Evaluating employees is a complex task as he has to perform a variety of activities. Different situations demand different types of skills. There is also difference in degree of personal qualities. Performance evaluation consists of setting performance standards, both qualitative and quantitative to measure actual performance and judge the employees in terms of their contribution to the objectives. The key concept is productivity which means contribution to profits and sales. Productivity should be greater that the cost incurred by the company on his work efforts.

Managers should “make the events happen” and not “let the events happen”. Every management activity has to be planned. Otherwise it will be left to chance.Managers  cannot rely on chance element. The following reasons explain the need for making appraisals:

Every organization sets high goals and objectives for which if needs competent managers. When an employee is recruited, he appears to be very promising and enthusiastic. He is called “ a potential candidate”. This potential has to be converted into performance. Just to have potential is theory, but converting it into performance is proactive. If a candidate is theoretically strong but weak in execution, the organization may not get a competent manager. Hence, the foremost advantage of appraisal is that the organization gets to know the level of competence of managers. If enables the managers to then the organization can forces on it and encase his best merit points.

Every position has a job design or description. There should be a man to fit the position. There must be tight man for the right job. This is possible by an appraisal ethos. What will happen id the organization gets a wrong man?

For example, in the design department, there is a wonderful design engineer. He is expert in making designs, and is will versed with his work. Over a period, he has gained specialization in his work. He is now senior most in the department. The organization is in need of a very dynamic person to head the design department. This design engineer does not possess managerial sills. However, he is a competent engineer, If he is promoted as Head of design department, when he is not compete, what will be the result? The organization will miss a good designer and get a bad manager to head the department. Hence, appraisal helps in getting a right man for the right hob.

Basic advantage of appraisals is to know the innermost merit point of every employee. Whit the help of appraisal system, it is possible to rotate executives in a scientific way. The advantage of job rotation is that the organization gets a good General Manager. Every organization has a chart. There are some slots available in the organization which should be filled by the most competent person. When this is known, It would be possible to re-structure the organization. Organizations today are flexible and dynamic. There is need to re-structure the organizations and have changing roles for the managers. This is possible only through competent appraisal systems.

Appraisal is a good tool for communication purpose. When managers talk to employees about their achievements or failures, they take help of appraisals. In appraisals, there are objective facts and goals which are set jointly. Thus, if becomes easy for managers to convince employees and give them feedback on inputs. In some organization, appraisals are signed by both boss and subordinates so that it is easy to give feedback to employees especially on weak areas.

A progressive organization is concerned about employee development. Organizations have long-term objectives and plans. TO get success, they groom people to shoulder future responsibilities of the organization. This is called development programmers with the help of appraisals. There are different methods by which employees chin be developed. Appraisal system helps to select and appropriate method. It takes time and money to develop employees and a sound appraisal system helps in making best use of time and money to develop the employees.

Appraisals are effective when they are tied with the reward system. Compensation for achievement is the most powerful motivating force. One of the strong motivating factors is promotion. There can also be extra increments and cash awards. There can also be requirements of transfers on employees’ request or organization’s requirement. Such decision needs sufficient data and cases. This is possible because of appraisals.

For a good performance appraisal method, it is important to have a judicious mix of quantitative and qualitative standards against which performance of employees can be compared. Many companies use quantitative standards. However, the tendency of using managers selects a combination of qualitative quantitative standards to appraise and assess different situation.

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