Organization is run and steered by people. It is through people that goals are set and objectives are realized. Today’s working culture demands a great deal of commitment and effort from the employees, who in turn naturally expect a great deal more from their employers. The development of much more participative style of management in many organizations is a positive step towards meeting such heightened expectations. This participative style can be expressed in a variety of practical ways. For e.g.: work teams, quality circles, and of course regular performance appraisals. The performance of the organization is dependent on sum total of the performance of its employees. Thus the success of the organization will, therefore depend on its ability to measure accurately the performance of its members and use it objectively to optimize them as a vital resources. Performance can be measured by some combination of quantity, quality, time and cost. Performance thus refers to the degree of accomplishment of the tasks that make up an individual job. It indicates how well an individual is fulfilling the job demands. And on the other hand success of any organization can almost always be tracked back to the level of motivation among its employees to whom its success can be accredited to, without a doubt. Motivation is must for the employees, because it converts ability to work into will to work or in other words contributes to high level of performance. Presence of effective motivational policies in the company leads to job satisfaction and consequent benefits of higher commitment and loyalty. Keeping in mind the growing attrition rates and the employee dissatisfaction among the employees, the HR professionals are approaching and using the performance appraisal as a fuel to motivate employees. The latest trend being followed by the HR professionals is to use the performance appraisal and review process as a motivating mechanism. Various surveys and studies have testified the relationship between performance review, pay and motivation. Other than the traditional goal of accessing the performance of the employees,
Performance appraisals and reviews can be used as a tool to reinforce the desired behavior and competent performance of the employees.
Performance appraisal can have a profound effect on levels of employee motivation and satisfaction for better as well as for worse. Performance appraisal provides employees with recognition for their work efforts. The power of social recognition as an incentive has been long noted. In fact, there is evidence that human beings will even prefer negative recognition in preference to no recognition at all. One of the most motivating factors for the employees, in the performance appraisal processes is to receive a fair an accurate assessment of their performance. Inaccurate evaluation is one reason because of which most employees dead going through performance appraisal. An employee always expects his appraiser to recognize and appreciate his achievements, support him to overcome the problems and failures.
The discrepancies and the inaccuracies in the performance review can demotivate the employees, even if there has been an increase in the salary. Such inaccuracy can kill the innovating and risk taking enthusiasm and spirit in the employees. Similarly, inaccurate reviews with no hike in compensation can increase the attrition rate in the organization, forcing the employees to look out for other options. An employee prefers an accurate performance review with no increase in the salary over inaccurate performance review with an increase in salary. Employees, who receive both accuracy and a pay increase during their performance review, are likely to be the most motivated. Therefore, performance appraisal (review and its consequence in the form of...