Is ‘performance appraisal’ conducted at the end of a year enough? That is where ‘performance management’ comes in. It is the process of identifying, measuring, managing, and developing the performance of the human resources in an organization on a continuous basis throughout the year.
The terms 'performance management' and 'performance appraisal' are sometimes used interchangeably, but they are different. Performance management is a comprehensive, continuous and flexible approach to the management of organizations, teams and individuals which involves the maximum amount of dialogue between those concerned. Performance appraisal is a more limited approach, which involves managers making top-down assessments and rating the performance of their subordinates at an annual performance appraisal meeting.
Shortcomings of performance appraisal system
It is unavoidable of modern management. Once the number of employees crosses 50, it is difficult for many CEOs to determine whose performance is bad and whose is outstanding. How about when the number crosses 500 like in banks and big corporate houses in Nepal today? Figuring out whom to promote can be a challenge in such large numbers of candidates. To solve this problem, the system of performance appraisal came into popularity in Nepal too.
We imported this system with both its merits and demerits. There is a form to be filled by the immediate supervisor on various parameters that the organization deems important. Then it is sent to the human resource department. What happens once all the rated paperwork from all the supervisors reach the HR? Various organizations deal in various ways with this load of papers. Some digitize it and save it, and it is over. Others use the ratings by supervisors as reference during the process of promotion and transfers.
However, the system is too simplistic. As we said earlier, many flaws exist in this system worldwide. Here are some unanswered questions that arise from the existing system:
The savior: performance management (PM)
In management, there are many fads. This might be one. But even the term dies, the concept and promise it makes is timeless. Here are some highlights:
Implementing PM and phasing out PE in an organization with more than 100 employees, would be a Herculean task. But in smaller ones, it is highly desirable, less messy and many companies have a similar process even though they do not have a name for it.