Performance appraisal systems are designed to serve the company's and employee's interests. They are used to inventory the abilities and resources of employees and to let an employee know where he stands so that he will be stimulated to improve his performance.
Employee motivation can be enhanced and performance improved with the monitoring of employees' performance level and the use of feedback to advise those employees about their effectiveness. Performance feedback exchanges can be ongoing and informal, on a day-to-day coaching basis or on a formal basis, annually or biannually.
"The ultimate--purpose of performance evaluation is to help
create an atmosphere in the organization that is characterized, in the words of David McCord Wright, by 'adventurism, in which people are energetic, creative-minded,'enjoy the activities of the organization for their own sakes, and is characterized also by high ethical standards, by high morale and pride in the organization" (Lopez, 1968, p. 25).
Many believe that the primary purpose of employee performance evaluation is motivating the employee to high standards of job performance. The key to this is the integration of organizational and individual goals. This necessitates bottom-up planning and top-down planning. Communication is the basis for the downward process. The upward process involves the employee informing management of his needs, aspirations and goals. For management, performance evaluation is a tool to determine the quality of manpower resources and to improve employee performance (Lopez, 1968, p. 50).
The requirements of a performance evaluation program include: that it be a sub-system of the organization's overall communications network; must reflect the organization's philosophy that will inspire confidence and trust; should be based on a solid foundation of ethical principles and policies that can be implemented by a set of realistic standards and measures...