What are the objectives of a merit-rating programme?

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Discuss the importance of merit-rating to an organisation.

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1. Systematic performance appraisal provides information of great assistance in making and enforcing decisions about such subjects as promotions, pay increases, lay-offs, and transfers. A research study has disclosed that performance appraisal is used for promotion in 73 per cent cases, salary adjustment 69 per cent, stimulating employee improvement 61 per cent, deciding upon discharge 46 per cent and determining lay-off 27 per cent. Performance appraisal provides information in advance of lime when it may be needed, thereby avoiding spot judgments when a decision must be made. Moreover, the systematic approach provides the information in a form that permits the making of comparisons.

2. A systematic performance appraisal serves to guide employee development. Most people like to know how they are doing. Appraisal programme provides this information which can be communicated to employees. Weaknesses of the employees revealed through the appraisal process can be removed through organising training and development programmes. Thus, this provides opportunities of assessing employee’s training needs in the organisation.

3. Performance appraisal puts a psychological pressure on people to improve performance on the job. If the people are conscious that they are being appraised in respect of certain factors and their future largely depends on such appraisal, they tend to have positive and acceptable behaviour in this respect. Thus, the appraisal automatically works as a control device.

4. Appraisal also serves to maintain fair relationships in groups. Thus, it is necessary for tactical and strategic planning, motivation, communication, and equity.

5. The existence of a regular appraisal system tends to make the supervisors and executives more observant of their subordinates because they know that they will be expected periodically to fill out rating forms and would be called upon to justify their estimates. This improves supervision.

6. Performance appraisal serves as a means for evaluating the effectiveness of devices used for the selection and classification of workers. Knowledge of the characteristics of superior and inferior workers can be helpful in selection and placement of workers.