Appraisal systems are increasingly being used to measure performance within organizations. Required: Describe the benefits of performance appraisal systems for: the organization; the line manager and the individual

Professional accountants, in their management role, need to understand and be familiar with current performance appraisal practices.
Overview:
Appraisal and evaluation of performance are increasingly being used in organisations especially in the service sector and the professions. Whilst not difficult to understand, these practices have their complications. It is important that professional accountants understand the technicalities and the issues involved.

A performance appraisal system has benefits for the organisation, the line manager and the individual employee:
The organisation benefits by having:
o standard information about its employees
o standard documentation to assist with recruitment, promotion and training
o a facility to assist staff development
o a means of planning accurately human resource needs
o a system that provides motivation by making clear to employees what is expected of them
The line manager benefits by having:
o objective guidelines by which staff activity and effort can be assessed
o a better understanding of staff needs and aspirations
o a basis for improving relationships with staff
o an understanding with individual staff members, especially through the appraisal interview
The individual benefits by having:
o an opportunity (albeit in practice on a semi annual or annual basis) to discuss his work objectively with the manager
o performance can be objectively evaluated\
o a basis upon which training and development needs can be discussed
o relationships with the manager can be improved because of the communication mechanism built into the appraisal process
o clarification of duties and responsibilities
o a clear understanding of his or her role or position in the organisation



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