What is the role of performance appraisals in employee development?

Companies that manage employees' job performance have been found to be more successful financially. Companies with performance management programs compared to those without:

The top objectives for performance management are to provide information to employees about their performance, clarify organizational expectations and identify developmental needs. As a general rule, the development components of performance management continue to challenge organizations. HR practitioners are frequently more satisfied with the performance planning, evaluation, and discipline aspects of their performance management systems than the development-focused components like development planning, 360 degree feedback, coaching or leadership development.

Effective performance appraisal requires goals. Goals must be established for the organization as a whole. Individual employees are then given a set of objectives that they can perform to help the organization meet the overall goals. The basic purpose of performance appraisal is to direct and improve an employee's performance relative to specific company goals. If performance matters in an organization, then effective performance appraisal is a necessity.

Why do companies conduct performance appraisals? There are several reasons, in addition to achieving organization goals, that companies conduct performance appraisal. These reasons include:

Process not an event. Performance appraisal is a formal system of giving feedback. Telling people how they are doing relative to agreed-upon goals should be an ongoing process, not something that is done once a year; however, the performance appraisal system is the process within the organization that establishes the formal record of an employee's performance.

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