Advantages and Disadvantages of Performance Appraisal

Performance appraisal is the word which brings many emotions to the employees, for some it brings joy because a good performance appraisal implies that an employee will get good increment as well as promotion while for some employees it brings nervousness because a bad performance appraisal implies cut in salary or even worse may lead to termination of the employee. In order to understand about performance appraisal better one should look at the advantages and disadvantages of performance appraisal –

Advantages of Performance Appraisal

Source of Motivation for Employees

The biggest benefit as far as performance appraisal is concerned is that it is a source of motivation for the employees of the company because imagine a situation where there is no appraisal and you would get fixed increment regardless of your performance in the company than there is no incentive to do hard work as people who are doing no work will also be getting the same increment as compared to those people who are doing hard work. Hence in simple words, performance appraisal is the biggest source of motivation for the employees to do hard work in the company.

Measure of Performance for Top Management

Another benefit of performance appraisal is that it is a way through which the top management can measure the performance of the employees of the company and on the basis of the performance appraisal rewards the hard workers through increment and promotions and punish the non-performers through salary cuts and demotions.

Retention of Talent in the Company

If the company does not have proper appraisal system than it will lead to good employees leaving the company as it is difficult to retain talent in competitive job market if there is no scope for development of the employee in terms of promotions and money and a company without good and proper workforce is like battleship without a crew which in turn will lead to company performing poorly. Hence in simple words appraisal indirectly helps the company in growing by retaining as well as attracting new talent into the company.

Disadvantages of Performance Appraisal

Personal Bias

The biggest disadvantage of performance appraisal is that it is subjective and is affected by the personal bias of the person doing the appraisal. Hence if the team leader or project manager who is in charge of the department has grudges against particular employee than the appraisal of that employee will not be on the basis of performance alone rather some personal bias will creep in leading to biased appraisal.

Time Consuming

Another problem with this is that it is the time-consuming process because management has to take into account every factor when doing performance appraisal which requires a lot of effort as well as time for the person doing this task resulting in one department or individual completely locked in this activity rather than doing some productive task.

Comparison between Equally Performing Employees

If two employees who have been performing equally but at the time of appraisal one gets good appraisal while other gets average appraisal than it will create an environment of tension between the employees themselves and also between the employees and supervisors in the company which ultimately will affect their performance and in the long run it will have a bearing on the company as a whole.

As we can see from the above that performance appraisal can be compared to an annual examination of students while in case of examination students get promoted to a higher class, whereas in case of appraisal employees gets promotion and increment if they perform well. Hence one can say that although performance appraisal has pros and cons still it is a very important function for any company if it wants to attract talent to the company.


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