The Pros and Cons of Using Performance Appraisals as a Reward System
1. Introduction
Nowadays, the majority of companies use some sort of performance appraisal system to evaluate their employees. Performance appraisals are a way of assessing an individual’s work performance over a set period of time. They usually take place once a year and involve the employee being rated against a set of predetermined criteria by their manager. The performance appraisal is also used to determine reward outcomes whereby bonuses, promotions, and pay increases are allocated to employees.
2. What are performance appraisals?
Performance appraisals are a way of assessing an individual’s work performance over a set period of time. They usually take place once a year and involve the employee being rated against a set of predetermined criteria by their manager. The performance appraisal is also used to determine reward outcomes whereby bonuses, promotions, and pay increases are allocated to employees.
3. How are performance appraisals used as a reward system?
The performance appraisal is used as a reward system in a number of ways. Firstly, bonuses and pay increases can be linked to an individual’s performance rating. For example, if an employee receives a ‘good’ rating, they may be eligible for a bonus or pay increase. Secondly, promotions can also be determined by performance appraisals. Typically, managers will use performance appraisals to identify high-performing employees who are then put forward for promotion. Lastly, training opportunities can also be linked to performance appraisals. For example, an employee who is rated as ‘needing improvement’ may be offered training to help them improve their work performance.
4. Advantages and disadvantages of using performance appraisals as a reward system
There are both advantages and disadvantages to using performance appraisals as a reward system.
Advantages:
• Performance appraisals provide a fair and objective way to assess an individual’s work performance over time.
• They can be used to identify high-performing employees who may be eligible for promotion or bonuses.
• They can also be used to identify employees who need improvement and offer them training opportunities.
Disadvantages:
• Performance appraisals can be time-consuming and costly for companies to implement.
• They can create feelings of anxiety and stress for employees who are worried about being unfairly judged or rated.
• There is also the potential for bias on the part of the manager conducting the appraisal.
5. Conclusion
Overall, performance appraisals are a widely used tool for assessing an employee’s work performance. They have both advantages and disadvantages but are generally considered to be a fair and objective way to assess an individual’s work over time.