The objective of performance appraisal are as follows:
1. Providing Feedback: The main objective of performance appraisal is to provide feedback to its employees. Through this process, the individual learns how he performed during the past twelve months.
Then, he can utilize this information to improve his performance in the future. Thus, performance appraisal aims to ensure that the expectations of the manager are properly communicated to employees.
2. Facilitating Promotion and Downsizing Decisions: Performance appraisal helps in making decisions regarding promotion and downsizing so that efficient employees can be retained and low performers can be removed.
3. Motivating Superior Performance: Performance appraisal also helps in stimulating people for rendering superior performance in a number of ways. Firstly, it helps in understanding what an organization means by being “superior.”
Secondly, as most people desire to be treated as superior performers, the performance appraisal process helps them to understand their actual performance. Lastly, performance appraisal motivates employees to become superior performers.
4. Setting and Measuring Goals: Goal establishment has been confirmed as a management process that produces advanced performance. The performance appraisal process is generally used to ensure that every individual sets and attains valuable goals.
5. Determining Compensation: The concept of pay for performance is generally followed by every organization. Performance appraisal helps in ensuring that good performers are paid more. Thus, employees are rewarded as per their performance.
6. Counselling Poor Performers: It is not possible for everyone to meet the standards of the organization. Performance appraisal pressurizes the managers to deal with those who are not fulfilling the organizational expectations.
7. Encouraging Coaching and Mentoring: Managers are supposed to be good coaches for their subordinates and mentors for their trainees. Performance appraisal determines the need for coaching and motivates managers to play an active role of coach.
8. Supporting Manpower Planning: Well-groomed frequently evaluate their strengths to ensure that they have the required talent. Organizations need to find out their most effective employees.
They also need to locate the departments having talented employees and those that are lagging behind. Performance appraisal provides the organization with a tool to ensure that they have that creative strength that is needed in the future.
9. Determining Training and Development Needs: With the help of data obtained from performance appraisals, training and development experts can better decide the areas where an organization should focus its training efforts.
10. Validating Hiring Decisions: Once the performance of newly selected employees is evaluated, only then the organization can determine whether or not it has selected the right candidate.
11. Providing Legal Defensibility for Personnel Decisions: More or less every personnel decision, whether termination, denial of a promotion, or transfer to another department, is governed by legal inspection.
If any of these decisions are challenged, the organization could also be challenged. Therefore, the organization must be capable of justifying that the decisions taken were not established on any personal issue or any other protected aspect.
A strong record of performance appraisals deeply assists in legal defensibility when any complaint about biasness is made.
12. Improving Overall Organisational Performance: Overall improvement of organizational performance is one of the most important purposes for which performance appraisal is being used in organizations.
Performance appraisal helps in conveying the organizational expectations to all team members and evaluates how each employee is performing his job.
When an employee is aware of what is being expected from him and how he is executing his task against those expectations, then ultimately this leads to enhancement in the success of the organization.