Human Resource Management

Abstract on Performance Appraisal System

Efficient and effective management of an organization is essential to enable the organization emerge as a market leader and gain competitive advantage. Management involves all the functions that helps to achieve all these objectives of the organisation. It also involves implementation of strategies and plans for optimum and efficient use of all the resources. The workforce or employees of an organisation is also an essential resource of the business. Effective management of this human resource is key for the overall growth and performance of the company. Performance management and performance appraisals are important elements of the human resource management system. The presented report discusses in detail this concept of formalised performance management system and performance appraisal of employees.

Table of Contents

Introduction.

Human resource management

Performance management

Performance appraisal

Conclusion.

References.

Introduction to Performance Appraisal System

A successful and efficient working of any organization or business requires a collective effort from among all the function of the organization.Management in simple terms can be defined as a process which makes the efficient use of all the resources of an organization or businesses to achieve the corporate goal. It is a process to attain the business goals and to achieve specific organizational purposes through economical and optimum planning and regulation. Efficient management consists of five core functions i.e. planning, organizing, staffing, directing and controlling (DeCenzo, Robbins, and Verhulst, 2016). Planning is the first managerial function and involves designing a detailed plan for attaining a specific organizational goal. Organizing is the next function and relates to the putting together the plan of using the all the available resources to fulfil the firm’s objective. Directing is assigning and providing direction of the procedures to work efficiently to attain the set organizational goals. The next function staffing is the one of the most important function of this process. Staffing involves recruiting the right personnel who are responsible for the organization’s growth. This function ensure that the business always has the right people in the right positions. The function of controlling ensures and monitors that the other functions are implemented appropriately.

The presented articles give a detailed view of this function of staffing and human resource management and how it is an integral part of the management system. The report sheds light on the performance management system and performance appraisal as important functions of human resource management and the strategies that are implemented by the companies to motivate its employees. Suchstrategies for the employeeshelp to maximize employee performance and thus be able to gain competitive advantage in the market.

Human Resource Management

The employees of an organization are also important resources of the business. All the functions of an organization whether managerial or non-managerial need humans to carry out these functions. Any company or business will hardly be able to function without human resources. Thus, the employees or the human resource of the company are a key element and form an integral part of the organization. Thus, the employees of an organization are actively involved in the operations of any business or organization and are directly responsible for the performance, development and growth of that organization. Hence, management of human resources and employees of a company is very essential to continuously motivate and encourage the employees to put in their best efforts an perform to their maximum capacities.

Human Resources in the most basic terms are all the people that work collectively or in one capacity contribute to achieve the common goal of the growth of an organization and contribute to its growth. Thus, human resource management is defined as a strategic approach for effective management of people or employees in an organization such that they contribute to business to gain a competitive advantage (Reesand Smith, 2017). The human resource management strategy is designed to maximize the employee performance to achieve the organization’sstrategic objectives. Human resource management describes formal systems developed for the management of people within an organization.

Human resource management involves all the process of selection and recruitment of employees for an organization. After selecting and appointing the appropriate personnel for a company the human resource management team also provides induction and orientation to the employees (Bratton and Gold,2017). The human resource management team is also responsible for imparting training to the employees and for their development. Appraising the performance of employees, providing employee benefits, giving them appropriate compensation are some of the most essential functions of the human resource management. Along with these, the human resource management team has a key role and is responsible in motivating the employees and maintaining employee relations and relations with trade unions, ensure safety of employees, their welfare and work in compliance of the prevalent labour laws of the land.

In the earlier times, the employees of an organization were viewed with the perspectives that employees are just tools for company’s growth or a liability to the to the organisation. They were seen as obligation to the company and were not considered as assets of organisation like today and were viewed as an expenditure to a business rather than investment (Hassan, 2016).The human resource officers also mostly used the disciplinary approach and were not flexible and interactive with employees. Employee welfare and addressing their concerns was not a priority for the human resource managers. Most of the times employee’s perspective was ignored and they lacked the opportunity to express their views and suggestions. However, with the changing times and development of new management strategies, the human resource management function is emerging as an essential and integral element of all the organizations nowadays.

The basic principle in the backdrop of the human resource management strategy is to understand that what should be offered to an employee of a company to extract the most optimum performance and the desired work from them (DeCenzo, Robbins,and Verhulst, 2016). Human resource management views employees from the perspective of them being the most valuable resources for a business or an organisation. The human resource management considers the employees as assets of their business. 

