According to Khan (2009) the essence of management system of an organization lies in the system of performance appraisal adopted in that organization. This, in turn, reflects the extent of the individual contributions and commitment of the employees in different hierarchical levels towards the achievement of organizational goals. Generally, it is admitted that an effective performance appraisal can lead an organization to take strides towards marked success and growth. Conversely, an ineffective performance appraisal system can seal the fate of an organization by creating chaos and confusion from top to bottom in the administrative hierarchy. As a consequence, the chances of success and growth of that organization are doomed. Background of the study
Dechev (2010) explains that the evaluation of job performance have been called by many different names throughout the years – a tool of management, a control process, a critical element in human resources allocation and many others. The first appraisal systems were just methods for determining whether the salary of the employees in the organizations was fair or not. Later, some empirical studies have shown that reduction or future pay were not the main effects of the process. Performance appraisal was recognized for a tool for motivation and development in the United States in the 1950s. (Cardy & Dobbins 1994) The practice to formally appraise workers has existed for centuries, but the interest in the area has grown rapidly in the last forty years. The first recorded appraisal system in industry was Robert Owen’s use of character books and blocks in New Lanark mills in Scotland around 1800. The character book recorded each worker’s daily report. The character blocks were colored differently on each side to represent an evaluation of the worker ranging from bad to good and they were displayed in each employee’s workplace. Owen was quite impressed by the way the blocks improve the behaviours of workers (Cardy & Dobbins 1994). Dechev (2010) contends that the social environment around organizations today has changed considerably since Owen developed his system. Although most organizations have standardized control systems for managing other types of resources and monitor their use, the system for managing human resources has been typically neither a standardized nor a generally accepted part of organizational life. This is a residue of large scale economic shifts. When the economy was primarily based on manufacturing the evaluation of performance was simple. A manager could evaluate a worker by only counting the number of units produced. In a service economy, however, output is not so easily measured and the evaluation of performance is much more subjective and less clearly defined process. Often then, there is a serious conflict not only over how evaluation should be conducted but also over whether it should be conducted at all. Many researchers and reputable sources criticize the importance of the process. They have expressed debates about the authenticity of the process. Some of them, such as Daniels (1999), even called it useless and evil. He couldn’t see how the appraisal improves performance and characterizes it as a step of firing process. He suggests that “the best performance appraisal is one that is done every day”. Another critic, Derven (1990), explains that if the manager or supervisor is unskilled or couldn’t give accurate feedback, then the appraisal process will have only a negative effect. Because of this every organization has to make carefully structured process and have to develop managers to focus activities and efforts and enhance business performance. On the other side, some of the defenders, such as Lawrie (1990), describe the process as “the most crucial aspect of organizational life”. Statement of the problem
It is the view of the study that performance appraisal benefits both the company and the individual that...
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