Management by Objectives and the Performance Appraisal System

The quest remains for a defensible performance appraisal system that will monitor, assist and control performance: appraise performance objectively, provide performance feedback and serve as a mechanism for using performance results for decision making. The myriad of literature available has only assisted in defining what is still unknown. This inquiry is exacerbated by the surge toward merit pay or linking pay to performance. The functions of a compensation system are: to attract acceptable candidates for employment, to maintain those employees once secured and to motivate or positively conjoin the interests and performance of the employee with the objectives of the organization. The elusive element that links performance appraisal systems and merit pay is the determination of defensible, possibly quantitative, performance standards. Management by.objectives can be that mechanism to develop defensible performance standards within certain applications and with certain qualifications. Management by objectives linked with merit pay requires the incorporation of assessment center usage. Without assessment center usage, the deficiencies of management by objectives are uncontrollable. By integrating a performance appraisal system with assessment center usage and linking merit pay: top management\u27s commitment and all employees\u27 perceptions and trust can and must be reaffirmed. A management by objectives performance, appraisal system leaves success to chance if its strengths and weaknesses are not accurately depicted. The intentions/objectives of performance appraisals, merit pay and management by objectives must be reviewed to ascertain their application to any unique business environment. In the proper format the review will yield both questions and answers critical to acceptance and success. A checklist or formula must be available to provide business a means to determine a management by objectives performance appraisal system\u27s proper fit. The high technology engineering firms, as well as research & development centers may find that a management by objectives performance appraisal system linked to merit pay is the most viable performance management technique available as we enter the twenty-first century. By incorporating the use of assessment centers as a means of protecting the integrity of the evaluation process, the importance of - specialization of labor is reaffirmed