Successfully managing organizational behavior in today’s world of work means that performance must be clearly defined and understood by the employees who are expected to perform well at work. Performance in most lines of work is multidimensional. For example, a sales executive’s performance may require administrative and financial skills along with the interpersonal skills needed to motivate a sales force. A medical doctor’s performance may demand the positive interpersonal skills of a bedside manner to complement the necessary technical diagnostic and treatment skills for enhancing the healing process. Each specific job in an organization requires the definition of skills and behaviors essential to excellent performance on the job.
This chapter focuses on performance management systems in general and the key component, performance appraisal, in particular—the organizational activity designed to provide performance feedback to employees. This feedback serves a variety of purposes and makes potentially significant contributions to organizations and individual employees alike. Indeed, we can almost think of performance-related feedback as being like a ship’s navigational system. Without such a system, the ship’s captain would have no way of knowing where the ship was, where it had come from, and where it was heading. Similarly, without an effective performance management system, organizations and individual employees would have no way of knowing how well they were doing or where improvements might be needed.
Performance appraisal is the process by which an employee’s contribu-