HR MANAGEMENT - Strategic Objectives in Performance Appraisals

Strategic Objectives in Performance Appraisals

by Arnold Anderson, Demand Media

Performance appraisals are tools used by companies and employees to help gauge the value of the employee's performance, and determine how performance can be improved. The effectiveness of a performance appraisal can be judged in how well it achieves its strategic objectives. Understanding the strategic objectives in performance appraisals can help you to adapt performance evaluations to meet company needs.

Improving Morale

Morale is an important factor in creating a productive workforce. According to the article "Performance Appraisal" on the managerial resource Changing Minds, when performance appraisals are properly executed they can improve company morale and create motivation for employees. By working with employees to identify the weak points in their job performance and then helping to create a plan to combat that weakness, managers are setting a tone with employees that can create a positive feeling toward the company and its goals. This is why it is a good idea to emphasize the positive in performance reviews, and then turn negatives into positives by developing a course of action to assist employee development.

Budgeting Tool

According to the Food and Agricultural Organization of the United Nations, a performance appraisal should be used as an important budgeting tool for a business. Through the analysis of performance appraisals, the company can determine which employees are due for a raise, and which employees are not. These considerations need to be added to the following year's budget. Other performance appraisals may require the termination of employees, and that causes two budgetary considerations to come into play. First of all, the money associated with having the terminated employees is put back into the annual budget. However, there are also budget considerations for replacing terminated employees as well. The company needs to decide if the employees will be replaced, and if there would be a benefit in paying a higher salary to a more experience candidate, or if hiring a lower cost entry-level employee will better serve the company's strategic goals.

Set Goals

One of the important parts of strategic objectives is reaching company goals. These can be metrics established for performance, or a percentage increase in revenue dollars. A performance evaluation should be a time for the manager and employee to discuss the professional development of the employee, and establish strategic goals that will be used to measure that development. The employee and manager can work together on the success of the employee and raise the employee-manager relationship to a more effective working level.