Motivation of employees is another basic principle of human resource management. Human resource managers always try to encourage and motivate the employees to participate in decision making and encourage them to express their views and suggestions. Human resource managers high priority is to manage the employee performance, provide its employees not always but sometimes flexibility in their work, create strategies for their welfare and provide and help the employees to maintain a work life. Human resource managers are responsible to show concern on employee issues and to address them timely and efficiently. Human resource managers constantly try to adopt new policies and developing and creating optimisation methods for the welfare of the employees. The human resource management strategy also involves integrating and augmenting of information technology in the human resources management process. This enables efficient functions and improved productivity. It also helps to save time and to some extend monetary expenditure of the company.

Performance Management

As discussed above, the performance management of employees is an essential priority of the human resource management team. Performance management systems are processes developed by the human resource managers to monitor and keep a track of the individual employee’s performance and the performance of other functional departments, and the thus performance of the organization overall (Akhtar and Sharma, 2018). Performance management systems are systems essentially systems that help in facilitating the achievement of individual and business goals. Performance management systems are often designed on the basis of the organizational and job-related competencies. These job specific competencies are essential for successful and efficient job performance. An effective performance management system should be a fair, reliable and consistent system. It should use established performance measures which are supported by all managers and executives. The effective system should be able to communicate the performance expectations from the employees regularly and should be able to make employees responsible for their actions. An effective performance management system should be able to aligns individual employee goals with the department in which the employee is associated with and also with the organization (Denisiand Murphy, 2017).Performance appraisal process involves assessing, measuring, identifying and developing the performance of the workforce or employees in an organization. It also promotes continuous employee development. This performance management system aims to seek the maximize performance from an employee and links this performance of the employee to compensation, rewards, and recognition benefits. Also, the performance management systems should be flexible and efficient and can also be used for succession planning in some cases.

Performance Management Systems use objective and measurable criteria for evaluating employee performance.An individual employee’s job performance criteria at times also include corporate performance measures with the performance management systems. The performance management systems help to define corporate goals as a part of requirements of individual employee goals. Employees who are efficiently and successfully achieve these goals are rewarded with positive reviews and appraised as per the laid rewards and benefits structure.

Performance measures such uses units like errors, cost, productivity to determine the acceptable levels of job performance.Performance management systems processes are often implemented and administered annually. In some organizations it is also administered quiet frequently on quarterly basis i.e. it is administered every three months. Performance managementprocesses can be used to determine and form compensation and rewards and benefits structure like bonuses, merit pay, or pay raises. These processes and systems are used to measure the productivity of employee and thus reward and recognize them for outstanding and efficient job performance.The process of performance management is implemented by drafting documents and giving the description of position requirements, department goals and objectives and job descriptions.

The basic ele­ments involved in creating an effec­tive per­for­mance man­age­ment process and framework are as follows (Mone, E. and London, M. 2018):

  • Setting goals- the human resource managers should set clear performance goal and objectives for the employees. The employees should have clear understanding of the organ­i­sa­tion­al objec­tives and why these indi­vid­ual goals mat­ter. Employ­ees tend to be much more sensitive towards their roles and will be much more engaged in it when they tru­ly under­stand their job roles and how is it important. Goals are usually established by the top management of an organization and are passed down to the lower management. The human resource managers thus formulate employee goals on basis of these received.
  • Collaboration and transparent communication- employees always want and wish for supervisors and managers who are approachable. The managers following an open-door approach for its employees, display a clear message to their employees that they are always available for their employee. It is important for the managers to always encourage its employees to participate in discussions and hear out their views and suggestions. The managers should provide and communicate all the relevant information to its employees related to the organization or their job roles and try to build healthy rela­tion­ships their employees (Bheemanathini, Srinivasan and Jayaram, 2019).
  • Employee recognition- it is important for the human resource managers to make the employees feel valued. Employees should be regularly appreciated for their work and good performance. One of the priorities of an effec­tive per­for­mance man­age­ment sys­tem is employ­ee recog­ni­tion and reward. They should appraise their employee on regular basis for all the efforts they have put in and be awarded for their good work.
  • Requirement of regular feedbacks and reviews- it is important for the managers to provide regular performance feedbacks to its employees. The employee should receive the regular reviews and insights about their work and performance which helps them to improve their performance and address gaps if any (Gerrish, 2016). Better informed employees are better able to excel and thus, maximize their performance.
  • Employee growth and development- development of employees is another important element of the performance management system. Employees donot stay in companies for long time if they are not provided with appropriate growth option and thus, move in search for better growth and development options. Thus, it is necessary for the human resource managers to provide good growth options to deserving candidates.

Thus, the basic aim of performance management system is to design a system for performance improvement of employees and for their welfare and development. It also helps to achieve the overall corporate goal and to build a high-performance employee workforce.

