Page 158 - Psychological Management of Individual Performance

introduction of a performance appraisal system 141
Economical arguments for the use of a performance appraisal system are, for example:
Superiors can train their employees more efficiently and can increase their perfor-

mance.
Goal achievement will improve because of the feedback, especially if specific goals

are set.
Employees show a better performance when they know what is expected of them. A

performance management system makes the demands transparent to them.
The productive potentials and abilities of the employees can be recognized and sup-

ported. Management positions can more often be staffed within the company and
expensive external search can be reduced.
Employees who have the potential to develop abilities and be promoted within the

company have fewer reasons to leave the company. The turnover rate will decrease.
In practice, it is difficult to measure the impact of an appraisal system. The turnover
rate can be an indicator, but this depends on many other factors as well. And if people
do not leave their job you can only estimate how many would have done so had there
not been a performance appraisal system.

COMMUNICATION

Communication has an important influence on the successful implementation of an ap-
praisal system. A communication plan at the beginning of the process is absolutely nec-
essary. The corporate management has to be involved in implementing the performance
appraisal system and has to communicate its goals early during the implementation
process. The announcement of a performance appraisal system usually causes fear and
uncertainty. If the implementation is not well communicated in the beginning, rumours
and resistance will easily arise among the staff. For this reason the management has
to explain the aim of the performance appraisal system and the consequences related
to it.
During the communication process the economical situation of the company has to
be taken into account. In a company that has good economic conditions, the staff will
have different fears and suspicions from those in a company with doubtful economic
conditions. Particularly management staff must get information at an early stage and the
use of the system should be described to them. Performance appraisal can be presented
to them as a management technique for achieving goals and managing the performance
of their employees, and as a tool for giving feedback to employees.

DEVELOPMENT OF THE APPRAISAL SYSTEM

The performance appraisal system must be developed according to the demands and
characteristics of the company.
Theappraisaldimensionscanbedefinedbythecorporatemanagementincooperation
with the personnel department and possibly some external consultants. One possibility
to define criteria is to start with the qualities that an employee needs to be a successful
player. These criteria can be developed by interviewing “experts”, i.e., employees who
have been with the company for several years. This method derives the appraisal criteria
from contemporary success factors of the company.