Appraisals also identify the below-par performers who then may be subjected to counseling or punitive action such as pay cuts, demotions or in the extreme case dismissal or decreases in pay.
The necessity of performance appraisals is a debated issue. While on one hand a number of authors feel that it is one aspect of corporate organizations that creates significant hindrance to effective management of human resources (Derven, 1990), authors like Lawrie (1990) feel it to be indespensible and possibly one of the most crucial aspects of organizational management. The fundamental reason behind opinions spread over both ends of the spectrum is that these are based upon observations about successes and failures of appraisals in engendering warranted results. I believe that it is not the action of evaluating employees through appraisals but rather the manner in which these are administered that leads to such different results.
The necessity of performance appraisals is intricately tied to the objectives and policies of the organization. For organizations that believe in generating employee loyalty and try and minimize employee turnovers performance appraisals can play a very important role. Further, appraisals offer the opportunity to focusing on activities and objectives, to locate and cure problems found to be existing, and thereby to provide encouragement for better performances in future. This, effectively done can thus improve the aggregative performance of the whole organization.
The appraisals also embody the opportunity mutual recognition and agreement of individual training and development needs. Discussion of any workers performance can beyond argument establish lack or abundance of skills which otherwise in a generic voting situation or centralized meeting situation cannot become clear. So, performance appraisals can definitely establish the necessity of training as well as the