Performance Management can be defines as a goal oriented process that makes sure that organizational processes are being done accordingly in order to increase the productivity of employees and organization. Performance Management is an ongoing process and every single person working in an organization is a part of it. Performance management plays a very significant role in today’s business world. The main purpose of PM system is to direct each and every employee towards achieving the organizational goals and to improve the value of the workforce.
The most important part of HRM is performance appraisal through which employee gets motivated by improving their performance. It is the system to review the performance of an employee or a team. It is the responsibility of a manager to review the performance of an individual in continuous basis. We cannot assume that performance management and performance appraisal is the same thing however, we can say that performance appraisal is a part of performance management which directly indicates the strategic plan of the organization. An effective performance appraisal system assesses the accomplishments and initiates the plans for development, goals and objectives.
The main purpose of the performance appraisal is to identify, evaluate and improve the current performance of an employee by providing them feedback, increase motivation, solve their ongoing job problems, award salary increase , identify their potentials and let them know that what an organization is expecting from them by focusing on their career development. There are 12 tools that can be used to evaluate the current and past performance on an employee but the 4 major tools that are mostly used by the organizations are as under:
1- Numerical rating scale
2- Objective based
3- 360 degree appraisal
4- Critical incidents.
These tools enable to evaluate the performance and finds out the possibility for improvement and how to achieve it.