Most business organisations today, even if they are family-run companies, are managed along professional lines. In such organisations, the system of performance appraisal ensures that an employee’s performance is judged against specified criteria.
It also ensures that if required, an employee is provided sufficient time for improvement. Which is why Pratik Kumar, Executive Vice President, HR, Wipro, describes performance appraisal as “essential for any progressive and performance driven organisation.” The key for a successful performance appraisal system, says he, is to link it tightly with the “organisation’s business vision and strategy” and provide “appropriate rewards.”
In certain companies, the performance appraisal system varies as per the seniority of the person. Says Manish Sanghi, Executive Director, Everest Industries, “The typical weightage is against Key Performance Areas (KPAs) and key functional abilities.
The weightage for Key Result Areas (KRA) is very high at lower levels but as a person moves up the hierarchy, the weightage for other areas, such as managerial leadership, people orientation, conflict resolution, decision making and corporate image-building, keeps going up.” A performance appraisal system helps an organisation plan, implement and review the performance of its employees. In addition, it helps prepare individuals to take higher responsibilities than they currently handle.