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t is the Right Performance Appraisal Approach to Drive Organizational Success?

Individual Final Research Project:

What is the Right Performance Appraisal Approach to Drive Organizational Success?


GB520-14M Strategic Human Resource Management

Kaplan University




The aim of this report was to explore the impacts and trends of performance appraisals and explain why the right approach can drive organizational success. The results indicate that managing performance is complex and a very difficult task that an organization must undertake. Though this task is difficult to undertake, the performance management process cannot be underestimated due to its potential impact on the organization. Having the right performance management system in place will feed and drive employee potential, while an inferior system will have an adverse impact on an organization's productivity. This research will shed some light on this process that provides feedback, accountability, and documentation for performance expectations. Lastly, this process will show how it helps to drive organizational success by aligning employee talents with organizational goals and by investing the right effort and resources performance management can yield significant returns.

What is the Right Performance Appraisal Approach to Drive Organizational Success?

This research was conducted by investigating current information from journals, publications and peer reviews from various websites. The various articles examined will provide an overview of performance appraisals, identify impacts and trends, explore alternative solutions and propose a solution. Through this examination, the proposed solution will attempt to determine how an organization's long-term success in meeting its strategic objectives rests with its ability to manage employee performance and ensure that performance measures are consistent with the organization's needs.

Performance Appraisal Overview


Performance Appraisal (PA) is a tool used by organizations to drive effective performance management practices. PA when utilized in the right context, it will assist in evaluating an individual's work performance and identifying his/her skill gaps that are present. By helping to manage employee performance, organizations can design suitable training programs that will drive skill enhancement for their employees. PA is also used by organizations to recognize their top employees, thereby assisting in an individual's career planning (Performance Management, 2003).


A PA should answer a number of questions: what is someone expected to do, how should they do it, have they done it according to the standard expected of them, and what reward or development will emerge as a consequence of the PA (BNET, 2010). Individuals differ in their abilities and their skills. Since there will always be a difference between the quality and quantity of output for the same work on the same job task being done by two different employees PA's become necessary. Organizations need a method to assess each employee's abilities, competencies and relative merit and value to the organization. The PA serves the important purpose of rating employees in terms of their overall performance. PA is vital to ensuring the performance progress of employees and their organizations are meeting the desired goals and aims (Naukrihub: Performance Appraisal, 2007).


PA's play a significant role in performance management. PA is just one element of performance management and just one tool to assist in managing performance management. Because PA's are usually carried out by line managers rather than Human Resource (HR) professionals, it is imperative that they understand this and how PA contributes to performance management (Farrington, 2007). Examples of this importance are as follows (Performance Management, 2003):

* PA facilitates making fair and equitable reward decisions, pay and promotion decisions, while providing necessary employee feedback.

* Motivation & Discipline- reinforces good performance and eliminates or correct poor performance via appropriate documentation.

* Developmental - assists in career planning and identification of strengths, weaknesses and needs.


Having a sound PA system in place will influence five critical organizational outcomes: financial performance, productivity, product or service quality, customer satisfaction, and employee job satisfaction (Sumlin, n.d.). Also, besides the normal HR decisions such as pay increases, promotions, demotions, terminations, and selection validation the PA process can be helpful in evaluating recruitment results and defining training needs for the organization. By deploying a value-add PA system companies can gain a competitive advantage over their competitors. With an effective PA process in place companies will have focus, a foundation for measurement, a tool for employee improvement, and a means for linking key outcomes to performance (Industrial Management, 1999).


PA is only as good as the performance management system it is part of. If managers and/or organizations do PA's for the sake of doing them, they will be wasting their time. Disadvantages of PA are as follows (Clark, 2009):

* Can be a negative experience if not conducted appropriately.

* For managers with many employees, this process can be time consuming.

* Subject to rater errors or biases.

* Complete waste of time if not done correctly.

* Very stressful for all involved in the process.


There are three types of PA methods used. Some organizations utilize a blend of some or all three of these to fit their organizational needs. The first method is trait-based and looks at individuals subjective character traits



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