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Employee appraisals and evaluations, while theoretically considered to be independent from the pay plan, really are not. Ostensibly appraisals are for critiquing an employee's performance and offering suggestions for improvement, often bordering on directives, and not for setting pay. However as we've seen every pay system for progression purposes is linked to how effectively an employee is doing in learning the job and performing all aspects of the job. Therefore to go along with the illusion that evaluations are independent of pay systems is simply wrong. Perhaps in an ideal world appraisals are set up simply for the purpose of critiquing performance, with the goal being to bootstrap all performance, hence productivity, to the next level. In the world we inhabit this is only a partial reason for the appraisal system. Couple this with the desire to rate people for pay increase decisions and we have the pragmatic world.
Manufacturing engineering, once more through its industrial engineering responsibilities is very much involved in the design of the appraisal system. The system is based on establishment of proper methodology of doing any job and the measurements we use to evaluate if the methods are being done correctly. Once again we are interested in proper design of jobs with specific measurable requirements. From this job description an appraisal system is derived. While human resources (HR) are usually assigned the task of managing the personnel evaluation system, they do their work based on the system designed in accordance with good industrial engineering practices. This chapter is about the development of the appraisal system we find in most industries, which has been successfully applied to both hourly and salaried personnel.