Globalization and increased competition among other factors have led to the adoption of strategic human resource management by many firms. This is because human capital contribution is currently regarded as one of the major factors that determine how successful a firm can be. As such, in order to gain competitive advantage within the market, many firms seek to ensure improved performance through good human resource practises. These practises are not limited to organizational transformation, performance appraisal, employee empowerment and motivation, and maintaining a learning organization. It is on this background that this paper seeks to describe how effective performance appraisals can increase employee performance. Further, this paper will describe strategic advantages of performance appraisal, potential forms of bias within the appraisal system, and how performance appraisals can contribute to the achievement of strategic objectives at large.
Strategic Advantages of Performance Appraisals
Performance appraisals are tools used by the human resource management to evaluate employees` performance and contribution towards a firm`s profitability. Performance appraisals are conducted through a set period of time with the sole purpose of determining how effective and productive an employee is. Performance appraisals enable employees to get a feedback on their performance. Additionally, it enhances the adoption of corrective action plans whenever necessary. Performance appraisals have various strategic advantages. Firstly, performance appraisals enable managers and supervisors to know the weaknesses of various employees. This in turn enables the management to assess whether there is a need to conduct training or not. Moreover, it facilitates the adoption of the best training practises which aim at correcting the identified weaknesses. Secondly, performance appraisals enable an employee to gain a complete comprehension about the company. An employee is also in a position to understand the goals and objectives of a firm through performance appraisal. An employee who fully understand the company`s goals and objectives is able to focus on how to ensure those goals are realized. Therefore, through performance appraisal, an employee is able to focus on achieving organizational goals and objectives. Thirdly, performance appraisals improve employees` morale which enhances improved contribution within an organization. Employee development and motivation is enhanced through continuous training and development. This in turn contributes to improved productivity and profitability.
Potential Forms of Bias within the Appraisal System
A performance appraisal system should ensure positive criticism and constructive feedback. Nonetheless, there are various potential forms of bias that can lead to ineffective performance appraisals. Firstly, stereotyping which occurs when appraisals are influenced by one`s social group or distinct features. Stereotyping leads to ineffective appraisals since it contributes to prejudice and discrimination. Secondly, another potential form of bias within an appraisal system is the halo effects. Halo effect occurs when one`s first good impression makes an evaluator to conclude that he or she is a good employee. On the other hand, initial negative impression makes an evaluator to concentrate on the negative attributes of an individual during the performance appraisal process. Thirdly, leniency errors can also lead to biasness during performance appraisals. Leniency results since managers fear confrontation from employees who may perceive the evaluation process as unjust. Fourthly, affective reactions can result to biasness. Affective reactions affect the evaluation process since one is not able to distinguish between personal or emotional feelings towards the individual being evaluated.
How Performance Appraisals can contribute to the Achievement of Strategic Objectives
Performance appraisals can contribute towards the achievement of strategic objectives through different ways. Firstly, performance appraisals make an employee aware of his or her weaknesses. This enables him or her to improve on his or her performance which consequently leads to increased productivity within an organization. Lastly, performance appraisal facilitates continuous training and development which in turn leads to improved employee performance, motivation, and morale. This facilitates the achievement of strategic objectives through increased productivity.
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