Performance Appraisal System - Essay Example

? Performance Appraisal System and Performance Management System Introduction Performance appraisal system andperformance management system form a crucial part of the HR function in any organization. The two aspects help in evaluating the performance of employees and in decision making. Performance appraisal details the process used to assess the performance of employees based on the standards, which the organisation has put in place. During performance appraisal, there is a comparison of the employees and the results of the appraisal are then used to determine areas in which the employee needs to improve (Grote 1996, p.3). Performance management systems refer to measures that the organization has put in place with the aim of establishing what employees ought to do in a certain period. For example, it can constitute measures on how the employee should perform in the next quarter of a year, the next sixth months, or the next one year. A performance management system outlines what should be met within a certain time frame, as well as the benefits that accrue to employees when they meet these objectives (Grote 1996, p.17). Differences between performance Appraisal System and Performance Management System There are certain differences, which exist between performance appraisal systems and performance management systems. These differences represent the most fundamental components of the two approaches, as well as how the two approaches differ in terms of what they address. The major differences between performance appraisal and performance management systems lies in the scope of what they aim to cover. While performance management systems represent a traditional approach to the management of human resources, performance management can be termed as a contemporary approach to the management of human resources (Rao 2004, p. 213). A main difference between the two is that performance appraisal emphasizes on rating the performance of employees while, on the other hand, performance management focuses on managing how the employees will perform. Performance appraisal dwells on evaluating and assessing employees individually. On the other hand, performance management dwells on improving the performance of individual employees, teams within the organization, as well as the entire organisation (Murphy & Cleveland 1995, p. 333). During performance appraisal, the principal activities that the human resource department engages in include evaluating employees, as well as rating their performance. On the contrary, performance management aims at the review, analysis, and planning of the expected performance of employees, and how an employee should make improvements (Deb 2006, p.201). While performance management can be regarded as a continuous process within the organisation, performance appraisal takes place in an annual basis. In performance management, there may be reviews that take place quarterly while, in performance appraisal, the review of the employee takes place once a year. However, there may be periodic ratings of employees in the course of the year (Rao 2004, p.214). Performance appraisal is a function entirely performed by the human resource department of the organisation. This means that the human resource department has the responsibility to design, evaluates, as well as monitor the implementation of the performance appraisal system (Roberts 2003, p.89). On the contrary, the performance management system can be designed by the human resource department, but the implementation of the system can be done by the various departments. In performance appraisal systems, there are reviews that may be conducted to ensure that the ratings of employees enhance objectivity. In performance management systems, the reviews serve the purpose of ensuring that the organization improves its performance (Waal & Counet, 2009). In performance appraisal, the need for making development is identified when the year ends. During performance management, the need for development can easily be identified when the year starts. During performance appraisal, competency gaps play a fundamental role in the identification of developmental needs. On the other hand, developmental needs in performance management can easily be identified through reviewing competency requirements for the next year (Rao 2004, p.214). The other difference between performance appraisal and performance management is that there is low visibility in performance appraisal while, in performance management, there is high visibility. The low visibility in performance appraisal systems emanates from poor reporting that emanates from the lack of automation in the appraisal systems. As such, in performance appraisal, the appraisal process and managers of the employees help to determine the future of employees. On the other hand, there is high visibility in performance management systems. This emanates from the fact that the performance reviews conducted during performance management tend to be frequent. This means that areas where performance is low are given a lot of attention; this makes it possible to solve problems with a lot of ease (Potgieter, 2005). Advantages and disadvantages of Performance Management System The implementation of a performance management system can have several advantages and several disadvantages to the organization. This system helps in rewarding individual who portray excellence when performing their duties. This emanates from the fact that this approach can be termed as instrumental in aligning the objectives of the organization with the accomplishments, which each employee has made (Kandula 2006, p.30). The other advantage of this system is that it helps