According to Armstrong (2000); Svetlik and Stavrou-Costea, (2007) defines HRM as a management of gather the employees, organization and motivation employees in human resources.
Human Resources Management include the two performance areas, first is the leadership and employees’ motivation matter and second is, it link to human resources practices example is training, recruitment and selection, compensation management and performance appraisal ( Lajara, et al, 2003). According to Prowse, (2009), Human resource management is used in much organization as a guideline in an organization. In addition, human resources not only include the two performance areas but also include the performance appraisal function .According to Ratzburg, (2008). The Performance appraisal is a powerful tool in the human resources management.
From the findings of Manoharan et.al, (2012) the performance appraisal is the process is determined the employee’s job performance and feedback information within communication with the employees.
The performance appraisal have some method, one of the performance appraisals method is graphic rating scales is the ranking of group or individual to think over the unsure and inaccurate issues that included in the service evaluation process (Manoharan et.al, 2011; Manoharan, et.al, 2012) .
Another performance appraisals method is forced distribution method, also called forced distribution system (FDS), FDS is rater leniency of directly deal with the problems and lack of discrimination, while measuring a person’s performance (McBriarty, 1988; Chattopadhayay and Ghosh 2012).
The next performance appraisals method is 360-degree appraisal method, form the findings of Prowse and Prowse, (2009) “the 360-degree feedback assessment manager finishing, rather than performance, and summarize the judge’s assessment.”
2.0 Performance Appraisals
So many researchers have defined the pros and cons of performance appraisal (Grubb, 2007; Manoharan et.al, 2009, Manoharan, et.al, 2012). From the findings of Manoharan, et al, (2012) using the performance appraisals not merely is a process for decide employee like merit-pay system based on their performance, but for development is a valid way , because a mentor can help the employees create the creativity and innovation .
The benefit of performance appraisal is achieve long-term individual performance and career development and provides a major potential that could strongly to increasing motivation, an opportunity to clarify goals when link for employee feedback’Prowse and Prowse ‘ 2009). So through performance appraisal it can improve and development the employee career, it make the company more productivity.
Performance appraisal is getting increases in human capital and these provide a developmental is cooperation closely with same goal within the organization (Arthur, 1994 ; Chen , et.al ,2011), Add more trust and cooperation within organization that can increase the employees social exchange (Collins and Smith, 2006; Takeuchi et al., 2007; Chen ,et.al ,2011). So performance appraisal allow a manager having a opportunity to get employees feedback to about discuss how well the employee goals were accomplished through the employees performance ( Lotich , 2010) .
According to Davis, (2012), when the time manager gives the employees during an appraisal, performance appraisal often having the direct bias issues, if administrators do not like to be optimistic or employees for political, religious, social, family or cultural point of view, managers will provide a better rating, when these people most like themselves. The make the performance appraisal unfair and only based on the manager perception, the bias issues make the performance appraisal become ineffective.
Appelbaum , (2011) clearly defined psychometric errors is make the performance appraisal ineffective For example leniency, halo effect, restricted range, recency and contrast, are doing assessments, due to the psychological tendencies. The all of the effect will make the performance appraisal ineffective , the company should take care of these , because willing become the expenses of the company .
Davila and Elvira, (2007) noted that comments and evaluation system managers and employees, such as a slightly different format, processing and feedback aspects. When their disagreement, the staff showed a deeper dissatisfaction with the system. Within the difference appraisal system employees will feel blurred of the work, so the performance appraisal becomes ineffective.