Performance appraisal process is planned,developed and implemented through a series of steps as show below:
- Establish Performance Standards with Employees: The appraisal process begins with establishment of performance standards in accordance with the organisation’s strategic goals. These should evolve out of the company’s strategic direction- and more specifically, the job analysis and the job description. These performance standards should also be clear and objective enough to be understood and measured. Too often, standard are articulated in ambiguous phrases that tell us little, such as “a full day’s work” or “a good job”. What is full day’s work or a good job? A supervisor’s expectations of employee work performance must be clear enough in his mind so that he will be able to, at some later date, communicate these expectations to his employee, mutually agree to specific job performance measures, and appraise their performance against these established standards.
- Mutually Set Measurable Goals: Once performance standards are established, it is necessary to communicate these expectations; employees should to guess what is expected of them. Too many jobs have vague performance standards, and the problem is compounded when these standards are set in isolation and without employee input. Communication is a two-way street-mere information transfer from supervisor to employee is not communication.
- Measure Actual Performance: The third step in the appraisal process is performance measurement. To determine what actual performance is, we need information about it. We should be concerned with how we measure and what we measure. Four common sources of information frequently used by managers address how to measure actual performance-personal observation, statistical reports, oral reports, and written reports. Each has its strengths and weaknesses; however, a combination of them increases both the number of input sources and the propability of receiving reliable information. What we measure is probably more critical to the evaluation process then how we measure. Selecting the wrong criteria can produce serious, dysfunctional consequences. And what we measure determines, to a great extent, what people in the organization will attempt to excel at. The criteria we measure must represent performance as it was mutually set in the first two steps of the appraisal process.
- Compare Actual Performance with Standards: The fourth step in the appraisal process in the comparison of actual performance with standards. This step notes deviations between standard performance and actual performance so that we can the next step.
- Discuss the Appraisal with the Employee: This step involves discussion of the appraisal with the employee. One of the most challenging tasks facing appraisers is to present an accurate assessment to the employee. Appraising performance may touch on one of the most emotionally charged activities-evaluation of another individual’s contribution and ability. The impression that employees receive about their assessment has a strong impact on their self-esteem and importantly, on their subsequent performance. Of course, conveying good news is considerably easier for both the appraiser and the employee than convying bad news. In this context, the appraisal discussion can have negative as well as positive motivational consequences.
- If Necessary, Initiate Corrective Action: The final step in the appraisal in the identification of corrective action where necessary. Corrective action can be of two types-one is immediate and deals predominantly with symptoms. And the other is basic and delves into causes. Immediate corrective action is often described as “putting out fires”