As one of the main formal ways that organisations have of talking to individual employees, appraisal is an important and integral part of human resource management (HRM).
If it is true that ‘people are an organisations greatest resource’, and that the quality of HRM is related to bottom-line performance, then it is vital.
One of its most important functions is as a communication tool. It gives organisations an opportunity to communicate their priorities to employees by stimulating discussions about how the individual’s performance and training needs relate to the organisation’s requirements.
A second function is that it encourages dialogue on careers and should help to make employees feel they know what they have to do to progress in an organisation. Where 360-degree appraisal exists, it allows for multiple views of an individual’s performance to be obtained.
The Cranet International survey on HR practices provides useful data on these issues, allowing companies to benchmark their practices against others. The data is gathered from the most senior HR manager in each organisation.
The survey shows that very few organisations practise true 360-degree appraisal, as a very high proportion do not claim to have completed the process.
However, appraisal systems are used and the existence of a formal procedure implies that the methods used have been thought through sufficiently and that they are transparent to all of those participating in the process.
The results here are interesting because they provide an indicator of how common formal appraisal systems are in the UK, The Netherlands and Sweden. By showing the high proportion of managers covered by formal appraisal systems, it demonstrates the importance of appraisal in the UK and how widely accepted it is as a management practice.
While appraisal systems are common for non-managerial grades of employees, their existence among managers themselves underlines how entrenched such systems are for all UK employees.
This table focuses on the UK only. It shows how organisations make use of the information acquired during appraisals.
Clearly, it would be remarkable if the information were not used to identify training and development needs, and almost all organisations do so.
Similarly, many organisations use the information to manage employee careers. The third most important use is for HR planning purposes, probably mainly because of the developmental requirements identified through appraisal.
However, more than half of the organisations surveyed linked appraisal directly to rates of pay and to how work is organised.
While the latter is often considered a positive and relatively advanced use of the information, the second is frequently thought to be the opposite.
Appraisal linked to pay determination has been criticised, however, as it tends to raise expectations, and it tends to discourage employees from taking an honest look at their own development needs.
Appraisals are clearly alive and well and British organisations are often in advance of their European counterparts. However, the information acquired in appraisals could be used far more effectively.