employees gain an understanding of what they ought to do in the organisation. This is because employees can know the performance expected from them with regard to behaviour, goals, as well as the results they ought to achieve. A performance management system can also be termed as advantageous since it helps employees perform duties with the culture of the organization in mind. This is because the system helps in setting the appropriate standards, which should guide employees in performing their duties. Through a performance management, it is also possible to solve problems when they crop up as opposed to solving problems when they have already caused damage to the organization. A major disadvantage of performance management systems is that they emphasise a lot on numbers. As a result, there is little emphasis on the improvements of performance, as well as processes in the organisation. The other disadvantage is that they aim at achieving many objectives at the same time, which may not be feasible. Performance management systems do not emphasize on motivation, or the ways, which can be employed to make employees improve on their performance (Rao 2004, p.216). Advantages and Disadvantages of Performance Appraisal Systems Performance appraisal systems can be considered of immense benefit to both the employees and employers. Performance appraisal systems are advantageous since they help in career development. Employees have an opportunity to develop their careers and improve on their job performance (Attorney 2007, p.11). In addition, employers have an opportunity to identify employees who have the best skills to perform a certain task. Performance appraisals also help in measuring whether the outcome of the appraisal aligns with the objectives, which were set when the system was designed (Goyal 2005, 220). Performance appraisal also helps in determining whether an employee’s potential is fully tapped in his or her job. Based on such evaluation, the management can decide what needs to be done in order to improve the performance of the employee. Performance appraisal systems also form the basis for decisions such as promotion, training, as well as pay increase (Goyal 2005, 224). Despite the advantages of a performance appraisal system, there are several disadvantages that relate to performance appraisal systems. One disadvantage of this system emanates from the fact that there is a high possibility of personal bias when rating employees. This is because the managers can rate the employee together with the job that he, or she does. Performance appraisal systems may also not be applicable to small organizations. This is because the supervisors may be subjective while rating employees since there is close contact between them and the employees. Performance appraisal systems can also be faulted for the lack of standards, which can be used to quantify the ratings (Goyal 2005, 224). Why I recommend performance management system rather than performance appraisal system A performance management system is suitable and more appropriate than a performance appraisal system based on a number of reasons. One of the reasons, why performance management systems can be termed as appropriate, is because they tend to align to the corporate plans of the organization. With the performance reviews that tend to be conducted on a periodic basis, the management can make plans with regard to the strategic plans of the company. This does not happen in performance appraisals since they do not focus on performance based on certain periods. A performance management system is also preferable since it encompasses plans for the future. This means that the organisation can achieve plans and set objectives. A performance appraisal system focuses on what has already been achieved by an employee and cannot thus be used to plan what the organisation wishes to achieve (Potgieter, 2005). Thus, it can be argued that the implementation of a performance management system can have immense benefits to an organisation as compared to the implementation of a performance appraisal system. In this regard, therefore, organisations should take advantage of the lucrative opportunity that performance management systems avail. With this in mind, it is worth noting that organisations should implement a performance management system rather than a performance appraisal system. References List Attorney, A. D. (2007). Performance Appraisal Handbook, London, Nolo. p.11. Deb, T. (2006). Strategic Approach To Human Resource Management Concept, Tools And Application, New Delhi, Atlantic Publishers & Dist. p.201. Grote, R. C. (1996). The complete guide to performance appraisal, New York, AMACOM. P3-17. Goyal, J. (2005). Hospital Administration And Human Resource Management 4Th Ed, London, PHI Learning Pvt. Ltd. Pp. 224. Kandula, S. R. (2006). Performance management: strategies, interventions, drivers, New Delhi, PHI Learning. Pp.30-31. Murphy, K. R., & Cleveland, J. (1995). Understanding performance appraisal: social, organizational, and goal-based perspectives, Thousand Oaks, Calif, Sage.pp.332-333. Potgieter, L. (2005). Appraisal Vs. Performance Management. [Online]. Accessed 29 April 2013. Available at: http://www.pmia.org.au/white/appvperf.pdf Rao, T. V. (2004). Performance management and appraisal systems: HR tools for global competitiveness, New Delhi, Response Books. p.213-216. Roberts, G. E. (2003). Employee Performance Appraisal System Participation: A Technique that Works, Public Personnel Management 32(1), pp. 89-92. Waal, A. E. & Counet, H. (2009). Lessons learned from performance management systems implementations, International Journal of Productivity and Performance Management 58(4), pp.367-390. Read More