Testing the effectiveness of Performance Appraisals

Performance appraisal is one of the popular conceptsperform better by linking it with reward packages.
among the multinational and local companies. TheThe concept and its uses can be further explained
concept has been defined by DeVries et al., (1981) aswith the help of the example of Nokia. Nokia has
the process which allows firms to measure andincorporated performance appraisals in its
consequently evaluate an employees achievementscompensation plans for its employees. The company
and behavior over a certain period of time. The basichas adopted the philosophy of pay-for-performance
purpose of using performance appraisal techniquesand therefore measuring and gauging different
within an organization is to align the employees effortsperformance indicators of each employee is essential
with the overall objective of the firm.to the company. Nokia is an innovative firm with a
There has been a widespread discussion within theglobal matrix structure and a typical line management
academic circles as to how to define performanceconfiguration at the country level. Therefore the
(Papers4you.com, 2006). Drawing upon Briscoe &performance appraisal system called Investing in
Schuler (2004) performance can be viewed as aPeople has been designed as 360 degree feedback
combination of several variables, such as motivation,and electronic briefing sessions (Pollitt, 2004), which are
ability, working conditions and expectations. It has beenperfectly aligned with the structure and overall aim of
established that there are certain factors that affectthe company.
employees performance more than others. TheseIt can be concluded from the discussion that valuable
factors, according to Dowling et al (1999) include theorganizational objectives are served with the help of
compensation package; the nature of task; supportperformance appraisals and organizations should use
from higher management; the working environmentthe technique by aligning the performance parameters
and the overall corporate culture.with their overall mission and vision.
There are many advantages mentioned in theReferences:
literature regarding the use of performance appraisalsBriscoe, D. & Schuler, R. (2004), International Human
within an organization (Papers4you.com, 2006). It hasResource Management 2nd Ed., Routledge
been suggested that it improves the communicationDowling et al (1999), International Human Resource
between the higher to lower level management;Management Managing People in a Multinational
identify areas of improvement; show employeesContext 3rd Ed., International Thomson Publishing
training needs; help in promotion, retention andDeVries, D.L., Morrison, A.M., Shullman, S.L., Gerlach, M.L.
termination decisions; and means of managerial control(1981), Performance Appraisal On The Line, Center for
(Fletcher, 1992). In order to take full advantage of theCreative Leadership, Greensboro, NC
performance appraisals, the goal in designing suchFletcher, C. (1992), Performance management: its
systems should be congruent to the overall aim andnature and research base, in Developing a
vision of the company. For instance, it is evident thatPerformance-oriented Culture (Eds), Association for
there is a direct correlation between the performanceManagement Education and Development
of employees and their rewards as businesses doPollitt, D. (2004), Nokia Connects HR Policy with
seek creation of wealth as their primary goal.Company Success, Human Resource Management
Therefore one of the increasingly adopted uses ofInternational Digest, Vol. 12 No. 6, p30-32
performance appraisals is to motivate employees toPapers For You (2006) "P/HR/244.