Performance appraisals are very important to organizations since organizations depend on appraisal results to make personnel decisions such as promotion, salary adjustments, layoff, and termination. A study by Sillup and Klimberg (2010) indicated that performance appraisal could help employers manage more effectively and meet employees' expectations in US-based corporations. Performance appraisals also serve as documentations for important decisions made in organizations. Accurate documentation can prevent companies from legal issues. For example, in case of employee termination for poor performance, the company must provide appraisal records to indicate the employee’s performance patterns over time, which is very important for the company against lawsuits (Levy, 2010).
Employees also benefit from performance appraisals for their career development. When an accurate appraisals are provided to employees for their strengths and weaknesses, “they can be proud of what they are doing well and can focus their efforts on the areas that need some work” (Levy, 2010, p. 104). On the other hand, many employees can do equally well even without performance appraisals when they are self-motivated. If employees are not satisfied with the appraisals and organizations, they may either appeal or leave for better opportunities. Therefore the impact of performance appraisal to employees is relatively small. On the contrary, organizations face greater risks and vulnerabilities for lack of performance appraisals, thus I believe performance appraisals are more important to organizations.
Levy, P. E. (2010). Industrial/organizational psychology: Understanding the workplace (3rd ed.). New York: Worth Publishers.
Sillup, G. P., & Klimberg, R. (2010). Assessing the ethics of implementing performance appraisal systems. The Journal of Management Development, (29)1, 38-55.