INTRODUCTION
The goal of this chapter is to explore the development and utility of performance appraisal as a critical management tool. This inquiry will involve examining the role of performance appraisal within the performance management system. While both terms – performance appraisal and performance management - have inelegantly been used interchangeably, they are distinguishable. Both performance appraisal and performance management refer to structures that management uses to evaluate employee job performance and how that impacts overall organizational performance.
While performance appraisal may be a snapshot of past performance, performance management is a dynamic and broader concept that encapsulates the gamut of employee performance evaluation. This extends to both primal and distal considerations, the social context in which the performance evaluation is conducted, and the impact of the outcomes of the performance evaluation for both the employee and the organization. Fewer interactions between a supervisor and a subordinate elicit more anxiety than the meeting between the two about performance appraisal. Yet, this meeting must occur, at least once yearly, to evaluate actual performance against expected goals. If done correctly this meeting should also serve as an opportunity to identify areas for improvement as well as illuminate future goals. How an organization deploys its performance management program will affect the level of employee engagement, job satisfaction, and ultimately productivity.
Should an organization conduct performance appraisal annually or semi-annually? Extant literature suggests the annual approach is gradually being phased out and being replaced by more frequent appraisal schemes, for example, semi-annual appraisals or in smaller organizations, quarterly appraisals. Regardless of the frequency of its administration, the objective of performance appraisal across organizations remains the same: how best to measure employees’ skills and their affective commitment toward the organization. Affective commitment is critical because it indicates employees perceived commitment toward their organization. Affective commitment is different from continuance and normative commitment because it has a stronger emotional component to it, and it does not relate to the need to stay with an organization because of circumstance.