The Role Of Performance Appraisals On Compensation Decisions

The Role of Performance Appraisals in Compensation Decisions The rise in the competitiveness of the ever-changing business environment has caused organizations to search for strategic ways to obtain and sustain a competitive advantage. Human resource managers can create competitive advantage for an organization by implementing effective performance appraisal systems, which properly compensate and incentivize employees. Incentivizing and compensating employees through an effective performance appraisal system will help retain top performing employees and help a company maintain a competitive advantage. Performance appraisals, according to Denisi, are described as, â€Å"†¦the specific and formal evaluations of an employee to determine the degree to which the employee is performing his or her job effectively.† Performance appraisal is a managerial process that links organizational objectives, performance standards and evaluation, to which the performance review are often applied. Performance appraisals in a business are considered a key to human resource management (HRM) practices for measuring effectiveness and efficiency (Sudin, 2011). Performance appraisal systems, according to Sudin, include the processes and procedures involved in implementing, managing, and communicating the events involved in performance appraisals. Performance appraisals serve many purposes within organizations, and as summarized by DeNisi, (2014) the performance appraisal process has at least threeShow MoreRelatedHuman Resources Policies And Procedures1704 Words   |  7 Pageshelp in planning, directing, coordinating, and any other activity that will help the organization to offer the best care possible. The role of the leaders is also to treat the patients effectively and efficiently by responding to any of the issues that is raised by the patients for purposes of offering effective care. 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