How Performance Appraisal System Motivates Employees

1. How Performance Appraisal System Motivates Employees? The performance appraisal technique is useful in evaluation of an individual’s work and performance as well as their objective personnel decisions. It is also considered as the process of finding, analyzing, and recording information, revolving around the relative value of an employee to an organization. Performance appraisal if undertaken in the right way can significantly contribute to employee motivation. Employee performance has always remained the prime focus area of the human resource managers. Consequently, a number of performance appraisal techniques have been devised over time to help establish performance of the employees. However, in recent times, the use of performance appraisal systems has been extended beyond the only use of rating employee’s performance to aspects like motivation. There are many studies that have investigated the usefulness of performance appraisal systems and its influence on employee motivation. Even, there are a lot of studies that have established the moderating role of performance appraisal systems as a motivation tool. Performance appraisal is a widely recognized concept in the area of performance management. The importance of performance appraisal systems arises partly because of the nature of the current business scenario, marked by the need to accomplish organizational goals as well as stay relevant in extremely competitive markets by using superior employee performance

3. Studies in this area strongly suggest that performance appraisal systems can be used as a motivational tool to enhance employee motivation. Existing literature on performance management indicates that performance appraisal if undertaken in the right way can significantly contribute to employee motivation.  While a number of organizations still use informal, subjective performance evaluation practices to make employee reward decisions, there are many emerging organizations today that use objective performance evaluation practices, which are becoming increasingly prevalent at the current times. The performance appraisal technique is useful in evaluating an individual’s work and performance as well as their objective personnel decisions. It is also considered as the process of finding, analyzing, and recording information, revolving around the relative value of an employee to an organization.  How Performance Appraisals can be used for Employee Motivation? Employee Rewards: The performance appraisals can be used to motivate employees through various intrinsic or extrinsic rewards. Extrinsic rewards such as promotions and salary increment can be used to boost performance. Promotions: The evaluators first measure the employee’s performance and give a performance number, which further leads to the level performance number (LPN). The management uses LPN

4. as a platform to determine rewards for employees as part of the motivation process. The LPN becomes a useful reference point for the managers to use for internal promotions. Salary Increases and Bonus Payments: Pay, can also be linked to performance by setting specific targets for every employee. Employees are then rewarded based on their ability to achieve these targets. Performance appraisals perform a vital role in determining the amount of bonus payment of salary increase. Employee Recognition: Performance appraisals have also been found as serving a useful purpose towards employee motivation by offering a platform for achievement recognition. It mainly include complimenting praise, achievement certificates, and private budgets; and ceremonies such as public celebrations and speeches. Additionally, employee recognition encourages the application of creative problem solving skills among employees.  Feedback: Providing feedback is one of the most commonly used justification for organizations to keep a performance appraisal system. It is through the process of performance appraisal that employees could learn their exact performance during the work period and use that information as a reference to improve their performance in future. Video links: https://www.youtube.com/watch?v=lxgHVgiKlFA

5. Key Points • Performance appraisal systems can be used as a motivational tool to enhance employee motivation • It is also considered as the process of obtaining, analysing, and recording information. • Performance appraisals perform a vital role in determining the amount of bonus payment of salary increase. • This also serves a useful purpose towards employee motivation by offering a platform for achievement recognition. • It is through the process of performance appraisal that employees could learn their exact performance during the work period.  Published by Brainware University