Question

Performance appraisals generally fulfill two functions. The first is to identify individual strengths and weaknesses and to develop action plans for improving performance. The second involves salary or merit adjustments. Why should these two functions be addressed at different times?

Answer 1

Reasons these two functions are addressed at different times are given below:

1. Development of action plans: Once the internal assessment is done the manager and the employee gets to know how the individual has performed and where he exceeds or where he is lagging behind. This would help to discuss the individual development needs of the employee which take place throughout the year.

2. Compensation adjustments process happens only for a limited period of time in a year say for one whole month. In this month the hike decided would be finalized and discussed with the employee. After which there would be no discussion at all till the next year or interim review.

3. But once the development needs are discussed with the employee the process of it takes place throughout the year which begins from finalising action plans, reviewing on a timely manner, providing feedbacks and then again working on the improvement etc.

4. Since development plan works throughout the year and compensation adjustment plan happens only once these two functions should be addressed at different time periods, knowing when to give importance to what.