Performance appraisals play a key role in several administrative areas such as promotions, job transfers, and legal protection. With the data generated from employee appraisals, you’re better able to make good decisions about a wide range of matters that directly affect your employees, your department, and the company at large. With accurate hard data in hand, employment-related decisions are easier for managers to make — and they’re easier for employees to understand and accept.
Setting the groundwork for promotions
One of the strongest motivators that many employees bring to the job is focused on being promoted.
As manager, you can look back on an employee’s performance over a given period and have a general impression regarding his promotability. However, if you base a promotion decision on feelings rather than findings, you actually generate difficulties in three distinct arenas.
Problems for the promoted employee: Without accurate performance data, you’re likely to promote the wrong person.
Problems for the employee who is not promoted: By promoting the wrong person, you’ve most likely also upset at least one other person in the department — namely, the person who deserved to move up the ladder.
Problems for the rest of the team: Employees get a strong sense of which co-workers are actually deserving of promotions.
Setting the groundwork for job transfers
A transfer can be a great way for an employee to advance his career and undergo a significant growth experience. If you have a job opening and an interested employee asks to be considered, whether through a job-posting system, internal advertisement, or simply word of mouth, you’ll need some accurate performance data in order to make a good decision. Certainly some important information can be gleaned by an interview, but the decision needs to be based on more than a friendly conversation.
Here’s where performance appraisals again enter the scene. When you’re looking at an employee who wants to be transferred, one of the best steps is to review all the appraisal data on him. And if you have multiple applicants, this approach can help you put all of them on a level playing field, matching each against the other on comparable work-related skills and behaviors.
Preventing legal problems
One of the less obvious but equally important roles of performance appraisals comes from the legal protection that they can provide. In today’s workplace, you must fairly, fully, and formally document employee performance before you take any kind of action — positive or negative, promotion or termination. Such documentation is extremely helpful in preventing legal claims and in dealing with claims if they’re made.
The documentation associated with performance appraisals can clearly demonstrate that decisions on such matters as work assignments, transfers, promotions, and raises were made on the basis of performance and merit.
If an employee is terminated and she’s surprised, don’t be surprised if she considers legal options.
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Source:http://www.dummies.com/how-to/content/how-performance-appraisals-help-in-promotions-tran.html
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