The Performance Appraisal Process:
Three Key Aspects and Company Examples
Terry Student
MGT/431
February 1, 2010

(BOLDING – red print done to highlight APA issues)

The Performance Appraisal Process:
Three Key Aspects and Company Examples In most organizations, periodic performance appraisals are a formal method of evaluating employee work and determining merit increases. Noe, Hollenbeck, Gerhart and Wright (2003) suggest there are three key aspects of the performance appraisal process: (1) establishing mutual goals and objectives, (2) using a valid and objective measurement method, and (3) linking employee performance to compensation. This case study will define the performance appraisal process, these three aspects of performance appraisals, discuss their importance, and illustrate their general impact upon the organization. Finally, specific company examples will be offered to demonstrate how these appraisal steps are practiced at Hewlett-Packard, New York Life Insurance, and IBM.
Establishing Mutual Goals and Objectives at Hewlett-Packard According to Noe et al. (2003), many companies establish goals and objectives as a means of communicating desired employee performance targets. The authors suggest that company interests can only be achieved when those interests are aligned with the skills and energies of the individual employee. A process of negotiation and compromise must occur between management and the employee in order to define specific standards of performance that match both corporate goals and individual abilities and interests. Noe et al. go on to report that mutual goal setting is an essential first step in the performance appraisal process and is required to provide a foundation for assessing both past and future employee performance. To quote Drucker (2005), “A person’s strengths and the way that person performs rarely