Performance appraisal

ACCA - F1   ACCOUNTANT  IN  BUSINESS

Performance appraisal is a continuous review and assessment of individual's expected and real contribution in relation to the benefits provided. As effective appraisal system ensures goal congruence, fact analysis/real contribution, fair approach and continuous/frequent review.

Appraisal helps to manage human capital, link reward to performance, understand training needs and career development of an individual. Significant portion of organisation cost ties up with employees as training and development program. Increased turnover rate increases the cost associated with staff. Performance appraisal addresses this issue by aligning the interest of employee and organisation.

Beer et al identified four criteria for performance assessment. They are the 4 C's. Commitment (of employees to assigned work), Competence (innate and developed), Cost effectiveness (optimal utilization of workforce) and Congruence (job design to match organisational and employees need).

Appraisal integrates reward, training and development together.

Ø  Reward - Individual's performance related pay (compared to his/her peer) is determined using different performance measurement tools and techniques. Continuous appraisal helps continuous review of reward.

Ø  Training needs - Appraisal identifies the need of personal/group training and development to increase individual/group competency and in a cost effective way.

Ø  Career development - Appraisal focuses on new and existing job design and personal specification for present and future available opportunities for individuals. It analyses individual capacity to handle high-level task and identifies individuals for promotion.

Individual appraisal requires subjective analysis in various issues. Therefore, appraisal process faces number of barriers. J Lockett suggested six barriers of human performance appraisal. They are confrontation (angry disagreement), judgement (one-sided), chat (conversation), bureaucracy (form filling), event (ceremony) and unfinished business (continuous review).

To overcome the barriers and make appraisal process effective management should use different techniques. Managerial experience and skills used in appraisal process are questioning, listening, persuading and verbal communication.

ACCA Article: Understanding the importance of appraisals