, so that the training needs can be identified within individuals. It also helps in indicating talented employees so as to impart additional knowledge and skills in them.
E. Supervision
Performance appraisal provides a guide line for determining where and what kind of supervision is required. It also helps in personnel research.
2. Development Uses Of Performance Appraisal
Performance appraisal is said to be used in development whenever it is used to gear up towards improving employee's performance and skills. It can also be defined from the view point of self improvement. Under it, performance appraisal helps for the development of overall skills and efficiencies of the individuals. It also facilitates employee's career planning by recognizing their strength and weakness. This brings out the deficiencies and short comings of the employees, and provides a regular feedback to employees, so that the employees can improve their skills deficiencies.
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