Nevertheless, appraisal of employee performance remains a critical and ongoing management activity. This is because managers are continually observing and judging their employees. This evaluation process may be formal or informal. Either way, it has a direct impact on the employees' salary increases, promotions, demotions, terminations, training and career development.
Despite the importance of performance management, many organisations do not have any systematic method of appraisal or use a system that lacks congruence with the organisation's culture and strategic business objectives. Not surprisingly, in a recent survey, more than half of the responding companies reported that their performance appraisal system offered little or no value to the organisation. Similarly, after a review of the literature, Newton and Findlay concluded that appraisal schemes rarely work as their formal procedures suggest because in practice they are predominantly concerned with surveilance, accountability and control.
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