A culture of open communication and feedback is recommended where the information and suggestions regarding the system is shared freely.
The "appraisals and review meetings", continuous accountability and check can cause emotional stress for the employees. Therefore, it is recommended to create such a work culture where
Changing pay practices:
- the employees are made responsible for their own performance and development
- the managerís / superiorís suggestions, inputs are encouraged and incorporated in the actions.
Instead of the rise in the pay on the basis of the results of the Performance appraisal (i.e. merit pay) a periodic cost of living increases, rewards on some accomplishments, tem bonuses, profit and gain sharing are good alternatives.
Researches have proved that appraisals have little or almost negligible motivating effect on the employees. The employees should be motivated by creating challenging and interesting work, telling them their contribution towards the organizational goals, their career development in the organization etc.
Therefore, creating an organization with a culture that encourages creativity, fosters innovative efforts and productivity, teamwork, empowerment requires around two years of time, reformulating strategic plans and assumptions but can be effectively put into place without the need of performance appraisals.
First of all, they list a number of false assumptions underlying the PA process, such as:
- A mandatory, organization-wide, one size fits all annual face to face feedback process is effective for just about everyone in all functions and groups;
- All our managers have the requisite interpersonal skills and sensitivity to give feedback accurately and counsel around emotional reactions to the feedback;
- The boss has the prime responsibility for ensuring the employee performs and develops himself;
- Ratings are objective enough to be perceived as fair and to motivate effort;
- PA's are objective enough to stand up in court;
- People will withhold performance if they are not appraised and rewarded annually (i.e. they need their PA "fix" or they won't continue to produce).