Performance evaluation is the process of evaluating the quality of an employee’s performance in a company and is usually done usually by the appraisee’s immediate supervisor (Drake, 1997; Grote, 2002). It is a system of management necessary to improve the success of employees, departments and most importantly, the company by generally helping in the identification of development and training needs, helping the employees understand how they can further improve themselves, increasing the morale of the employees and the whole company, and by providing an avenue for communication between the company and the employees (DelPo, 2007).
Performance may also serve as proof by companies in cases where they need to defend their actions (e. g. dismissal) against accusations by employees (Mathis, et. al. , 1999). Usually, the procedure involves the filling out of a standardized evaluation form by the immediate supervisor, the peers or even the self. The evaluation form is designed to determine an employee’s standing on many different dimensions by the immediate supervisor. The results would then be discussed by the supervisor to the employee (Grote, 2002). II. History
Performance appraisal can be traced back over a hundred years. The earliest record of performance appraisal was in 1887 when the federal Civil Service Commission decided that a merit rating system would be beneficial for the improvement of their operations (Grote, 2002). In 1914, Lord and Taylor introduced the modern conception of performance appraisal which involved a “scientific management method”. A few companies realized that such method was an effort to a more organized system of management and allowed themselves to be influenced by Lord and Taylor.
A few decades later, companies started concocting their own performance appraisal methods (Grote, 2002). But before World War II, these few included only a handful of organizations, and the military. It is also important to note that most performance evaluation prior to WWII focused more on the employee’s personalities and characteristics instead of relating their actual achievements with the companies’ goals. Analysis of the employee’s characteristics and behavior as it would relate to its effect on the company was also seldom done (Grote, 2002).
It was only in 1950 when some companies recognized the importance of behavioral analysis and goal setting. This was when Peter Drucker introduced his idea of management by objective (MBO) and when the book, The Human Side of Enterprise by Douglas McGregor was published (Grote, 2002). It was through the latter that the concepts of Theory X and Theory Y gained popularity among businesses. Since then, companies started to expand the process and the scope of their performance evaluations to include the development of a method that concentrated more on goal setting aside from trait assessment.
The appraisal process was also not anymore limited as a responsibility of the supervisor but a responsibility of both the employee and the immediate supervisor (Grote, 2002). If the prototype of performance appraisal started in the last decades of the 19th century and its application in companies initiated by Lord and Taylor, it is through the works of Drucker and McGregor that performance evaluation started to evolve towards its modern day application when almost all organized companies already have its own developed formal system of evaluation (Grote, 2002).
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