What are the reasons for appraising employee performance?

The Importance of Employee Appraisals

There are a variety of reasons for performance appraisal but the three most important reasons are the following:

1. identifying weaknesses and strengths;
2. identifying opportunities for improvement and planning/strategizing for the purpose of skills development
3. Determining rewards and outcomes.

Of these three reasons, I think that the most important reason is the first, being that it provides an assessment of performance by identifying areas of strength and weakness. It allows a view of areas for improvement in the employee. When looked at in the bigger picture, a collective analysis will show the organizations own areas of strength and weakness. Sadly this is perhaps the most oversimplified and least in depth appraisal system in most organizations. Most companies use rating systems that merely appraise a person’s negative performance or shortcomings. This view is one-sided and does not give a complete picture of the individual. As a whole, by targeting more areas of improvement an organization could increase productivity and performance (Salanova et al, 2005).

References

Linking Organizational Resources and Work Engagement to Employee Performance and Customer Loyalty: The Mediation of Service Climate. Salanova, Marisa; Agut, Sonia; Peiró, José María Journal of Applied Psychology, Vol 90(6), Nov 2005, 1217–1227.