Performance Appraisal - Advantages and Disadvantages

Advantages Of Performance Appraisal

  • It helps the supervisors to chalk out the promotion programs for efficient employees. In this regards, inefficient workers can be dismissed or demoted in case.
  • It helps in chalking out compensation packages for employees. Merit rating is possible through performance appraisal. PA tries to give worth to a performance. Compensation packages which include bonus, high salary rates, extra benefits, allowances and pre-requisites are dependent on performance appraisal. The criteria should be merit rather than seniority.
  • The systematic procedure of PA helps the supervisors to frame training policies and programs. It helps to analyze strengths and weaknesses of employees so that new jobs can be designed for efficient employees. It also helps in framing future development programs.
  • It helps the supervisors to understand the validity and importance of the selection procedure. The supervisors come to know the validity and thereby the strengths and weaknesses of selection procedure. Future changes in selection methods can be made in this regard.
  • For an organization, effective communication between employees and employers is very important.
  • It serves as a motivation tool. Through evaluating performance of employees, a person's efficiency can be determined if the targets are achieved. This very well motivates a person for better job and helps him to improve his performance in the future.

Disadvantages of Performance Appraisal

  • If not done right, they can create a negative experience.
  • Performance appraisals are very time consuming and can be overwhelming to managers with many employees.
  • They are based on human assessment and are subject to rater errors and biases.
  • Can be a waste of time if not done appropriately.
  • They can create a very stressful environment for everyone involved.

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