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Small business appraisal

Performance of small business appraisal is a continuous process that focuses on organizations objectives, task accomplishment and personal development. appraisal is, or should be, an integral part of any system of management. Assessing the manner and methods whereby a manager plans, organizes, staffs, leads and controls is the only method to ensure that employees in managerial position are doing an effective job of managing. Effective performance of small business appraisal should also recognize the sincere desire of employees for progress in their career.


Performance of small business appraisal is the process by which organizational expectations for employee performance are defined followed by the measurement, evaluation and recording of his or her actual performance relative to these predetermined expectations and then providing the employee the relevant critical and constructive feedback'. In simple words, performance of small business appraisal can be defined as the formal evaluation of an individual's job performance. It involves giving feedback to the individual and includes constructive solutions for further improvement.


The major purpose of performance of small business appraisal is to influence, in a positive way, both employee performance and organizational development. In addition, to these the appraisal process is used for a variety of their organizational purposes, such as making decisions about pay raises, planning future performance goals, assessing the promotional potential of employees, and determining training and development needs. Performance of small business appraisal also provides feedback to employees, which helps them improve their present performance and plan future careers.


Thus, some of the objectives of small business appraisal s are as follows:


Feedback performance.


Performance of improvement.


Identification of potential.


Promotions decisions.


Compensation administration.


Work force planning.


Validation of selection procedures.


The process of appraisal occurs both formally and informally or systematically.


Formal appraisal s are usually conducted annually or semi annually or on a systematic basis. The main purpose of a formal appraisal is:


To identify employees whose performance is not up to the mark and organize remedial measures such as training in order to improve their performance.


To identify those employees who perform well and reward them as per their performance and identify suitable candidates for promotion.


To give employees a performance rating.


To help employees understand how their performance is evaluated.


In this process of formally evaluating employees, it is essential for managers to evaluate employees not only on their present performance, but also on their ability to perform different tasks effectively in the future. That is, if and when these employees are placed in different or more responsible positions, they should be able to perform effectively.


In an informal appraisal, continuous feedback is provided regarding the performance of employees. As a close interactive relationship exists between behavior and feedback, informal appraisal s encourage desirable professional behavior and prevent undesirable behavior. The feedback is usually spontaneously expressed or alternatively the subordinate can get immediate feedback from the superior as and when the job is completed. Hence, informal appraisal can be termed an integral activity of any organization. The feedback both verbal and written should be taken seriously and should be acted upon. Suggestions should be implemented. Informal appraisal s usually occur on a day to day basis.


For formal performance small business appraisal there are four basic approaches that are proposed.


The first approach is superior's rating of subordinates. This is a common approach and is followed in most organizations. But with the present changes in the business environment, other approaches are gaining importance.


The second approach that is commonly used these days is a group of superiors rating subordinates. In this method, a subordinate is rated by a managerial committee or by a group of managers who fill separate rating forms. This approach is considered to be more effective than the first approach because it relies on the feedback of a number of managers. Where the first can become objective, the second is objective and balanced. The drawbacks of the approach are that it is time consuming and at times it may reduce employees' feelings of accountability to their immediate supervisor.


The third approach is the rating of an individual by his or her peers. Employees working in the same organizational level are asked to rate their co-workers. This approach is rarely followed in organizations, as this too can be subjective.


The fourth approach is subordinates' rating of superiors. Here subordinates evaluate their superior's performance. This approach has a common analog in colleges, where students are often asked to evaluate their lecturers on a number of performance measures. Though not widely used earlier in business organizations, now this approach is becoming a common method of evaluating managers and helping them to improve their performance.


Apart from these four approaches, there is another method of performance which is called the 360-degree appraisal. In such an appraisal the individual is evaluated by his or her superior or superiors, peers, and subordinates. Thus the 360-degree appraisal is in fact an amalgamation of all the four formal appraisal methods discussed earlier. If 360-degree appraisal s are to be successful, they need to be carefully designed and skillfully implemented.


Thus, the effectiveness of a formal performance of small business appraisal system depends on the quality of control techniques used. They include standards, information and corrective action.


The most essential and crucial aspect of performance appraisal lies in determining the standard of an effective performance. In performance systems, standards are usually referred to as criteria or means of identifying success in an activity. An important and essential step in developing a performance appraisal system is the development of criteria that indicate a successful performance.


The primary method of evaluating an individual performance of job is to compare his or her performance with the organizations overall objectives. The individual performance should not only be congruent with these objectives but it should also contribute to organizational performance. Though this principle seems self-evident, it is difficult to implement, particularly, when there is a change in organizational objectives.


Information is essential for managers to appraise the performance of subordinates. Managers must decide three issues regarding information that is needed for appraisal. The information needed for appraisal can be ascertained through the source, the schedule and the method of appraisal. Information technology is helping companies sharpen their appraisal process.


Appraisal information can be ascertained from five possible sources. They are


(1) the immediate superiors or supervisors of the appraisee


(2) peers,


(3) the appraisee himself or herself,


(4) subordinates of the appraisee and


(5) individuals outside the work environment. In most cases, the appraiser is the immediate supervisor of the person being rated and is most familiar with the appraisee's performance.


Once the performance standards are spelt out and the actual performance information is gathered, both are compared in order to identify the deviations. If the performance does not match the standards laid out, corrective action is suggested. The corrective action may be in the form of training and development. The corrective action may be necessary for any or all the following inputs, activities, and outputs. In other words, corrective action is directed towards changing employees' knowledge and skills, as well as job performance, activities and behaviors.


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