Also, in today's business community, there is far more focus on customer satisfaction.
Performance appraisal (PA) is an important part of any organization, but according to human resources consultant John Drake, it seldom improves employee performance and sometimes even has a negative effect (1). Within any company, documentation is necessary for legal purposes, for feedback, corporate planning, employee development, and salary administration. Structure is needed in a PA plan, but it must be set up in a way that will help an employee understand and try to meet company goals and will best reflect the company's identity in the marketplace (Introduction).
In the management process, it is necessary for a company to develop an initial plan for performance appraisal by meeting with a new employee and having a discussion that addresses key job responsibilities, a common understanding of company goals and objectives, the most important competencies needed, and an appropriate individual development plan (Grote 2.1). It is not enough just to pass out a manual, as has been the case in the past, and expect the employee to follow it. Without this initial discussion, further appraisal of the employee's attributes cannot be honestly determined. If an employee understands at the outset what is expected, his or her evaluation at different intervals will offer a more realistic appraisal of the employee's development.
Once a performance appraisal method has been developed, the various factors that influence performance can be evaluated. With the current development of what might be called virtual organizations, it is employee relations, market relations and various hybrids of these two units that make up the overall performance factors for employees in today's global companies. Strict working hours and a single workplace have given way to a workforce that might be working from home or on the road as well as in the office itself. In the virtual marketplace, the physical employee becomes a combination of internal and external employees at different levels of training and expertise. In determining an appraisal method that takes all of this into consideration, it is necessary to recognize the factors that have not worked in the past and to replace them with positive factors based on a changing business arena. The boundary between organizations and the marketplace is changing as employees become more involved in organizational structure. Labor agreements and internal company rulebooks are giving way to service contracts in companies that are beginning to depend on information technology (Huiskamp & Kluytmans). With the Internet bringing customers into the mix, changing expectations call for a more fluid method of appraisal based on individual performance within a flexible time frame, and in a global economy, changes are inevitable and ongoing.
Factors Influencing Employee Performance
From Negative to Positive:
1) Monetary incentives - According to Drake (14), "you cannot expect a performance appraisal to improve performance when it is also linked directly to rewards (salary or promotion)." Drake sets forth a situation in which a plant manager is limited in his ability to get a salary increase for an employee unless he rates the employee at least at "5" on a scale of 1-7, which means a rating of "outstanding." If the