Performance Appraisal

Appraising an employee is an important element of an efficient performance management system. A performance management framework is used to ensure that employees' job roles and performances are in line with the organisation's goals.An effective performance management process provides the strategy to link individual employee goals with the strategic plans of the company. It also focuses on defining clear performance goals and objectives by the use of outcomes, actions and behaviours. An effective performance management process also enables to conduct frequent discussions during the performance cycle which include providing mentoring, feedback and assessment. The employee should also be awarded and appraised regularly for their performance.

Performance appraisal, an important element of the performance management strategy clearly describes and involves the process of judging past performance of the employees and thus providing them with appropriate rewards and recognition (Tweedie, et.al. 2019). This concept helps figure to out how is an employee performing and thus to improve their performance level.Performance appraisal is an continuous process of assessing employee performance.Performance appraisals are conducted at regular time intervals. Some organisations implement performance appraisal on quarterly basis that is once in 3 months, some do it on biannual basis that is once in 6 months, while some do it on annual basis once a year. A regular performance appraisal system helps to keep a track and record the performances of the employee regularly. This record helps to provide reviews and feedback to employee and thus address any employee issue and assist the employees to enhance their performance over time.

The performance appraisal system is the key to an effective management.The three basic functions of the performance appraisal system are as follows(Schleicher, et.al. 2018):

  • to provide adequate and appropriate feedback and review to each employee on his or her performance
  • to serve as a basis for facilitating change of modifying an employee’s behaviourfor more effective and efficient working habits
  • to provide adequate data to the managers they enable them and assist them in defining the future job assignments and compensation.

Most of the organizations and businesses have a formal performance appraisal system to conduct employee performance appraisal. The formalised performance appraisal management systems are nothing but a defines set of laid down procedures to conduct the employee appraisal performance from time to time (Sharmaand Sharma, 2017). A formalised performance appraisal system is important to achieve a productive and efficient performance of an employee. Such a productive and efficient performance appraisal system benefits both the parties involved in the system i.e. the employee as well as the organization. With a formalised and productive appraisal system the manager can focus on provided the most appropriate and honest feedback to the employee. This adequate feedback in turn helps the employee to address the gaps in his or her performance and thus work more efficiently for the next appraisal cycle. This delivery of maximum and efficient performance helps the employee to seek associated rewards and recognitions in the next appraisal, and also the employee gets chances of growth and development. The performance appraisal is performed for the following three purposes (Idowu, 2017):

  • Communicating- one of the important purposesof performance appraisal is to give an opportunity for formal communication betweenthe employees and the management of the company. It helps to understand the performance of each employee (Idowu, 2017). Communication also provide the employees with the opportunity to give their view, suggestions, concerns and feedback to the management. Thus, regular appraisal is very important to establish this communication.
  • Evaluation and decision making- another important goal of performance appraisal is to help management to take appropriate decisions about employees of the firm. The managers make decisions based on information which is received from communication with the employees (Pichler, 2019). Accurate information is very important for decision making of management. It is animportant element that assists the manager to improve productivityof the organization. This information fromthe timely performance appraisals helps to take evaluative decisions regarding employees likeraises in pay, their promotions, demotions, training and development.
  • Motivation, growth and development- another reason for performance appraisal is to give motivation and encouragement to the employees to improve their working habits and style (Idowu, 2017). This helps the employees for individual developmental process, which in turn will improves organizational productivity overall. Managers can create willingness in employees to attain the corporate goals. This in turn will help to increase productivity of the organizationthrough their appraisal systems. The evaluative decisions taken in appraisals lead to development of employees through enhancing their performance, and also byoptimum uses of the resources to enhance organizational performance.

The central of any formalised and effective performance appraisal system is to create and ensure that the meetings and the discussions between the employee and the manger are built around a developmental and growth perspective. Formalised performance review meetings usually take the following points into consideration (Jindal and Navneet, 2015):

  • Reviewing of the outcome and what has been achieved by the employee
  • Discuss and plan of the further job assignments and what will be achieved in future
  • Providing performance insights of the employee and discussing the development needs of the employee and how they can be addressed

The formalised performance appraisal system focuses out the results and the outcomes of the employee and not on how that outcome is achieved. However, at times the managers may also consider on how the objective was achieved and attained. The main purpose of the performance appraisal system is to appraise results, but in the present scenario, in practice employees are actually appraised on how they achieve the objectives and the performance, which is not describedin formalised performance appraisal system. These days many managers of an organization do not follow a formalised performance appraisal system. They discuss more in details other aspects of employee performance along with the above-mentioned key points, like how the employee achieves the set goals and results.

