Performance appraisal includes various steps, as shown in the figure given below:
1. Establish Performance Standards with Employees: The process of performance appraisal starts with the formation of performance standards, according to organizational planned goals.
These standards should be derived from the strategic organizational decisions, particularly from job analysis and job description.
These standards should be easy to understand so that they can be easily comprehended and evaluated. Generally, these standards are expressed with confusing remarks that one understands little such as “a full day work” or “a good job.”
It is difficult to understand what is a full day work or a good job. A manager should have a clear-cut picture in his mind about what he expects from his employees.
Thus, he would be able to convey these expectations to the employees in the future and evaluate their performance as per these standards.
2. Mutually Set Measurable Goals: After the formation of standards, the most important thing is to convey the expectations so that an employee would not waste his time in presuming what is being expected from him.
Many jobs have ambiguous performance standards, and the problem occurs when these standards are formulated separately without any discussion with employees.
Only transfer of information from manager to employee cannot be termed as communication because communication is a two-way process.
3) Measure Actual Performance: Measurement of actual performance is the next phase of the appraisal process. To measure actual performance, it is necessary to collect information about it.
Managers should be aware of what is to be measured and how. There are four common sources of information that are often exercised by the managers to evaluate actual performance.
These sources are personal observations, statistical reports, oral reports, and written reports. Every source has its own benefits and limitations.
However, a group of these sources will boost the number of input sources and prospects of collecting trustworthy information. What is being measured is more difficult to evaluate as compared to how it is being measured.
Selecting the wrong criteria may result in severe outcomes. What is to be measured indicates what people have to achieve in order to excel in the organization.
4) Compare Actual Performance with Standards: Next step involves a comparison of standards with actual performance. This step includes the identification of fluctuations between the standard performance and the actual performance in order to proceed further.
5) Discuss the Appraisal with the Employee: During this phase, the appraiser discusses the appraisal with the employee. For a manager, the most difficult job is to provide a precise appraisal to the employee.
The review of performance appraisal affects an employee’s self-esteem and, most importantly, his performance. Obviously, providing positive feedback is comparatively easier for both the appraiser and the employee than providing negative feedback.
The appraisal may have both positive and negative outcomes.
6) If Necessary, Take Corrective Actions: The last phase of the appraisal process involves taking remedial actions wherever needed. These actions could be immediate or basic.
Immediate actions mostly deal with the symptoms. These actions are frequently regarded as ‘putting out fires as they deal with urgent problems.
They rectify the problems immediately and smoothens the flow of work. On the other hand, basic actions deal with the causes of the problem.
These actions cover the reasons for fluctuation and also aim at controlling the differences permanently. They diagnose how and why the performance fluctuates.
In some cases, appraisers may give a reason that due to the shortage of time, they did not take basic remedial actions. Hence, appraisers feel satisfied in putting out fires.
Efficient managers know that spending a little time in evaluating the problem today may save their time in solving the problem tomorrow.