Formalised appraisals systems at times creates dissatisfaction among the employees. As these systems are traditional systems of appraisal based on a pre-determined structure of appraisal, such systems provide little or no scope for anopen communication between the managers and the employee. These systems do not look at an employee effort, and just focuses on the final result or outcome. These systems are time- consuming are do not encourage or motivate the employees. Formals systems are designed in a manner that they do not adequately address the concerns of low performing employees and at times might even fail to reward high performers. This creates job dissatisfaction in employees and lowers their self-esteem and morale. Thus, it is recommended for the businesses and firms to get rid of the formalised appraisal systems and adopt a more employee friendly appraisal system. this can be achieved by conducting formalised performance appraisal system as per the determined time line, the managers nowadays conduct mini appraisals regularly during the course of normal working days, to understand where an employee stands and provide any help if required. Such cumulative series of mini reviews and appraisals help to avoid any gaps during formal performance appraisal.

Conclusion on Performance Appraisal System

Human resource management is one of the most important functions of a business or an organization. The basic aim of human resource management is to make sure that the business is able to attain its goal successfully with the help of its manpower. Human resource management (HRM) involves all the processes of employing and recruiting staff, providing training to them, providing them appropriate compensation and employee benefits. It also includes developing employee related policies, and developing strategies to retain the employees.

Once the human resource management team selects and recruits the people, it is important to help people to perform efficiently on the job. Thus, performance management is also an important element of the human resource management. Performance management is the process that involves planning, monitoring, reviewing, and rewarding employee performance and it tries to maximize employee performance. It is a kind of continuous communication and feedback between a manager andemployee towards the achievement of organizational objectives. And appropriate performance management system implemented regularly and also be transparent in its communication.

Performance appraisal is an element or function of performance management system. A performance appraisal is a formal process used to monitor and assess an employee's effectiveness and productivity and assists in both administrative and developmental purposes. Employees achieving the corporate goals are rewarded and recognised with appropriate reviews and bonuses according to their performance and contribution to the business. If performance appraisals are performed in the correct manner, they can provide many valuable results like motivating the employee and increasing his performance. However, if they are performed incorrectly, the process of evaluating employee performance can actually lead to lower levels of job satisfaction and productivity. Thus, performance management and performance appraisals are important elements of the human resource management process and very essential for an employee’s growth along with the organizational growth.

References for Performance Appraisal System

Alonso, A. Akhtar, M. and Sharma. S. 2018. Strategic performance management system in uncertain business environment: An empirical study of the Indian oil industry. Business Process Management Journal, 24(4), 134-148.

Bheemanathini, S., Srinivasan, B. and Jayaram, A. 2019. A review on performance management system (PMS) methods for employee’s appraisal in an organization. Industrial Engineering and Management, 8(2), 1-3.

Bratton, J. Gold, J. 2017. Human resource management: theory and practice. London: Macmillan Publishers.

DeCenzo, D.A., Robbins, S.P. and Verhulst, S.L. 2016. Fundamentals of human resource management. New York: Wiley.

Denisi, A. S., and Murphy, K. R. 2017. Performance appraisal and performance management: 100 years of progress? Journal of Applied Psychology, 102(3), 421–433.

Gerrish, E. 2016. The impact of performance management on performance in public-organizations: A meta-analysis. Public Administration Review, 76(1), 48-66.

Hassan, S. 2016. Impact of HRM Practices on Employee’s Performance. International Journal of Academic Research in Accounting, Finance and Management Sciences, 6(1), 15-22.

Idowu, A. 2017. Effectiveness of Performance Appraisal System and its Effect on Employee Motivation. Nile journal of Business and Economics, 3(5), 59-67.

Jindal, S. and Navneet, L. 2015. Study of effectiveness of performance appraisal system in selected Indian companies. International Journal of Research Granthaalayah, 3(12), 44-50.

Mone, E. and London, M. 2018. Employee engagement through effective performance management: a practical guide for managers. New York: Routledge.

Pichler, S. 2019. Performance Appraisal Reactions: A Review and Research Agenda. Available at: https://link.springer.com/chapter/10.1007/978-3-030-30915-2_5 [Accessed on: 30th June, 2020]

Rees, G. and Smith, P. 2017. Strategic human resource management: an international perspective.London: Sage Publications.

Schleicher, D.J., et.al. 2018. Putting the system into performance management systems: a review and agenda for performance management research. Journal of Management, 44(6), 2209-2245.

Sharma, A. and Sharma, T. 2017. HR analytics and performance appraisal system: A conceptual framework for employee performance improvement. Management research Review journal, 40(6), 204-223.

Tweedie, et.al. 2019. How does performance management affect workers? Beyond human resource management and its critique. International Journal of Management Reviews, 21(1), 76-96.

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